Can a retired PAYE worker use class S contributions to qualify for Benefit Payment 65.

[S class]

The following is based on my reading of the rules of BP65SE, so it may or may not be possible.


If a PAYE worker has taken early retirement and has ARF drawdowns over 5k per year they will get 52 class S contributions per year.

If this person doesn't meet the class A rules in their governing year but does have 52 class S contributions in their governing year for BP 65 they meet one of the qualification rules for Benefit Payment 65 self employed.

In order to qualify for BP65SE they need to have ceased a self employment at any time later than the beginning of the calender year of their 63rd birthday.

ARFs are classed as a self employment.

If this person has ceased an ARF in this period they should be eligible to qualify for BP65SE.

An ARF could be ceased by converting it to an Annuity.
Income from an Annuity is classed a a pension, so it doesn't prevent qualification for BP65SE.

If this person had multiple ARFs, they could cease one ARF in order to meet the rule of having ceased a self employment.

This is the questionnaire sent to applicants for BP65SE.
It clearly lists ARFs as a self employment

 

[ClubMan]

BP65SE

What's "BP65SE" and is it different from "BP65"?

Payment for people who retire at 65

If you retire at 65, you may qualify for a benefit payment until you reach 66. The payment is similar to Jobseeker’s Benefit, but you don’t need to be looking for work or sign on at your local Intreo centre.

www.citizensinformation.ie

 

[S class]

It's Benefit Payment 65 Self Employed.

Qualification for this is based on having 52 class S contributions for the governing year.

Other than the different qualification rules it is identical to BP65.

 

[ClubMan]

Ah, thanks. I didn't know what there were two different payments. Thanks for the info - it may be relevant to me in a few years if things don't change in the meantime!

 

[Sarenco]

@S class

I don’t think it’s entirely accurate to say that ARFs are treated as self-employment.

It’s certainly true that ARF drawdowns are subject to Class S PRSI and constitute qualifying contributions.

However, there are Regulations in place that provide that where a person has sustained a loss of self-employment in their usual occupation and only pay contributions on ARF drawdowns, that shall be regarded as a week of unemployment.

 

[S class]

However, there are Regulations in place that provide that where a person has sustained a loss of self-employment in their usual occupation and only pay contributions on ARF drawdowns, that shall be regarded as a week of unemployment.

This is not the issue here.

What you are referring to is the fact that ARF drawdowns count as unemployment during a JBSE claim.

I am referring to a person qualifying for BP65SE after ceasing their ARF for the purposes of fulfilling the rule of having 'ceased a self employment' in order to qualify.

The issue is whether an ARF is considered as a self employment for the purposes of having 'ceased a self employment' in order to qualify for BP65.

The attached DSP questionnaire lists ARFs as self employment with regard to having a ceased self employment for the purposes of a BP65SE claim. (Question 3 on the questionnaire)

This implies that ceasing an ARF would be acceptable to fulfill the rule of needing to 'cease a self employment' in order to qualify for BP65SE.

 

[TRS30]

Must you convert to an annuity or is ceasing taking payments from an ARF sufficient?

 

[Sarenco]

@S class

I’m not clear what questionnaire you are referencing but the Department’s Operational Guidelines are quite explicit that ARF drawdowns do not disqualify somebody from BP65 -

https://www.gov.ie/en/publication/65561-benefit-payment-for-65-year-olds/#qualifying-conditions

 

[S class]

Must you convert to an annuity or is ceasing taking payments from an ARF sufficient?

If ceasing an ARF is acceptable (I am not sure if it would be) then it would not matter how it was ceased. So you could do either.

 

[Sarenco]

From the Operational Guidelines -

“…if in any week a person has income solely from an ARF, and is paying S cons, it will be treated as a week of unemployment and so they won’t be considered to be engaged in self-employment for the purposes of the JBSE/BP65 conditions…”.

 

[S class]

I’m not clear what questionnaire you are referencing but the Department’s Operational Guidelines are quite explicit that ARF drawdowns do not disqualify somebody from BP65 -

I am not disputing this.

