Early Drawdown of pensions

D

DrDoolittle

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I am 52 and finishing up work. I have a deferred DC pension from previous job and a PRSA from current job.

My husband has a good deferred DB pension, that will meet our needs, but he will not draw that until 65. Currently he is on a low income and I will be on no income shortly.

Would it make sense now to drawdown my pensions which would effectively be tax free because we will be covered mostly by tax credits ?
Would drawing this pension now generate PRSI credits ?

Could the PRSA and deferred DC be combined into an ARF and drawn down now as needed to carry us towards my husbands drawdown ?
 
DrDoolittle said:
I am 52 and finishing up work. I have a deferred DC pension from previous job and a PRSA from current job.

My husband has a good deferred DB pension, that will meet our needs, but he will not draw that until 65. Currently he is on a low income and I will be on no income shortly.

Would it make sense now to drawdown my pensions which would effectively be tax free because we will be covered mostly by tax credits ?
Would drawing this pension now generate PRSI credits ?

Could the PRSA and deferred DC be combined into an ARF and drawn down now as needed to carry us towards my husbands drawdown ?
Click to expand...
The professionals on here may give you a more holistic response but here are a couple of nuggets that I've learnt on here just by reading the various threads.

If you buy an ARF and draw an income from it, it is subject to PRSI deductions until age 66 so those will go towards your state pension entitlement. Annuities are not subject to PRSI so to maintain your social welfare record you will need to submit an unemployment claim to the DSP now for either JSB (which includes PRSI credits) or just PRSI credits alone.

You can draw down an ARF or not....as needed. However the tax treatment changes in the tax year that you attain age 61. A process called deemed distribution applies which means you will be taxed on the basis that you have drawn down 4% of your pension pot irrespective of whether you did or not. This rises to 5% at age 71.

Just thinking out loud perhaps there is an option for your husband to draw down his DB pension a few years earlier? This will reduce it's value but when combined with your pension drawdowns the two together may still meet your needs at a younger age.
 
Kev1964 said:
The professionals on here may give you a more holistic response but here are a couple of nuggets that I've learnt on here just by reading the various threads.

If you buy an ARF and draw an income from it, it is subject to PRSI deductions until age 66 so those will go towards your state pension entitlement. Annuities are not subject to PRSI so to maintain your social welfare record you will need to submit an unemployment claim to the DSP now for either JSB (which includes PRSI credits) or just PRSI credits alone.

You can draw down an ARF or not....as needed. However the tax treatment changes in the tax year that you attain age 61. A process called deemed distribution applies which means you will be taxed on the basis that you have drawn down 4% of your pension pot irrespective of whether you did or not. This rises to 5% at age 71.

Just thinking out loud perhaps there is an option for your husband to draw down his DB pension a few years earlier? This will reduce it's value but when combined with your pension drawdowns the two together may still meet your needs at a younger age.
Click to expand...
Thanks, good to know it would count as PRSI contributions and would not need to rely on credits.....Yes slightly earlier DB would be a possible option too. For now would really like to combine DC and PRSA and take an ARF.....Then a lot of those pensions could be drawn down almost tax free.
 
DrDoolittle said:
Would drawing this pension now generate PRSI credits ?
Click to expand...
Yes as stated above, provided you drawdown a minimum of 5000 euro per year.

You should also aim to get Jobseekers credits up to the end of the calender year of your 63rd birthday. These credits will help you to qualify for Benefit Payment 65.

You are allowed to have both Jobseekers credits and class S Prsi from your ARF in any particular year.

Read this thread for more information.

Key Post - PRSI and planning retirement

This Key Post is in the form of a FAQ where I don't know many of the answers. I will update the post as I get answers. 1. PRSI payable on reaching state pension age Answer: 0 (Class M) 1a. Does this relate to the start of the tax year in which you become 66? Or to after your birthday? Answer...
www.askaboutmoney.com
 
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