outofmymind
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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: For self employment (earned or unearned) it is class M for the full year of your 66th birthday. For PAYE it only converts to class M after your 66th birthday. If you are paid monthly your earnings for the month of your birthday will be class M. Earnings before this will not be class M. The same probably applies to weekly earnings.
1b. Any idea what happens to voluntary contributors in the year of their 66th birthday? Every extra week may make a difference.
Answer: No voluntary contributions are allowed for this year. There is an exception to this rule, if the voluntary contributions are needed to reach the 520 minimum full rate paid contributions, in order to qualify for the contributory pension. This would be of benefit to people with class B or D contributions and less than 520 paid class A or S approaching retirement age.
The rest of this relates to those retiring/scaling back early:
2. No of weeks/minimum contribution in a year as paye worker on class A for it to count for contributory state pension?
Answer: Minimum earnings 38 euro per week. Maximum 52 weeks per year. So if you earn 38 euro or more per week as a PAYE worker you get one class A contribution for each week worked, and up to 52 of these class A contributions per year are reckonable.
3. Minimum contribution in a year as self employed on class S for it to count for contributory state pension?
Answer: 500 euro minimum contribution. This contribution is only deducted if there are minimum earnings of 5000 euro.
4. PRSI class for share income is ??
Answer: This can be either class S or class K. See question 9.
4a. Does this give a credit for contributory state pension?
Answer: Depends - See question 9.
5. PRSI class for rental property income is ??
Answer: This can be either class S or class K. See question 9.
5a. Does this give a credit for contributory state pension?
Answer: Depends - See question 9.
6. PRSI class for defined benefit pension if early retirement is taken is ??
Answer: Any pension taken as an annuity or occupational pension will be class M. This is not reckonable.
7. PRSI class for arf pension if early retirement is taken is ??
Answer: A pension taken as an ARF of a minimum of 5000 euro per year up to age 66 is reckonable. (class S). It doesn't matter whether this is taken weekly/ monthly/ or yearly. After age 66 it changes to class M. If you had an ARF in the year of your 66th birthday and made drawdowns of over 5000 euro before the month of your 66th birthday you should get 52 class S contributions for that year. There is an anomaly on the operation of ARFs. They are S class but the prsi is collected under the PAYE system.
8. PRSI class for annuity pension if early retirement is taken is ??
Answer: Any pension taken as an annuity or occupational pension will be class M. This is not reckonable.
9. I know there is something odd with the class changing depending on some combination of the above existing in a single tax year. Can anyone enlighten us??
Answer: For any Prsi contributions year:
Answer: The requirement for the 65s benefit is having at least 39 reckonable class A contributions in the year of your 63rd birthday. At least 13 need to be paid class A contributions. The remainder can be credited class A contributions.
11. Can eligiblity for this over65s benefit be made up any other way?
Answer: There is some flexibility regarding when the contributions need to be made. This is explained in the "Operational guidelines for 65s benefit". i.e. They do not necessarily have to be made during the year of the person's 63rd birthday.
Answer: Yes you can do that. Having a pension makes no difference. You can still be available for and seeking work as a pensioner up to age 66.
11b. Is someone who has the required class A contributions for the year that they are 63 able to have eg part time self employed income in the year they are 65+ and claim over65s benefit at the same time??
Answer: They can be in self employment and also in PAYE employment if the employments meet the rules for subsidiary employment. These are slightly complex. They can be found in the "Operational Guidelines for 65s benefit".
12. How long do you get reckonable PRSI stamps from signing on for credits when you stop work ?
Answer: Until you are 66.
This age limit might be raised for people who defer their contributory pension beyond age 66. See this link: Changes to the State Pension (Contributory) in Ireland. However a maximum of 520 credits are reckonable when using the TCA calculation method. If Home Caring Periods are involved a maximum of 20 years of reckonable credits are allowed. There is no mention of a limit of 520 reckonable credits when using the Averaging calculation. Maybe the limit applies or maybe not? See this link: How to calculate your State Pension (Contributory) rate
13. If you are signing for credits and not working do you need to be available for and seeking work?
Answer: Yes. Anybody resident in the state, in good health and not otherwise occupied, as in for instance, fulltime caring, can state that they are available for work. Seeking work can be anything from reading the situations vacant page of the newspapers. You will be required to agree to these rules when signing on.
In practice retirees will not be pursued to seek employment and anybody over age 62 is not required to engage with Social Protection in any job placements or training schemes.
14. For someone retiring early, particularly pre-95 public sector employees taking early retirement, they may not have a full pension from their employment, and paid Class D for many years. Can they top this up to gain some Contributory pension by having with other reckonable Class A or Class S contributions?
Answer: Yes, also most of these employees will have a few years of reckonable paid contributions from pre-establishment. There are a few Prsi milestones that these people can aim for....
