General retirement financial advice sought

Apparently the state pension reform ihas alll been agreed at cabinet already. https://www.gov.ie/en/press-release...rk-reform-of-state-pension-system-in-ireland/

pension stays at 66, but if you wait up to 70, you can get a higher amount per week
move to total contributions method (from average method) on a phased basis over 10year ( you get best of both callc - so half way through the phasing in calc could be 50% average + 50% total cont OR 100% total cont, whichever is higher)
plus bringing more carers into the state pension net
starts from Jan 2024
 
wondering how the surviving spouse pension will be affected by this

"from January 2024, people will have the option to continue working up until the age of 70 in return for a higher pension"

As it stands, once you claim your own state pension the Surviving spouse pension ceases; if you choose to continue working & not claim the state retirement pension, will the surviving spouse pension continue to be payable?

I know we don't have all the details just yet, but for the clever folks here who are more up on these things, would be interested to hear your opinions.
 
Devil will be in the detail. How many years to breakeven between taking the age 66 amount and age 70 amount?

Might be worth living off personal pension or own finances till 70 (i.e. rental income and continue paying PRSI) and start claiming then.

Will all depend on the amounts involved.
 
My back of an envelope breakeven calc was 20 years or so, ie if you started claiming at the current state pension rate from 66, you’d be 86~ish before your twin who waited till 70 to claim had caught up with you on a cumulative non-inflated basis.
 
@S class- Thanks for that. Of course I won't qualify for full pension, silly question when I think about it. I should have about 600 contributions by age 66, and a bit more if I can get the UK element included. So certainly a nice little top-up of 75-80 euro/week in due course.

One more question you might know the answer to- say I was to take up paid employment and pay normal PRSI. How would that be factored into the equation along with the AVC S class contributions?
 
If you have an ARF at retirement you will get S class Prsi ( with a minimum drawdown of 5000 euro per year). This is not affected by having employment A class Prsi. You can be in the S class and A class systems simultaneously. You can also claim A class credits while in receipt of S class Prsi. If you immediately work for one day when you retire you can get one A class paid prsi contribution and then sign on for credits. You will then have your B or D class Prsi for that current year and the previous year converted to A class credits. This will bump up your pension entitlement another bit.
If you work for any periods make sure to sign on again for credits at the end of each work period. If you work for 13 weeks in the calender year of your 63 birthday and get credits for the rest of this year you will qualify for 65s benefit. The 13 weeks of paid employment can also be done in other years. Check out the "Guidelines for 65s Benefit" for details.
 
S class said:
If you have an ARF at retirement you will get S class Prsi ( with a minimum drawdown of 5000 euro per year). This is not affected by having employment A class Prsi. You can be in the S class and A class systems simultaneously. You can also claim A class credits while in receipt of S class Prsi. If you immediately work for one day when you retire you can get one A class paid prsi contribution and then sign on for credits. You will then have your B or D class Prsi for that current year and the previous year converted to A class credits. This will bump up your pension entitlement another bit.
If you work for any periods make sure to sign on again for credits at the end of each work period. If you work for 13 weeks in the calender year of your 63 birthday and get credits for the rest of this year you will qualify for 65s benefit. The 13 weeks of paid employment can also be done in other years. Check out the "Guidelines for 65s Benefit" for details.
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Thank you again, most helpful.
 
S class said:
If you have an ARF at retirement you will get S class Prsi ( with a minimum drawdown of 5000 euro per year).
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Is it the case that one will get S class PRSI with any monthly drawdown with no minimum total requirement?
 
There was clarification by Zurich and Heather Humphreys last year that a minimum of 5000 euro is needed. This 5000 euro can be shared between the ARF and other income. If a person had investment income of 3000 euro they would only need 2000 euro from their ARF to get 52 S class contributions.
 
S class said:
There was clarification by Zurich and Heather Humphreys last year that a minimum of 5000 euro is needed. This 5000 euro can be shared between the ARF and other income. If a person had investment income of 3000 euro they would only need 2000 euro from their ARF to get 52 S class contributions.
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Are you absolutely sure that is correct?