What I am trying to establish is, if an ex PAYE worker who has no other self employment, who meets the rule of having 52 class S contributions in the governing year for BP65, could use the ceasing of their ARF in order to meet the rule of needing to have ceased a self employment, in order meet the final rule to qualify for BP65SE.

The questionnaire is a DSP document sent to another poster who is making a claim for BP65. The questionnaire is linked to post #1.

 

[S class]

“…if in any week a person has income solely from an ARF, and is paying S cons, it will be treated as a week of unemployment and so they won’t be considered to be engaged in self-employment for the purposes of the JBSE/BP65 conditions…”.

That is fine.

The person in the situation I am trying to establish ,will have ceased their ARF before making their claim for JB or BP65.
So they will be classed as unemployed without having to rely on this rule.

 

[Redzer]

How does one cease their ARF? Withdraw the full amount or deduct less than €5k?

 

[S class]

You would have to exhaust it by drawing down all funds.
If you didn't want to take the entire ARF as cash, you could convert it to an Annuity. This would cease the ARF.

 

[Sarenco]

@S class

I think you are reading too much into that questionnaire.

I don’t think that “ceasing” an ARF (whatever that means) would qualify your hypothetical retired PAYE worker for BP65SE.

I don’t think your hypothetical retired PAYE worker would qualify for BP65SE unless he sustained a loss of self-employment in their usual occupation and the loss of the usual self-employment occurred since the beginning of the last complete calendar year before the year in which the application is made.

 

[S class]

don’t think it’s entirely accurate to say that ARFs are treated as self-employment.

From Operational guidelines for JBSE.

"Unearned Income from Rental Income, Investment and so on, is considered to be insurable self-employment."

Unearned income, including ARFs, is considered to be insurable self employment.

If Class S Prsi has been applied to this self employment, then this is insured self employment.

Jobseekers Benefit is included in the benefits for class S Prsi insured self employment.

 

[Sarenco]

Again, ARF drawdowns are subject to Class S PRSI and constitute qualifying contributions. No question about it.

However, Regulations specifically provide that where a person has sustained a loss of self-employment in their usual occupation and only pay contributions on ARF drawdowns, that shall be regarded as a week of unemployment.

If your interpretation is correct, a person who was previously self-employed in their usual occupation would not be considered to be self-employed simply by drawing down an ARF in contrast to somebody who was previously employed in their usual occupation.

I don’t think that’s correct.

 

[michaelm]

Re thread title: Can a retired PAYE worker use class S contributions to qualify for Benefit Payment 65.

I'm confused now. My understanding was that should I retire from PRSI A employment at 60 I could drawdown €5k from my ARF in the reference year (year I turn 63) and receive 52 PRSI S stamps which would qualify me for BP65. Is this incorrect?

 

[S class]

I could drawdown €5k from my ARF in the reference year (year I turn 63) and receive 52 PRSI S stamps which would qualify me for BP65. Is this incorrect?

Yes it's incorrect.

To qualify using your class S contributions, you need to cease a self employment.

ARFs are classed as insurable self employment.
The DSP questionnaire in post #1 clearly lists ARFs among the various self employments that could be ceased in relation to an application for BP65.

I don't know if you would qualify for BP65 if your ARF finished before your 65th birthday.

This is what I am speculating about.

If you still have your ARF at age 65 you are considered to be still in self employment and you cannot meet the rule to be unemployed.

If your ARF was finished at age 65 you would then be considered to be unemployed and maybe you would qualify.

Class S Prsi has various insured benefits.

Is class S related to an ARF equal to class S related to earned self employment ?

My guess is that it has to be.

It should then give exactly the same benefits as earned self employment.

It definitely is Reckonable for COAP and treatment benefits.

JBSE and BP65 are also class S benefits, so these should be available to the insured self employed person (ARF holder).

 

[S class]

If your interpretation is correct, a person who was previously self-employed in their usual occupation would not be considered to be self-employed simply by drawing down an ARF

This is not correct.

A person with earned self employment and an ARF is considered to have two separate self employments.

They gain 52 class S on the earned self employment and another 52 class S on their ARF. Total 104 class S per year.

If they cease their earned self employment they continue to be considered as in insurable self employment and continue to gain 52 class S from their ARF.