Answer: Provided someone has their 52 S contributions for their 63rd year, they can then cease self employment any time up to age 65. If they cease work before they reach age 65 they would probably also qualify for Jobseekers benefit (self employed) for 9 months. To qualify for the Benefit Payment for 65 Year Olds a person must have fully ceased employment or self-employment. If a person is still in employment or self-employment they should be advised to apply for Jobseeker’s Benefit or Jobseeker’s Benefit (Self-Employed). If a person commences casual or part-time work while in receipt of Benefit Payment for 65 Year Olds, their claim must be closed and the person should be advised to apply for Jobseeker’s Benefit or Jobseeker’s Benefit (Self-Employed).
These are the rules for a self employed person who also has an ARF.
Anything else that I have missed??
Thanks everyone.
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: For self employment (earned or unearned) it is class M for the full year of your 66th birthday. For PAYE it only converts to class M after your 66th birthday. If you are paid monthly your earnings for the month of your birthday will be class M. Earnings before this will not be class M. The same probably applies to weekly earnings.
1b. Any idea what happens to voluntary contributors in the year of their 66th birthday? Every extra week may make a difference.
Answer: No voluntary contributions are allowed for this year. There is an exception to this rule, if the voluntary contributions are needed to reach the 520 minimum full rate paid contributions, in order to qualify for the contributory pension. This would be of benefit to people with class B or D contributions and less than 520 paid class A or S approaching retirement age.
The rest of this relates to those retiring/scaling back early:
2. No of weeks/minimum contribution in a year as paye worker on class A for it to count for contributory state pension?
Answer: Minimum earnings 38 euro per week. Maximum 52 weeks per year. So if you earn 38 euro or more per week as a PAYE worker you get one class A contribution for each week worked, and up to 52 of these class A contributions per year are reckonable.
3. Minimum contribution in a year as self employed on class S for it to count for contributory state pension?
Answer: 500 euro minimum contribution. This contribution is only deducted if there are minimum earnings of 5000 euro.
4. PRSI class for share income is ??
Answer: This can be either class S or class K. See question 9.
4a. Does this give a credit for contributory state pension?
Answer: Depends - See question 9.
5. PRSI class for rental property income is ??
Answer: This can be either class S or class K. See question 9.
5a. Does this give a credit for contributory state pension?
Answer: Depends - See question 9.
6. PRSI class for defined benefit pension if early retirement is taken is ??
Answer: Any pension taken as an annuity or occupational pension will be class M. This is not reckonable.
7. PRSI class for arf pension if early retirement is taken is ??
Answer: A pension taken as an ARF of a minimum of 5000 euro per year up to age 66 is reckonable. (class S). It doesn't matter whether this is taken weekly/ monthly/ or yearly. After age 66 it changes to class M. If you had an ARF in the year of your 66th birthday and made drawdowns of over 5000 euro before the month of your 66th birthday you should get 52 class S contributions for that year. There is an anomaly on the operation of ARFs. They are S class but the prsi is collected under the PAYE system.
8. PRSI class for annuity pension if early retirement is taken is ??
Answer: Any pension taken as an annuity or occupational pension will be class M. This is not reckonable.
9. I know there is something odd with the class changing depending on some combination of the above existing in a single tax year. Can anyone enlighten us??
Answer: For any Prsi contributions year:
- Person aged under 66 whose only source of income is unearned and has an income of at least 5000 euro per year gains 52 S class.
- Person with PAYE income and unearned income will gain class K on their unearned income. This applies no matter how much unearned income they have.
- e.g. they could have one class A contribution and 100,000 euro unearned income and the unearned income is subject to class K.
- Person in public sector employment, class B or D ( or any other modified class) with unearned income will gain class K on the unearned income.
- Person in receipt of an occupational pension or annuity at class M will gain class K on unearned income.
- Person aged under 66 with an ARF + unearned income. If the combination of ARF + unearned income is at least 5000 euro they will gain 52 class S. (This person can also have PAYE income + occupational pension or annuity.)
- Person aged under 66 with ARF income of at least 5000 euro will gain 52 class S.
- (This person can also have PAYE income + occupational pension or annuity.)
- People in any of these categories (except for the modified class contributors B, D etc) can also claim class A credits if they meet the qualification rules. The class A credits will not cause any of their class S to convert to class K.
- Unearned income is rental or investment income.
- There is a major advantage for people aged under 66 in some of these categories if they have an ARF.
- Class S and Class A are reckonable for state contributory pension. Both of these are available up to age 66.
- Class K and class M are not rekonable for state contributory pension.
Answer: The requirement for the 65s benefit is having at least 39 reckonable class A contributions in the year of your 63rd birthday. At least 13 need to be paid class A contributions. The remainder can be credited class A contributions.
