# Contributory state pension



## Pinky22 (24 Jul 2021)

I’m looking to retire at 50. My pension will be worth 850k (hopefully). If I draw down 200k, and then take an income of 13k, I will still be paying prsi. So will this ensure I get the full state pension?


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## RedOnion (25 Jul 2021)

Pinky22 said:


> I will still be paying prsi


What income will you be paying PRSI on? Income from occupational pension schemes isn't subject to PRSI.


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## Pinky22 (25 Jul 2021)

Thanks RedOnion, I didn’t realise that. I thought as I am under 66 that I would be treated as self employed.


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## NoRegretsCoyote (25 Jul 2021)

It can make sense to become a landlord in your circumstances.

If you have rental profits of at least €5k per year you pay Class S PRSI (€500 flat rate or 4%, whichever is higher). This will give you 52 contributions a year for state pension eligibility.

A €200k apartment will almost certainly generate rental profits high enough for you to pay PRSI on.


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## Pinky22 (25 Jul 2021)

That’s interesting, but not keen on becoming a landlord. Can I pay class S voluntarily?


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## NoRegretsCoyote (25 Jul 2021)

@Pinky22 No.

You could outsource management and lettings to an agent. As an apartment owner there would probably not be too much to do.


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## 50andOut (25 Jul 2021)

Since you can live off substantial savings prior to drawing down the pension (as per your earlier money maker post), you could register for jobseekers benefit/allowance. Whilst the means test would mean no allowance would be paid you will get credits.

You are expected to be looking and available for work though.

Maybe a part time job would be a better option, keep you busy and continue to maintain the required contributions?

50andO


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## Marc (25 Jul 2021)

In these situations we generally set up an investment account to generate €5000pa of dividend income that is subject to class S PRSI and makes the credits for you.

no need for the hassle and additional risk of renting a property.

About €300k should do the trick.









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This guide sets out the issues Irish Resident and Domiciled investors  should consider in order to ensure that their investment portfolio is the most suitable for their particular requirements. We summarise Personal and Capital Taxes in Ireland along with the taxation of different fund...




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## Pinky22 (25 Jul 2021)

Thank you for your answers. So my options are an investment income or rental profit greater than 5k to get class S, or sign on, or work part time earning greater than 38 euro per week to get employer class A. 
Again thanks a million


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## bstop (26 Jul 2021)

If you are able to set up an ARF then your income from the ARF is subject to S class prsi.


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## Ndiddy (26 Jul 2021)

And as per OP, if they are drawing down 200k, does it not have to become an ARF?  I was also thinking along the same lines but a bit sooner...leave work at 45, live off savings until age 50  and then access the 25% lump sum.  I thought that between jobseekers for awhile and homemaker's credit, PRSI would be covered until age 50.....


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## bstop (26 Jul 2021)

Pinky22 said:


> Thank you for your answers. So my options are an investment income or rental profit greater than 5k to get class S


If you are getting an occupational pension or an annuity you will be classed as M prsi.
When you have income classed as M prsi and your only source of other income is unearned then this unearned income will  be classed as K prsi. This means that your rental and investment income will be K class prsi which is not reconable for state pension. If you have an ARF then you will pay S class prsi on the ARF and also on the other unearned income. You can make voluntary contributions at Class S.


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## LiferT (26 Jul 2021)

Hi

Income from an ARF, taken while under 66 years of age, is subject to Class S PRSI, and as such is reckonable (if over €500 p.a.) as a contribution towards the state pension

LF


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## Lifeinthesun (26 Jul 2021)

LiferT said:


> Hi
> 
> Income from an ARF, taken while under 66 years of age, is subject to Class S PRSI, and as such is reckonable (if over €500 p.a.) as a contribution towards the state pension
> 
> LF


I am also in the same situation as pinky, 55 years old and hoping to retire early next year. Take my 25 per cent lump sum and 4 per cent per year from my ARF. I have worked for the last 35 years paying prsi and this was a concern to me regarding my pension! With the 10 plus years gap between retirement and oap, but by reading above I should be covered!!


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## Shirazman (26 Jul 2021)

bstop said:


> You cannot make voluntary contributions at Class S.



I'm rather taken aback to read this, having done exactly that in 2015!     

(I'm a Class S PRSI person who didn't withdraw anything from my ARF in 2015;   I later applied to DSP to make a voluntary contribution for that year and was allowed to!)


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## Early Riser (26 Jul 2021)

*"If you paid PRSI at Class S you pay a special flat rate of €500. The social insurance payments you may be entitled to by making voluntary contributions at this rate are:*

_*State Pension (Contributory)*_
_Widow’s, Widower’s or Surviving Civil Partner's (Contributory)    Pension_
_Guardian’s Payment (Contributory)"_






						Voluntary social insurance contributions
					

Voluntary social insurance contributions can help you qualify for a social insurance payment in the future. Find out more about making voluntary contributions.




					www.citizensinformation.ie


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## bstop (26 Jul 2021)

Sorry about that Shirazman. My mistake you can make voluntary S contributions. I made them myself a few years ago. I got confused, it is credits that you cannot get for S class contributions.


