Taxation of pension income

D

Daddy Ireland

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Anyone pick holes in this scenario.

Current annual take home PAYE earner €28k.

Retire now at 60 and this would be my idea to bridge the gap till state pension kicks in at 68.

ARF pot €90K. (AMRF pot €63.5k leave intact until age 68)

Drawdown 12.5% p.a from ARF pot. So € 11,250 between 60 and state pension age of 68.

Utilise from bank savings €16,750 each year from 60 to 68 to match current income.

Am I correct in saying no income tax, USA or PRSI payable or very little at worst ?

Also, I don't mind dipping into savings for 8 years. Get out of rat race.

Reckon at age 68 could live ok on state pension of €12.5k p.a plus dip into savings plus start drawing from AMRF but to a point only that keeps me below tax, USC, PRSI thresholds.

Am I missing anything obvious ?
 
The AMRF is 75 I think.

How much savings have you got?

I think bridging the gap to 68 is one thing, what about the potential 15/20 years after that?
 
Can draw down the (hopeful)increase in the AMRF before 75 I believe.

Am I correct on the taxation aspect ?

Approx 125K in cash will remain from 68 but I would think I will need lass cash over time after age 68.
 
You can draw down 4% of your AMRF each year but no more until age 75. Then you can take as much as you like (but it's taxable, obviously).
 
Probably To get full state pension need to sign fir credits if seeking with work ?
On reflection will prsi on Arf drawdown cover it ? Anyone know ?
 
35 years a PAYE worker. Doubt I would have to sign of for credits between 60 and 68 to get full state pension.
 
MTK
With reference to PRSI Applied to ARF/AMRF Income: Just to relate my experience about deriving income from these products.
I Retired at 65 yrs.in 2014. After careful deliberation I opted for the ARF/AMRF retirement funds, from which to derive an income.I could have gone the Annuity route, but interest rates were and are still Low. So after the set up I was aware of the deductions to be made on the Income. So PAYE ,USC & PRSI were deducted.The Deduction Class for PRSI is "S", and is deducted at the Rate of 4% on the Gross Income.This class of PRSI entitles your PRSI Record to show it is a contribution for the purpose of counting them towards The State Contributory Pension. In other words they are the equivalent of Class "A" Contributions. The Payslip from the company providing your payments will show the Class of PRSI Being used.
1.I think you can commence ARF Draw down at age 60 (Check Revenue website).
2.Request a Statement of your PRSI record from Dept. of Social Protection (DSP) and check to see if your Class S Contributions are being recorded properly.You can go online and request this statement. www.welfare.ie and follow the Links.
3.When you reach the age of 66 The deductions of PRSI cease, and by that stage you should be receiving The State Pension from then on.Provided your contribution record is all in order of course. Check you age to see in what year you will be likely to receive it, as the rules changed recently.
4.Your Payslip from then on, 66, will Show the Class of PRSI you are now on. This will be Class "M". It is Zero Rated, so no deductions are made. It is important that if you keep drawing from your ARF fund, your PRSI record is still updated. This can be important since certain benefits Like Eye Tests,and Dental checkups are available, for Free, currently.

I hope the foregoing will be of some use to you. Please note future Budgets may change what is outlined above.
 
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