11. Can eligiblity for this over65s benefit be made up any other way?
Answer: There is some flexibility regarding when the contributions need to be made. This is explained in the "Operational guidelines for 65s benefit". i.e. They do not necessarily have to be made during the year of the person's 63rd birthday.
- If a person does not have a minimum of 39 A contributions in the year of their 63rd birthday they can still qualify if they have a minimum of 26 paid A contributions in the year of their 62nd birthday and also a minimum of 26 paid A contributions in the year of their 63rd birthday.
- If a person only has at least 39 credited contributions in the year of their 63rd birthday, they could still qualify.
- They would need to have at least 13 paid class A contributions in any one of the following years: the year of their 61st, 62nd, 64th or 65th birthday.
- If they cannot qualify using any of the above they might also be able to qualify based on their class S Prsi contributions. The rules for class S are complex and are explained in the Operating guidelines for 65s benefit.
Answer: Yes you can do that. Having a pension makes no difference. You can still be available for and seeking work as a pensioner up to age 66.
11b. Is someone who has the required class A contributions for the year that they are 63 able to have eg part time self employed income in the year they are 65+ and claim over65s benefit at the same time??
Answer: They can be in self employment and also in PAYE employment if the employments meet the rules for subsidiary employment. These are slightly complex. They can be found in the "Operational Guidelines for 65s benefit".
12. How long do you get reckonable PRSI stamps from signing on for credits when you stop work ?
Answer: Until you are 66.
This age limit might be raised for people who defer their contributory pension beyond age 66. See this link: Changes to the State Pension (Contributory) in Ireland. However a maximum of 520 credits are reckonable when using the TCA calculation method. If Home Caring Periods are involved a maximum of 20 years of reckonable credits are allowed. There is no mention of a limit of 520 reckonable credits when using the Averaging calculation. Maybe the limit applies or maybe not? See this link: How to calculate your State Pension (Contributory) rate
13. If you are signing for credits and not working do you need to be available for and seeking work?
Answer: Yes. Anybody resident in the state, in good health and not otherwise occupied, as in for instance, fulltime caring, can state that they are available for work. Seeking work can be anything from reading the situations vacant page of the newspapers. You will be required to agree to these rules when signing on.
In practice retirees will not be pursued to seek employment and anybody over age 62 is not required to engage with Social Protection in any job placements or training schemes.
14. For someone retiring early, particularly pre-95 public sector employees taking early retirement, they may not have a full pension from their employment, and paid Class D for many years. Can they top this up to gain some Contributory pension by having with other reckonable Class A or Class S contributions?
Answer: Yes, also most of these employees will have a few years of reckonable paid contributions from pre-establishment. There are a few Prsi milestones that these people can aim for....
- Reach 260 reckonable paid prsi contributions. This will qualify them for a pro rata pension.
- Reach 520 reckonable paid prsi contributions. This will qualify them for a contributory pension calculated using either Averaging or TCA method. They are at Average 10 contributions level at this stage.
- Rounding up is used in the averaging method. e.g. A person with a yearly average of 9.5 will be rounded up to 10 and a person with a yearly average of 14.5 will be rounded up to 15.
- Reach the late 600s to 750 level. (this can include reckonable credited contributions).
- If they started working at age 16. 750 reckonable paid or credited contributions would allow then reach the Average 15 contributions level.
- If they started working at age 20. 690 reckonable paid or credited contributions would allow then reach the Average 15 contributions level.
Answer: Provided someone has their 52 S contributions for their 63rd year, they can then cease self employment any time up to age 65. If they cease work before they reach age 65 they would probably also qualify for Jobseekers benefit (self employed) for 9 months. To qualify for the Benefit Payment for 65 Year Olds a person must have fully ceased employment or self-employment. If a person is still in employment or self-employment they should be advised to apply for Jobseeker’s Benefit or Jobseeker’s Benefit (Self-Employed). If a person commences casual or part-time work while in receipt of Benefit Payment for 65 Year Olds, their claim must be closed and the person should be advised to apply for Jobseeker’s Benefit or Jobseeker’s Benefit (Self-Employed).
These are the rules for a self employed person who also has an ARF.
- the person has sustained the loss of self-employment in their usual occupation (A person’s usual occupation is one where the type of work a person ordinarily performs for most of the time is by virtue of experience and/or training and is within a particular field of work).
- and the loss of the usual self-employment occurred since the beginning of the second last complete calendar year before the year in which the application is made. For example, in order to qualify for a claim made in 2022, the applicant’s usual self-employed business must have closed on or after 01 January 2020. If the usual business closed before this date, JBSE and consequently BP65 is not payable.
Anything else that I have missed??
Thanks everyone.
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