Dr Strangelove
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As of 2014 Class S PRSI is charged on all “unearned income” at a rate of 4% or €500, whichever is higher. Unearned income mainly consists of profits from rental properties, deposit interest, and dividends on investments.
This probably raises a lot of PRSI from rich people but it also allows out-of-work people who only have a small amount unearned income to build up a state pension entitlement. How?
Basically an adult who does not work and has as little as €5,000 in annual unearned income will pay just €500 per annum in Class S PRSI and build up an entitlement to a contributory state pension at 66 worth €13,000 a year.
This seems very generous, and has the wrong set of incentives: don’t work but still get a contributory state pension like someone who does.
Is policy likely to change on this?
If so, how are rules likely to be tightened?
I started a new thread on this as it was triggered by this money makeover discussion https://www.askaboutmoney.com/threads/58-early-retirement-multiple-questions.236451/
This probably raises a lot of PRSI from rich people but it also allows out-of-work people who only have a small amount unearned income to build up a state pension entitlement. How?
Basically an adult who does not work and has as little as €5,000 in annual unearned income will pay just €500 per annum in Class S PRSI and build up an entitlement to a contributory state pension at 66 worth €13,000 a year.
This seems very generous, and has the wrong set of incentives: don’t work but still get a contributory state pension like someone who does.
Is policy likely to change on this?
If so, how are rules likely to be tightened?
I started a new thread on this as it was triggered by this money makeover discussion https://www.askaboutmoney.com/threads/58-early-retirement-multiple-questions.236451/