Contributory state pension

Pinky22

Registered User
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12
I’m looking to retire at 50. My pension will be worth 850k (hopefully). If I draw down 200k, and then take an income of 13k, I will still be paying prsi. So will this ensure I get the full state pension?
 

Pinky22

Registered User
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12
Thanks RedOnion, I didn’t realise that. I thought as I am under 66 that I would be treated as self employed.
 

NoRegretsCoyote

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3,070
It can make sense to become a landlord in your circumstances.

If you have rental profits of at least €5k per year you pay Class S PRSI (€500 flat rate or 4%, whichever is higher). This will give you 52 contributions a year for state pension eligibility.

A €200k apartment will almost certainly generate rental profits high enough for you to pay PRSI on.
 

Pinky22

Registered User
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12
That’s interesting, but not keen on becoming a landlord. Can I pay class S voluntarily?
 

50andOut

Registered User
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140
Since you can live off substantial savings prior to drawing down the pension (as per your earlier money maker post), you could register for jobseekers benefit/allowance. Whilst the means test would mean no allowance would be paid you will get credits.

You are expected to be looking and available for work though.

Maybe a part time job would be a better option, keep you busy and continue to maintain the required contributions?

50andO
 

Marc

Registered User
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1,481
In these situations we generally set up an investment account to generate €5000pa of dividend income that is subject to class S PRSI and makes the credits for you.

no need for the hassle and additional risk of renting a property.

About €300k should do the trick.

 
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Pinky22

Registered User
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12
Thank you for your answers. So my options are an investment income or rental profit greater than 5k to get class S, or sign on, or work part time earning greater than 38 euro per week to get employer class A.
Again thanks a million
 

Ndiddy

Registered User
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157
And as per OP, if they are drawing down 200k, does it not have to become an ARF? I was also thinking along the same lines but a bit sooner...leave work at 45, live off savings until age 50 and then access the 25% lump sum. I thought that between jobseekers for awhile and homemaker's credit, PRSI would be covered until age 50.....
 

bstop

Registered User
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146
Thank you for your answers. So my options are an investment income or rental profit greater than 5k to get class S
If you are getting an occupational pension or an annuity you will be classed as M prsi.
When you have income classed as M prsi and your only source of other income is unearned then this unearned income will be classed as K prsi. This means that your rental and investment income will be K class prsi which is not reconable for state pension. If you have an ARF then you will pay S class prsi on the ARF and also on the other unearned income. You can make voluntary contributions at Class S.
 
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LiferT

Registered User
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18
Hi

Income from an ARF, taken while under 66 years of age, is subject to Class S PRSI, and as such is reckonable (if over €500 p.a.) as a contribution towards the state pension

LF
 

Lifeinthesun

Registered User
Messages
10
Hi

Income from an ARF, taken while under 66 years of age, is subject to Class S PRSI, and as such is reckonable (if over €500 p.a.) as a contribution towards the state pension

LF
I am also in the same situation as pinky, 55 years old and hoping to retire early next year. Take my 25 per cent lump sum and 4 per cent per year from my ARF. I have worked for the last 35 years paying prsi and this was a concern to me regarding my pension! With the 10 plus years gap between retirement and oap, but by reading above I should be covered!!
 

Shirazman

Registered User
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198
You cannot make voluntary contributions at Class S.

I'm rather taken aback to read this, having done exactly that in 2015!

(I'm a Class S PRSI person who didn't withdraw anything from my ARF in 2015; I later applied to DSP to make a voluntary contribution for that year and was allowed to!)
 
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Early Riser

Registered User
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1,110
"If you paid PRSI at Class S you pay a special flat rate of €500. The social insurance payments you may be entitled to by making voluntary contributions at this rate are:
  • State Pension (Contributory)
  • Widow’s, Widower’s or Surviving Civil Partner's (Contributory) Pension
  • Guardian’s Payment (Contributory)"
 

bstop

Registered User
Messages
146
Sorry about that Shirazman. My mistake you can make voluntary S contributions. I made them myself a few years ago. I got confused, it is credits that you cannot get for S class contributions.
 

Pinky22

Registered User
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12
Ok, so from the citizens information, it looks like I can make voluntary contributions based on the previous tax year, at 6.6% of reckonable.
I’m class A currently, and I’m not sure what reckonable is, but surely it would be better to sign on, then get a part time job, and then finish up, as the 6.6 % is based on the last year?
 

bstop

Registered User
Messages
146
Another thing to be wary of if you stop working and have unearned income from rentals or investments.
If the unearned income is your only source of income and is over 5000 euro per year you will get 52 S class contributions per year. If however you.get a job and pay at least one A class contribution and this is your only other source of income, all your unearned income will then convert to K class contributions which are not reconable for State pension. I got caught out by this a few years ago by working for two weeks at A class. At the end of the year I had 52 K class and 2 A class contributions. This was really annoying as I had paid well over 500 euro on K class stamps that have no benefits.
 
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