Key Post PRSI and planning retirement

[Calmsea]

I just reread your #95 post. You retired from class A employment last December.
Do you have class A contributions during the calender year of your 63rd birthday ?
If you have a minimum of 39 class A of which at least 13 are paid class A you would qualify under the class A rules.

Unfortunately I was self-employed that year and paid class S contributions.

 

[S class]

Okay.

The subsidiary rules for class S are hard to understand.
Reading them they seem to state that income below 7500 euro per year could be subsidiary, but then extra complications are added in. The wording in the guidelines is confusing.

You should appeal the 65s benefit decision and also apply for Jobseeks Benefit Self employed the rate for this is the same as 65s benefit when you are aged over 65.

If none of this works and if you had previous class A employment before the year of your 63rd birthday, you could try asking DSP to fill in your 63rd year with class A credits.

It is allowable to claim class A credits in any year where you are also paying class S contributions. You could say you were not aware that you were entitled to claim class A credits at that time.

If you succeeded in this approach you could then possibly qualify under class A rules.
Your rental income would definitely be subsidiary under class A rules.

I know of other people who have succeeded in getting backdated class A credits.

 

[Calmsea]

Okay.

The subsidiary rules for class S are hard to understand.
Reading them they seem to state that income below 7500 euro per year could be subsidiary, but then extra complications are added in. The wording in the guidelines is confusing.

You should appeal the 65s benefit decision and also apply for Jobseeks Benefit Self employed the rate for this is the same as 65s benefit when you are aged over 65.

If none of this works and if you had previous class A employment before the year of your 63rd birthday, you could try asking DSP to fill in your 63rd year with class A credits.

It is allowable to claim class A credits in any year where you are also paying class S contributions. You could say you were not aware that you were entitled to claim class A credits at that time.

If you succeeded in this approach you could then possibly qualify under class A rules.
Your rental income would definitely be subsidiary under class A rules.

I know of other people who have succeeded in getting backdated class A credits.

Thank you for all that advice S Class. I will try all that you recommend.

 

[Calmsea]

I would really appreciate it if anyone knows the answer to this question re. Benefit Payment for 65s.

I make a loss each month on my rental property because the monthly interest payments on the tracker mortgage I have on it exceed the rent. I have no income from it and this won’t change until interest rates drop significantly. I was turned down for the Benefit payment for 65 year olds because they say I have a continuing rental income. I don’t have an income, I have a loss that I need to supplement with my savings. How can they say I have a continuing rental income when I have no profit after allowed interest payments and expenses?

 

[S class]

I rechecked the rules for subsidiary employment.
I don't think you qualify.

If you receive remuneration from the rental you are classed as employed. There doesn't have to be profit.

Also you would need to have had your normal self employment and rental running concurrently for 6 months immediately before your application for 65s benefit i.e. you would have to cease your normal self employment immediately before your application.

You would also be ineligible because you had a mixture of class A and class S in your last 3 years.

As well as all this you would not qualify if your rental remuneration is more than 7000 euro per year.

 

[Calmsea]

I rechecked the rules for subsidiary employment.
I don't think you qualify.

If you receive remuneration from the rental you are classed as employed. There doesn't have to be profit.

Also you would need to have had your normal self employment and rental running concurrently for 6 months immediately before your application for 65s benefit i.e. you would have to cease your normal self employment immediately before your application.

You would also be ineligible because you had a mixture of class A and class S in your last 3 years.

As well as all this you would not qualify if your rental remuneration is more than 7000 euro per year.

Thank you for all the advice S Class.

 

[Marsupial]

Earlier response to the question:-

"Any idea what happens to voluntary contributors in the year of their 66th birthday? Every extra week may make a difference."

No voluntary contributions are allowed for [the year of contributor's 66th birthday].

There is an exception to this rule, if the voluntary contributions are needed to reach the 520 minimum full rate paid contributions, in order to qualify for the contributory pension.

I'm wondering whether the new arrangements allowing people to apply for the Contrib. State Pension at ages 67 - 70 may lead to the abolition of this useful exception. I suppose that we'll have to wait for the legislation before we'll be able to clarify this.

 

[S class]

So far there is no change to the rules for voluntary Prsi.
It stops when you reach age 66.

Also Jobseekers credits stop at age 66. Jobseekers benefit is payable to people over age 66 but without credits.

These are a new layer of complications added to an already confusing Prsi system.
The only way to gain extra Prsi contributions after age 66 seem to be to remain in employment or have ARF drawdowns.

The execption allowing contributions in the pension claim year to be counted towards the 520 level also includes employment contributions and presumably ARF drawdowns. I presume this applies up to age 70.

My guess is that the credits and voluntary contributions will remain only up to age 66.
These are probably seen as a "too easy" way for people to increase their pension entitlement.

Hopefully the voluntary contributions exception will remain for people claiming their pension at age 66.

