Mixed rate contributions

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clarity

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I am currently age 55 and planning to retire from my public service role at age 60. I am a pre 95 member and paying class D contributions but have 330 paid class A contributions (360 paid plus credited) from temporary service in my early working life. I understand that I should be entitled to a mixed contribution pro rata pension at age 66 but am considering my options to maximise my contributions in order to qualify for a Contributory State Pension.

I am paying PNS in order to have a full occupational pension and lump sum i.e 40 years at age 60 so will have reached revenue maximum tax free threshold therefore an AVC/ARF is not a runner.

Am I correct in thinking that having retired at age 60, if I worked for a week at class A, I could then qualify for change of status credits and pay full rate voluntary contributions for the years up to age 66 in order to gain the maximum number of class A contributions possible for me?
 
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Yes you could do that.

But there is a better way to go.

You could pay more into your AVCs.
You are not limited to maximizing your tax free lump sum. You can make AVCs on the basis of maximizing the shortfall in your PS pension from the 25% surviving spouse pension to the revenue allowed 50% surviving spouse pension.

On this basis you could make maximum contributions to an AVC.
When you retire you can then buy an ARF.

Drawdown 5000 euro from the ARF and you will get 52 reckonable class S contributions per year.

If you decide to do this you should also get the 1 paid class A contribution to gain the change of status credits.

You should also then sign on for Jobseekers credits up to the end of the calender year of your 63rd birthday. This will keep the possibility of qualifying for Benefit Payment 65 open.

You are allowed to have class A credits and class S Prsi in any year.

If you decide to do the voluntary contributions plan you can also keep claiming Jobseekers credits.

You are allowed to have voluntary prsi and class A credits in any year.

Also the Jobseekers credits would allow you to qualify for treatment benefits
Voluntary prsi doesn't allow qualification for treatment benefits.

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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Thanks S class for your helpful response. I am not currently paying into an AVC and as I am a lower rate tax payer and already availing of tax relief on PNS I'm not sure if it would be cost effective to start AVCs but I will look into it.

Otherwise the change of status credits followed by voluntary contributions and signing on for jobseekers credits sounds like a good option.

Many thanks again for your response, it is much appreciated.
 
clarity said:
Am I correct in thinking that having retired at age 60, if I worked for a week at class A, I could then qualify for change of status credits and pay full rate voluntary contributions for the years up to age 66 in order to gain the maximum number of class A contributions possible for me?
Click to expand...

If I was in this situation I would consider a different approach.
As you say, if you work for a week at Class A you should qualify for change of status credits. After that you can apply to sign for credited contributions, which should be at Class A. You will qualify for a pro-rata state pension at 66 but with 260 more reckonable A contributions than you have now. I am not sure but I don't think there is much difference between this and the pension you would get with another 260 paid contributions. Signing for credits is once a year once it has been set up.
 
Very good point.

The advantages of the averaging system will unfortunately be gone when clarity reaches age 66.

The maximum number of reckonable credits allowed is 520.
When pre entry and change of status and any previous Jobseekers credits are counted in, a few years of credits are already there. Then there is up to 6 years from age 60 to 66. So the credits is a useful way to go.

This is the method for calculating pro rata pension.

Pre 95 retiring with 30 years service

Am working part time for the past few years and want to keep doing so until retire at 60. Salary is currently about 32k and on lower tax bracket. When should I start paying into a lump sum AVC to bring upto the 1.5 times salary when I retire. And is the purpose of this so that I can claim 20%...
www.askaboutmoney.com
 
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Ruffian said:
If I was in this situation I would consider a different approach.
As you say, if you work for a week at Class A you should qualify for change of status credits. After that you can apply to sign for credited contributions, which should be at Class A. You will qualify for a pro-rata state pension at 66 but with 260 more reckonable A contributions than you have now. I am not sure but I don't think there is much difference between this and the pension you would get with another 260 paid contributions. Signing for credits is once a year once it has been set up.
Click to expand...
Yes Ruffian, you're probably right and if, as you say signing for credits is just once a year it would make sense to do it that way. Many thanks for your input.
Ruffian said:
If I was in this situation I would consider a different approach.
As you say, if you work for a week at Class A you should qualify for change of status credits. After that you can apply to sign for credited contributions, which should be at Class A. You will qualify for a pro-rata state pension at 66 but with 260 more reckonable A contributions than you have now. I am not sure but I don't think there is much difference between this and the pension you would get with another 260 paid contributions. Signing for credits is once a year once it has been set up.
Click to expand...
 
S class said:
Very good point.

The advantages of the averaging system will unfortunately be gone when clarity reaches age 66.

The maximum number of reckonable credits allowed is 520.
When pre entry and change of status and any previous Jobseekers credits are counted in, a few years of credits are already there. Then there is up to 6 years from age 60 to 66. So the credits is a useful way to go.
Click to expand...

S class said:
Very good point.

The advantages of the averaging system will unfortunately be gone when clarity reaches age 66.

The maximum number of reckonable credits allowed is 520.
When pre entry and change of status and any previous Jobseekers credits are counted in, a few years of credits are already there. Then there is up to 6 years from age 60 to 66. So the credits is a useful way to go.
Click to expand...
 
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