Key Post PRSI and planning retirement

Is there any point several years from applying for contributory pension in getting homemaker credits and years spent in the US addressed on my and my wife’s statements? Or is that something we deal with on application?

For the US years I believe our social security numbers and names of employers is sufficient?
 
AppleVenus said:
Is there any point several years from applying for contributory pension in getting homemaker credits on my and my wife’s statements? Or is that something we deal with on application?
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You could do either. If you are claiming your pensions before the end of the phase out period for the averaging calculation method (2034), it could be useful to know exactly how many Homecarer credits (or deducted years) you are entitled to now.

If for instance you discover that you were only a few contributions short of reaching a higher averaging band, you could possibly make up the shortfall using various methods. (as explained at the start of this thread)
 
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A point of clarification on Class D PRSI employee planning retirement at 60 with a little shy of 40 years service. Can I still acquire (or do you pay €650 for a year?) Class S stamps if unearned income (from say, ARF) is >€5000? A point made below seems to exclude Class D public sector employees (but perhaps not retirees) from this?
Does 'unearned income' comprehend deposit interest (or even ETF gains?) and if so could Class S stamps be acquired this way if interest earned each year were >€5k? Or is ARF the best approach for this? Or could they be combined (as @S class I think mentioned) - 52 stamps from ARF and more from Class A employment?
I have ~290 Class A PRSI on record which (by my estimate) would yield €38/wk SCOP. An additional 6 years of Class S would push that to €80/wk I reckon under TCA (Total Contributions Approach). I think at age 60 I'd fall in the middle of the transition from Yearly Average to TCA so this an approximation.
Alternatively, as I understand, if I instead took up Class A employment in year of retirement, this would convert previous years Class D to Class A and kickstart accumulation of more Class A ahead of 66th birthday? Frankly, I'd prefer the Class S route as enough work done at that point! But if I understand correctly, I could work for a few weeks and then claim (or purchase voluntary?) credits through to 66. Spouse has no PRSI or pension so keen to avail of every opportunity to build my own.

S class said:
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.)
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With your current 290 class A Prsi record. (Presuming these are paid contributions) you are in the position to do various things.

As you state, if you work for minimum of 1 paid class A after retirement you will get change of status credits. You then qualify for voluntary contributions. These cost 500 euro per year and can continue up to contributory pension claim date or age 70.
If you take this option also sign on for Jobseekers credits.
These will gain you treatment benefits and the possibility of qualification for BP 65.


You can also use the class S option.

If you will have an ARF you can take 5k drawdowns from this to gain 52 class S per year.

If your ARF drawdowns are less than 5k you will still gain 52 class if you have other income subject to Prsi, and this income combined with your ARF drawdowns totals 5k.

Bank deposit interest can be subject to Prsi. Normally this only applies to a chargeable person. (a person with non PAYE income greater than 5k) You might have to apply to pay Prsi on bank deposit interest if you are not a chargeable person.

You might also have to notify DSP to add the 52 class S to your record each year.

I haven't personally been in this position so I don't know the exact workings of it.

Definitely it has been clarified that combined income of 5k from an ARF plus other unearned income liable for Prsi entitles a person to 52 class S in any particular year.

If your ARF depleats, you can then make voluntary contributions based on your class S contributions. These cost 650 euro per year. If you end up in this position you could gain 1 class A contribution from employment and make voluntary contributions based on this instead, this would only cost 500 euro per year.

Capital gains from ETFs or gains from anything else are not subject to Prsi, so these would not help you gain class S contributions.

Share dividends are liable for Prsi and can gain you class S contributions.

Class B or D workers cannot gain class S from any other form of earned or unearned income while they are still in class B or D employment

When they retire and have income from their occupational pension (class M Prsi) they still cannot gain class S from unearned income. However if they have any income from an ARF they will get class S from their other unearned income which is liable for Prsi.

This applies regardless of whether a person previously was a class B, D, A, or S employee.

If taking the class S option also remain signed on for Jobseekers credits. Keep any possibility for qualification for BP 65 open.
 