 

[Forumuser]

If you reach pension age on or after 6 April 2012, you need to have 520 paid full-rate [Class S in your case] PRSI contributions. Only 260 of these 520 contributions can be voluntary contributions.​

​

Before we begin, are you certain that you will be able to meet this pre-condition?

Just seeing this here again....
Is it possible to use some high rate voluntary contributions from another EU country (not UK) to reach the 520 PRSI level if you are short in some Irish PRSI contributions to qualify for a pro rata EU part pension?
I am researching this already for quite a while- but even Citizen Information, SW or the pension office in Sligo give you very conflicting information about this.
Any link to some rules?

 

[yellow]

My husband will turn 66 later this year and is in receipt of a public service pension, with 30 years of 'D' PRSI contributions. He took up a job in the private sector at the age of 64, paying 'A' PRSI contributions and hopes to retire from this job in about a year and a half. He will have less than 180 'A' contributions made by then, so is there any way he could qualify for any form of contributory state pension?

 

[Marsupial]

Just seeing this here again....
Is it possible to use some high rate voluntary contributions from another EU country (not UK) to reach the 520 PRSI level if you are short in some Irish PRSI contributions to qualify for a pro rata EU part pension?
I am researching this already for quite a while- but even Citizen Information, SW or the pension office in Sligo give you very conflicting information about this.
Any link to some rules?

The "rules" are called Operational Guidelines and are at this link.

The SW pension office in Sligo would presumably have referred to them to answer your query; so the fact that they gave you very conflicting information suggests either that they didn't consult them, or that that your query should have been escalated to someone with more expertise!

 

[Marsupial]

My husband will turn 66 later this year and is in receipt of a public service pension, with 30 years of 'D' PRSI contributions. He took up a job in the private sector at the age of 64, paying 'A' PRSI contributions and hopes to retire from this job in about a year and a half. He will have less than 180 'A' contributions made by then, so is there any way he could qualify for any form of contributory state pension?

30 years of PS employment and now in his mid-60's means that there's a gap of about ten years of his potential working life.
Might he have made any PRSI contributions in Ireland or abroad during that period?
Has he applied for a copy of his PRSI record?

 

[yellow]

Unfortunately no jobs that were registered for PRSI. He has received a copy of his PRSI record.

 

[Marsupial]

Unfortunately no jobs that were registered for PRSI. He has received a copy of his PRSI record.

In that case, I don't think that his Class A contributions will be of any use to him.

But if he continued working until he had accumulated a total of 260 Class A contributions then he'd probably be eligible for the pro-rata pension.
Bear in mind that -

• he wouldn't need to work for more than half a day each week in order to be eligible to pay a PRSI contribution; and
• the pro-rata pension that he'd get wouldn't be very high (rough estimate: about €35 a week)

 

[yellow]

Thank you. I have checked the link to the 'pro-rata pension' above. Do the 260 contributions have to be made before he turns 66 do you know? If so he would not qualify. Also, he did not work for 6 years between starting his pension and going to work in the private sector so this would affect the yearly average of 10 contributions needed?

 

[S class]

He can continue working up to age 70, and if he earned a minimum of 38 euro per week he will gain 1 class A contribution per week.

Assuming that he has 180 contributions at age 66, he could reach the target of 260 class A at about age 67.5.

He would then qualify for, and could claim a deferred pro rata pension.

He will have the required average of 10 per year as his class D are included in the calculation.

Did he make AVCs from his public sector employment ?

 

[yellow]

Unfortunately he didn't make any AVC contributions. He will have just under 180 contributions when he plans to retire in about a year and a half so could reach 260 if he continued to work until he's nearly 70 under your calculations (health and willingness dependent!). It's useful to know that his earnings need only be 38 euros per week. Thanks for your help.

 

[S class]

If he could manage to make pension contributions from his current employment he could set up an ARF when he retires.

If he could get an ARF of slightly over 10,000 euro he could drawdown the ARF at 5000 euro for 2 years.

This would gain him 104 class S Prsi contributions and allow him to reach the 260 paid Prsi contributions he needs.

This would eliminate the need for him to continue in employment after age 66.

 

[yellow]

He does not have access to a pension plan in his current employment. Would it be worth his while or complicated to set up an ARF?

 

[S class]

He can set up a PRSA. This is relatively easy. If he contacts a broker they would set this up for him. There are a few brokers who regularly post here.
Search for G Sheehy or LD Ferguson or LA Brokers.

He would make pension contributions to the PRSA and then when he retires he can take 25% of his PRSA as a tax free lump sum and the remainder is then used to set up the ARF.

This might sound complicated, but is very straightforward.

One of the above brokers would do all the setting up.

Do a Google search for PRSAs to get some more information.

It would be well worthwhile if he wants up get extra Prsi contributions without the hassle of remaining in employment after age 66.