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## Pinky22 (26 Jul 2021)

Ok, so from the citizens information, it looks like I can make voluntary contributions based on the previous tax year, at 6.6% of reckonable. 
I’m class A currently, and I’m not sure what reckonable is, but surely it would be better to sign on, then get a part time job, and then finish up, as the 6.6 % is based on the last year?


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## bstop (26 Jul 2021)

Another thing to be wary of if you stop working and have unearned income from rentals or investments.
If the unearned income is your only source of income and is over 5000 euro per year you will get 52 S class contributions per year. If however you.get a job and pay at least one A class contribution and this is your only other source of income, all your unearned income will then convert to K class contributions which are not reconable for State pension. I got caught out by this a few years ago by working for two weeks at A class. At the end of the year I had 52 K class and 2 A class contributions. This was really annoying as I had paid well over 500 euro on K class stamps that have no benefits.


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## Pinky22 (26 Jul 2021)

My income would be from 10 year state savings- would this incur class K?


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## bstop (26 Jul 2021)

I don't think there is any prsi on state savings.


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## Shirazman (26 Jul 2021)

Pinky22 said:


> My income would be from 10 year state savings- would this incur class K?


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## fayf (27 Jul 2021)

bstop said:


> I don't think there is any prsi on state savings.


Correct, there is no PRSI, PAYE or USC liability on state savings.

One of the most straightforward methods of maintaining your PRSI record is drawing from your ARF at a minimum of 12,500 pa, with an attached Class S 4% PRSI of €500 per annum, satisfying all PRSI requirements for maintaining 52 insurable weeks pa, re State Contributory Pension.

This can make sense, even if, you do not need the funds, it also utilises your annual tax free amount, which expires once a tax year is completed. A typical person would Pay, no USC or PAYE if their annual income was 12,500, indeed, the USC exemption amount is 13k, and someone with normal tax credits of 3,300 pa, is exempt from PAYE up to 16500. So even if one draws down 16,500 pa from an ARF, there is no PAYE, USC of just 150 pa, and PRSI of 660 pa, which is just under 5% total deductions - a good deal indeed. One could always invest those funds if they are not needed, or put them into something guaranteed, and non taxable, like state savings.

But ARF’s, are not always a possible route as depends on individual circumstances.


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## november16 (3 Aug 2021)

fayf said:


> Correct, there is no PRSI, PAYE or USC liability on state savings.
> 
> One of the most straightforward methods of maintaining your PRSI record is drawing from your ARF at a minimum of 12,500 pa, with an attached Class S 4% PRSI of €500 per annum, satisfying all PRSI requirements for maintaining 52 insurable weeks pa, re State Contributory Pension.
> 
> ...


Hello Can I ask a few questions
Can a Civil/Public Servant avail of an ARF. Im pre-95, aged 60, retirement age 65 as per pre 95 public servant. Pension will amount to 14,000 approx at 65 for 28 years. Not entitled to A stamp (contributory pension).  Had approx 7 yrs A rate stamp pre-public service.
Can property be part rented to gain entitlement to S stamp to build years re Contributory pension. If still working as Servant can the S stamp be built up whilst renting?


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## NoRegretsCoyote (3 Aug 2021)

november16 said:


> Had approx 7 yrs A rate stamp pre-public service.


It would be good to get this to 10 years which will get you some contributory state pension at 66.

If you have investment income (dividends, profits on a rental property) of >€5k per a annum you pay €500k Class S PRSI or 4%, whichever is higher. This might be an option for you between age 60 and 65 to get you your ten years.

But without a wider picture of your personal and financial circumstances it's very hard to advise.


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## november16 (3 Aug 2021)

Thanks NoRegretsCoyot
Ordinary Public Secor Worker no Dividends to speak of.
No rental property just own home, which I am considering if it is viable to rent for the next 5 years or more through necessity. It seems though from previous poster that if I got employment paying A rate contributory stamp and If I was in the position to rent then the S contributory would be cancelled out. If I am understanding it correctly.
Or If my only source of income was a pension and I rented and earned over 5,000 then the S  stamp payment would become M and K as per previous poster of no benefit towards a contributory pension.
Can I be paying an A stamp (if I got employment) and also be employed paying the B rate Stamp (civil Service) previously paid D Public servant.


NoRegretsCoyote said:


> It would be good to get this to 10 years which will get you some contributory state pension at 66.
> 
> If you have investment income (dividends, profits on a rental property) of >€5k per a annum you pay €500k Class S PRSI or 4%, whichever is higher. This might be an option for you between age 60 and 65 to get you your ten years.
> 
> But without a wider picture of your personal and financial circumstances it's very hard to advise.


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## NoRegretsCoyote (3 Aug 2021)

november16 said:


> It seems though from previous poster that if I got employment paying A rate contributory stamp and If I was in the position to rent then the S contributory would be cancelled out. If I am understanding it correctly.


Am still not sure I understand your circumstances precisely. Say for example you retire from public service at 60 and at 61 take up private sector employment until 65. You will pay Class A PRSI on this private sector employment until 65 and will build up stamps for a contributory state pension. In these circumstances no point in letting your house.



november16 said:


> Or If my only source of income was a pension and I rented and earned over 5,000 then the S stamp payment would become M and K as per previous poster of no benefit towards a contributory pension.



I can't see any circumstances where you would pay either Class M or Class K.


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