Thanks @S class for the thorough reply. A followup if I may - is it possible to gain >52 PRSI contributions/credits each year? That is, use ARF (or other PRSI reckonable unearned income) to gain 52 Class S contributions while also working/paying voluntary contributions for Class A?
All this is really by way of maximising mine and my wife's retirement income given she has no paid contributions. However, she recently gained long term Carers contributions that happily will give her a small SCOP when 66. As I can't see a PRSA in her name having any advantages (no tax relief) for us, that leaves only the Class A PRSI option to build her (own) income. Were she able to secure employment for a week, would this equally open the door to voluntary contributions for her? This is far from a likelihood but worth knowing the options - particularly now that I've come this far down the rabbit hole!
 
raisinette said:
Thanks @S class for the thorough reply. A followup if I may - is it possible to gain >52 PRSI contributions/credits each year? That is, use ARF (or other PRSI reckonable unearned income) to gain 52 Class S contributions while also working/paying voluntary contributions for Class A?
All this is really by way of maximising mine and my wife's retirement income given she has no paid contributions. However, she recently gained long term Carers contributions that happily will give her a small SCOP when 66. As I can't see a PRSA in her name having any advantages (no tax relief) for us, that leaves only the Class A PRSI option to build her (own) income. Were she able to secure employment for a week, would this equally open the door to voluntary contributions for her? This is far from a likelihood but worth knowing the options - particularly now that I've come this far down the rabbit hole!
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What Prsi contributions does she currently have ?
When did she last receive a class A paid or credited contribution ?

If her only source of income is unearned income and is greater than 5k she would get 52 class S per year. This is only possible if she has no Class A income in that particular year.

There is no advantage in getting more than 52 Prsi contributions in any year, as only 52 will be reckonable.

If she has a minimum of 520 paid class A contributions and within the last 5 years has received a credited or paid class A contribution, she could apply to make voluntary contributions.

If she doesn't have any Prsi contributions in the last 5 years she could work to gain 1 class A contribution and then qualify.

If she previously worked in class B or D employment and has at least 260 B or D contributions, and at least 260 class A contributions she could also qualify for voluntary contributions.
 
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Unfortunately, she has no Class A PRSI contributions (never worked) but I wondered if the recent long term carers contributions (>1200 contributions) would be equivalent and open up the same options as regular Class A stamps.
We rented out a property for 10 years until 7 years ago which I wonder in hindsight we should have sought Class S for it (though property was in my name alone) but the gross rent achieved never exceeded €7k and so her income ‘share’ didn’t exceed €5k (all taxes/PRSI paid at time).
Thanks for the great insights on the labyrinth of PRSI regulations.
 
raisinette said:
Unfortunately, she has no Class A PRSI contributions (never worked) but I wondered if the recent long term carers contributions (>1200 contributions) would be equivalent and open up the same options as regular Class A stamps.
We rented out a property for 10 years until 7 years ago which I wonder in hindsight we should have sought Class S for it (though property was in my name alone) but the gross rent achieved never exceeded €7k and so her income ‘share’ didn’t exceed €5k (all taxes/PRSI paid at time).
Thanks for the great insights on the labyrinth of PRSI regulations.
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Yes, that's unfortunate that the rent wasn't in her name.
She would need 520 class A paid Prsi contributions to get any Contributory pension. If she reached this level she would then be able to use her carers credits.

She cannot use her carers credits to meet the minimum 520 paid credits level.

She has the possibility to reach the 520 paid class A level provided she is currently under age 60. She would need employment for 10 years. This might seem like a daunting prospect for her, but it could be achievable without any major effort if she can get a family member or friend to employ her for 3 hours per week at minimum wage.

This employment could be as simple as babysitting, caring or housework, etc for 3 hours.

It could also be 2 hours work at 19 euro per hour.
Or 1 hour at 38 euro per hour.

Anybody except you (spouse employment is not allowed for Prsi)
could employ her.

Anybody can register as an employer and employ her.

