Post 1995 Supplementary Pension Query

[PatMu]

Good morning

I have a query regarding eligibility for a Supplementary Pension between 60 (NRA) and the Contributory state pension at 66.

I will only have 20 years service at age 60 (Late entrant) but would like to retire at that point currently.

To fund this I have been paying into a AVC PRSA for many years and my working assumption was that

60-66 Occ Pension, Supplementary and Drawdowns from AVC PRSA Pot (in whatever manner most efficient)

66 Onwards Occ Pension, Contrib Old age Pension and a Deferred Pension from Previous Employment

However I have seen a couple of references on various Pension related threads which indicate that eligibility to Supplementary Pension would be impacted by paying PRSI between the age of 60-66 for post 95 entrants.

Have I taken this up correctly and is there a possibility that drawdowns from my AVC PRSA could impact my eligibility to a Supplementary Pension, clearly this is not the case for a pre 1995 entrant so I was hoping to get views and thoughts in case I need to rethink my approach at this point.

Thanks for reading.

 

[Allpartied]

My understanding is that drawdowns from an AVC fund are defined as Approved Retirement Funds ( ARF) and as such are not subject to A Rate PRSI. These drawdowns may be subject to PRSI if they reach a certain threshold ( 5000 Euros per annum?) . However, this is S Rate PRSI, which is the category applied to the Self Employed and as such it should not effect your Supplementary Pension.

The good news is that if you draw down a minimum of 5000 Euros per annum, from your ARF, and make the S Class contributions, it will count as a fully funded contribution year for your state pension.

ARF Withdrawals and your PRSI Record - PPS Financial Planning

Back in November 2018 Deputy Michael McGrath received clarification from the Minister for Employment Affairs and Social Protection (Regina Doherty) as to whether PRSI paid from ARF withdrawals are reckonable for the purposes of the State Pension. Regina advised “Distributions from ARFs fall...

ppsfinancial.ie

 

[S class]

There was a lot of confusion regarding ARFs and qualifying for 65s benefit in previous threads.

There was legislation passed last year to clear up anomalies for self employed people who have an ARF and want to claim 65s benefit.

As a result of this and some information submitted by other posters the following became clear.

There are two completely separate systems of Prsi relating to claiming Jobseekers benefit and 65s benefit i.e. class A and class S.

A person can be in either or both of these systems for any period of time.

A person can be employed in one system and can be a Jobseeker in the other system at the same time. This person can be employed in one system and have earnings, while at the same time they can be unemployed in the other system and claiming Jobseekers benefit.

What this means for you, is that you can have an ARF and gain 52 class S contributions in the class S system. At the same time you can be classed as unemployed in the class A system.

As you are unemployed in the class A system you should be okay for qualifying for the supplementary pension.

I am not 100% sure about this but I am 100% sure that an ARF of any size does not prevent a person who qualifies under the class A rules from receiving 65s benefit.