Any clarification from the Minister that I have read states that if a person under the age of 66, who is not a modified contributor, is receiving a distribution from an ARF than any income (which can include income from sources other than the ARF distribution) of €5,000 or more a year will incur a PRSI charge of 4% or €500, whichever is greater.

Are you suggesting the €500 minimum is not applicable in these circumstances? If so, do you have a link?
 
Sarenco said:
Are you absolutely sure that is correct?

Any clarification from the Minister that I have read states that if a person under the age of 66, who is not a modified contributor, is receiving a distribution from an ARF than any income (which can include income from sources other than the ARF distribution) of €5,000 or more a year will incur a PRSI charge of 4% or €500, whichever is greater.

Are you suggesting the €500 minimum is not applicable in these circumstances? If so, do you have a link?
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See last three comments here: https://www.askaboutmoney.com/threa...-what-prsi-class-applies.231591/#post-1827250
 
S class said:
If you have an ARF, then the drawdowns are classed as self employment income. Provided you drawdown a least 5000 euro per year you will pay prsi at 4% and gain 52 S class contributions per year. This would continue until you reach age 66.
S class Prsi is reckonable for the contributory pension. You could possibly achieve the 520 paid prsi contributions needed to gain a larger pension than you would get from a pro rata pension. You will get these S class contributions regardless of whether you are a pensioner or do some work. These S class Prsi contributions will also allow you to qualify for treatment benefits.
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Can you clarify this, i may have misunderstood what you mean, as 5k per year @ 4% PRSI is only €200 annually. My understanding is you have to pay a minimum of €500 in PRSI annually, to be entitled to benefits such as state contributory pension as outlined here:

PRSI Class S Rates

www.gov.ie www.gov.ie
 
fayf said:
Can you clarify this, i may have misunderstood what you mean, as 5k per year @ 4% PRSI is only €200 annually. My understanding is you have to pay a minimum of €500 in PRSI annually, to be entitled to benefits such as state contributory pension as outlined here:

PRSI Class S Rates

www.gov.ie www.gov.ie
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If you read the link that I mentioned in post # 32 above, you'll see that although this requirement exists, it doesn't appear to be enforced.

If you're not paying €500 annually in PRSI, then what you could do is check your PRSI record after filing your tax return for the relevant year and see if an additional 52 week's reckonable paid PRSI contributions have been added to it. If they have, then all is well, and if they haven't then you have five years to apply to make voluntary PRSI credits to bring your total contributions up to the €500 threshold.
 
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Shirazman said:
If you read the link that I mentioned in post # 32 above, you'll see that although this requirement exists, it doesn't appear to be enforced.

If you're not paying €500 annually in PRSI, then what you could do is check your PRSI record after filing your tax return for the relevant year and see if an additional 52 week's contributions have been added to it. If they have, then all is well, and if they haven't then you have five years to apply to make voluntary PRSI credits to bring your total contributions up to the €500 threshold.
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I see, thanks for explaining this, good to know
 
Just coming back to my own situation. I'm meeting my AVC advisor next week. I'd appreciate any advices/comments on asking about ARFs versus annuities. My reading is that annuity rates have improved and they can be considered an option compared to just a few years ago. All views welcome.

Thanks.
 
Magilla said:
Just coming back to my own situation. I'm meeting my AVC advisor next week. I'd appreciate any advices/comments on asking about ARFs versus annuities. My reading is that annuity rates have improved and they can be considered an option compared to just a few years ago. All views welcome.

Thanks.
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Keep the option of both in mind
 
S class said:
No you won't qualify for a full pension. You need 40 years (2080) Prsi contributions for full pension. With 520 contributions you would be guaranteed 25% of the full pension (66.32 euro per week). If you achieve more than 520 contributions you will get more than 25% of the full pension. (8 years of ARF could get you to about 74 euro per week). At present you would be guaranteed a weekly pension of 106 euro per week with 520 contributions using the averaging calculating method. Unfortunately this method of calculation will probably be phased out before you reach pension age.
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Hoping S class is still active…or anyone else who might know.
So I retired and am drawing down my AVC since January. It is being paid monthly. So my May pension slip says 5 contributions made year to date. Am I losing out- should I be getting the pension weekly to ensure full contribution for the year i.e. 52 weeks? Or are monthly contributions adjusted as required?
Thanks.
 
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