There is information on Revenue.ie about registering as an employer and employing people. Everything is online now and simple to operate. Anybody with moderate computer skills could learn this process very quickly.

She only needs to earn 38 euro per week to gain 1 class A contribution for that week.

If this is her only income she would not be liable for income tax as her PAYE credits would cancel out her tax liability.

She would not pay USC as her income is below the USC threshold.

She would not be liable for employee Prsi.

The only cost would be to her employer.
They would pay employers Prsi at 8.9%.

(This will rise 0.1 percent in October 2025. There will be further increases of 0.15 percent in both 2026 and 2027 followed by an increase of 0.2 percent in 2028).


So the employers Prsi cost would be approximately 3.38 euro per week. 176 euro per year.
 
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This, from the letter by Secretary general of the Department of Social Protection John McKeon, jumped out at me:

It said maintaining the current dependency ratio of pensioners to workers in 2051 would require a working-age population of almost 7.2 million people by 2051. This would be 3.3 million people more than the CSO’s projections.
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The dependency ratio is important on the basis of current taxes pay for current state pensions at any given time. So if the state pension is expected to be a smaller portion of retirement income, do we need to maintain the same dependency ratio? It is just one element that we need to watch. % of expected retirement income from non state streams is another one.
 
I am unclear on one item. As mentioned previously I plan to retire next month at the age of 63 with about 16 paid Class A contributions in 2025. I hope to claim Jobseekers to get the other 23 that I require as unpaid contributions. I will have an ARF of about €20k per year. Will this ARF income affect my chance of getting the Over 65 payment in 2027
 
Tin Soldier said:
Will this ARF income affect my chance of getting the Over 65 payment in 2027
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No.
ARFs are classed as a pension for the purposes of qualification for Benefit Payment 65. If you get the extra 23 Jobseekers credits you will qualify.
 
ClubMan said:
I took a single payment of €22,500 from the PRSA for this year and it was processed through Standard Life "payroll".
My "payslip" details 4 class S1 PRSI contributions but, as mentioned above, I believe that the > €5K drawdown will eventually entitle me to a full 52 contributions for 2024.
I asked DSP about this and received this reply:
Is this what others have experienced or what might be expected (maybe @S class knows :) ?)?
I guess that I'll chase it up early next year but was just wondering if anybody else had been through a similar process?
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Quick update on this in case it helps anybody else...

I checked my PRSI contribution statement today and the erstwhile 4 class S contributions via payroll payment of the €22.5K in one go have been automatically updated to 52 class S contributions for 2024 on the basis that I received > €5K pension income for the full year. So this reconciliation and updating of one's PRSI contribution statement, where necessary, happens automatically early in the following tax year as the helpful person in SW/DSP previously explained to me. It's not actually necessary to chase it up manually. Although it's always worth checking in case of errors or omissions that do need chasing up... ;) 94% towards the 2080 target now. :D
 
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By coincidence I also checked my Contributions record yesterday and also noticed that the various updates for 2024 appear to have completed. This is earlier than previous years when it was usually into the month of April.
 
Yes, the guy that I spoke to told me to expect my record to update around April/May (maybe in line with the old tax year or something?) so maybe it's earlier than normal this year?
 
Hi does anybody know who to correct a mistake on your prsi contribution statement, in 2019 they have me down as 52k which is not correct, so hard to find a number to ring, should I just go into a intreo office and see can they help.
 
I emailed my queries to contributionstatement@welfare.ie and they called me back.

PRSI on ARF count for COAP?

Hi. My wife drew from her ARF in 2022 and is considering doing so in 2023 and possibly each year until 2029 when she will turn 66. Each draw attracts prsi class S. Will this 8 years of class S entitle her to a pro rata Contributory State Pension? She has no other class A afaik, except...
www.askaboutmoney.com
What do you mean by "they have me down as 52k"? Do you mean 52 x class K PRSI contributions?
 
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There are errors on my contribution statement too. I sent an email to that email address on Jan 31st and haven't received a reply of any sort (yet).
 
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