Semi State employed Wife just short of 520 PRSI contribution for State Pension

My wife has worked for a semi state since she was 18, she is retiring next year at age 60 with 42 years service and full pension.

In addition to Semi State pension she will have circa 113k in AVCs.

She has paid class D stamp (no PRSI ) all through this employment except for a period prior to semi state employment where she earned 130 Class A1 stamps.

When she retires at 60 she will not work any more. We have rental income which is currently classed as Class K. This will change to Class S from 2025 to 2031 earning her 302 Class S stamps ( 52 * 6 years -10 due to birthday).

In total this gives her 432 combined reckonable contributions.

This is 88 short of the minimum requirement of 520.

Is there any method of bringing her up to 520 stamps prior to turning 66?

She could take up some employment (part-time/ or full-time) temporarily to gain "change of status" credits as detailed below.

"Change of status credits
You may qualify for change of status credits, if you are employed at PRSI Class A and your last paid PRSI contribution was at Class B, C or D. These change of status credits are only taken into account for the State Pension (Contributory).

You can get change of status credits back to the beginning of the tax year in which you start making PRSI contributions at the Class A rate and for the previous tax year. A mixture of PRSI contributions at Class A and PRSI contributions at Class B, C or D may help you to qualify for a mixed insurance pro-rata State Pension (Contributory)."

Thanks for input, my understanding is that Class S stamp is reliant on you not working otherwise it converts to class K which is not reckonable for contributory pension.

If she doesn't qualify for any State Contributory Pension at 66, she can defer until 67, 68, 69 or 70.

If needed, she can also obtain Class S contributions by setting up an ARF with her AVCs and making withdrawals from the ARF.

Presumably you are aware that, as things stand, her contributions will make her eligible for a pro-rata State pension?

If you reach pension age on or after 6 April 2012 and you have a mixed insurance record, you can get a pro-rata pension if you meet the following conditions:

• You have a minimum of 520 PRSI contributions (full-rate and modified-rate)
• You have at least 260 full-rate paid contributions since your entry into insurance
• Adding together a mixture of full-rate contributions and modified-rate contributions, gives you a yearly average of at least 10 from the time you first entered insurance (or 1953, whichever is later) to the end of the tax year before you reach 66. This yearly average condition does not apply if the TCA (or Aggregated Contributions Method) is used
• You do not qualify for a pension under EU regulations or under reciprocal arrangements with other countries (or you only qualify for a pension at a lower rate than this pro-rata pension would give you).

If you meet all these conditions, you may qualify for a pension proportionate to the number of contributions you paid at the full rate. For example, if you worked for 40 years and 10 of those years were in the private sector, you would get one-quarter of the full pension.

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Dave Vanian said:

If she doesn't qualify for any State Contributory Pension at 66, she can defer until 67, 68, 69 or 70.

If needed, she can also obtain Class S contributions by setting up an ARF with her AVCs and making withdrawals from the ARF

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Thanks Dave, so in this case where she is short by 88 contributions ( 52 per year) she can defer taking pension until 1.7 years after 66- so she becomes entitled to it at circa 67.7 years ?

This entitlement is 520/2080 = 25% of state pension at that time.

Is class S (rental income) still allocated after 66 years or does it cease at 66?

Marsupial said:

Presumably you are aware that, as things stand, her contributions will make her eligible for a pro-rata State pension?

• You have at least 260 full-rate paid contributions since your entry into insurance

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Thanks Marsupial, no I was not aware of this, I understood that 520 was the minimum needed to qualify for contributory pension.

If I Understand you correctly, she would qualify based on her 130 A1 stamps & 302 received from Class S rental income meaning she would get 432/2080 = 20.7% of state pension at age 66?

Knuttell said:

Thanks Marsupial, no I was not aware of this, I understood that 520 was the minimum needed to qualify for contributory pension.

If I Understand you correctly, she would qualify based on her 130 A1 stamps & 302 received from Class S rental income meaning she would get 432/2080 = 20.7% of state pension at age 66?

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That's my understanding. But it's advisable to check here or with Citizens Information in a couple of years' time, as the legislation may change.

She needs to plan carefully.
When she starts to drawdown her ps pension she will be in receipt of class M Prsi.
With class M her rental income will remain at class K.
She will need an ARF to maintain her rental at class S.
Provided her combined income from both rental and ARF is at least 5000 euro per year she will gain class S Prsi. So an ARF of 100 euro + rental income of 4900 euro will gain her 52 class S per year.
She can continue to qualify for class S on this basis up to age 70 provided she deferres her contributory pension.
She can easily reach the 520 paid Prsi level.
She should also take up class A employment immediately after retirement from PS employment to gain 1 paid class A contribution and then continue to sign on for class A credits up to age 66. This will give her up to 2 years of change of status credits and help her to qualify for BP 65.

Pro rata calculation method

S class said:

She needs to plan carefully.
When she starts to drawdown her ps pension she will be in receipt of class M Prsi.
With class M her rental income will remain at class K.
If will need an ARF to maintain her rental at class S.
Provided her combined income from both rental and ARF is at least 5000 euro per year she will gain class S Prsi. So an ARF of 100 euro + rental income of 4900 euro will gain her 52 class S per year.
She can continue to qualify for class S on this basis up to age 70 provided she deferres her contributory pension.
She can easily reach the 520 paid Prsi level.

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The combined annual income from rental and ARF will Indeed be at least 5,000 per year.

Thanks S-class, that's very helpful. A few questions if that's ok.

Is there a timing issue here, would she need to have the ARF in place immediately before receiving the semi state pension?

How does this get triggered so it doesn't convert to Class M -is it on foot of a tax return the following year or is there another mechanism?

S class said:

She should also take up class A employment immediately after retirement from PS employment to gain 1 paid class A contribution and then continue to sign on for class A credits up to age 66. This will give her up to 2 years of change of status credits and help her to qualify for BP 65.

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I f we go down the ARF route shouldn't need to do this, after 42 years she's finished with the work lark what does help her to qualify for BP 65 mean?

If she manages to get her ARF set up and makes a drawdown in the calender
year she retires and has the rental income, she would get 52 class S for that year.

When you do your form 11 return for the rental the Prsi is automatically deducted at 4%. The class S is automatically deducted from her ARF. When this combination is seen by DSP, they will apply class S to her rental income.
She will get 52S for the rental and another 52S for the ARF on her Prsi record.
Only 52 out of the 104 class S will be reckonable for each year.

The A class employment will gain her extra change of status credits and these will increase her number of reckonable contributions and therefore increase her contributory pension.

If she was to earn 38 euro per week for 13 weeks in any calender year from age 61 to 65 and continues to sign on for credits she would get BP65 (benefit payment 65) for 52 weeks at a rate of 230 euro per week. Only 3 hours work at minimum pay per week would be necessary.

Thanks a lot for that great detail S Class, she retires in Oct next year so will push to have the ARF in place for that month. Presumably setting up ARF is relatively straight forward so dont anticipate and delays.

The ARF can be slow enough to be set up. It would be a good idea if she gets in touch with a broker before she retires and gets inquires going. She might be able to fill out the application forms before retirement so there is minimum delay in the setting up.

Thanks again for that insight S Class, you've been really super helpful!