Information on pension calculations after age 66.

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S class

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If a customer decides to defer their pension, will the years worked after age 66 be counted as part of their yearly average?

If a customer chooses to defer their pension, the number of extra years worked will add to the divisor for the yearly average. (e.g. if a customer has 50 years cons at 66, the divisor is 50, so the same customer will have 54 years cons at 70, but the divisor will be 54, and will bring down the yearly average.)
54 years is the maximum possible divisor. (Started in employment at age 16 and deferrs pension to age 70).



Can a customer continue to pay voluntary contributions after age 66 if they defer their pension?

As there are different classes of voluntary contributions, with only some counting towards the State Pension, it is best to check with the Waterford team on this, as they can answer this question with consideration to individual circumstances. The team can be contacted at (01) 471 5898 or 0818 690 690.



If a customer deferred their pension, are the contributions paid in the year they make their application counted?

If you are calculating using Total Contributions (%age of the 2080 cons), these contributions will be counted. All contributions up to the 66th birthday or the deferred Drawdown date will be counted.



If you are calculating your pension using the Yearly Average method, these contributions are dealt with differently. These cons are only counted if they are needed to bring the customer up to 520 contributions (the minimum number of contributions needed in most cases for a Contributory Pension).

  • For example, if a customer is 66 on 1/6/2024, their contributions are counted until 31/12/2023 (the previous tax year). If the customer has over 520 contributions at that point, the contributions from January to June are not counted.
  • If a customer has under 520 cons at 31/12/2023, then the contributions from January 2024 to 1st June 2024 are counted to see if it will bring them up to the 520 cons and therefore be eligible to qualify for the State Pension Contributory.
  • This will work the same way if that same customer defers to say 68 years of age and the Drawdown date is now 1/6/2026.
  • The contributions between January 2026 and 1/6/2026 will only be counted to satisfy the requirement of 520 cons. If the person already has 520 contributions or above by 31/12/2025, the contributions between January 2026 and 1/6/2026 will not be counted.
 
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Using the info above....

A person reaching age 66 in 2024 with a divisor of 50 and 950 cons would have an average of 19.

If they retired this year they would qualify for a pension of 180.70 euro per week.

If they deferred their pension to 1st January 2025 and gained an extra 45 cons they would then have a divisor of 51 and 995 cons and would have an average of 19.5.
This would be rounded up to 20 and they would qualify for a pension of 236.10 euro per week. They would have to factor in the loss of 10% of the difference between their total cons method calculation because of the phasing out of the averaging calculation method.

This would reduce their pension by approximately 10 euro to 226.00 euro per week.

They would gain an extra 2355 euro in their yearly pension.
They would loose up to one years pension, a maximum loss of 9396.40 euro.
The maximum break even time would be approximately 4 years.
This time would be much shorter if their birthday falls later in the year.

There is a larger gap in pension payment between average 10 (110.80 euro) and average 15 (180.70 euro), so there is an opportunity for a person nearing average 14.5 to deferr their pension claim.

If you are claiming the contributory pension shortly and are advantaged by the averaging calculation method it would be well worthwhile getting out your calculator and your Prsi contributions record and doing some homework.

This information could be of advantage to pre 95 public sector workers who have taken early retirement.
 
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S class said:
Using the info above....

A person reaching age 66 in 2024 with a divisor of 50 and 950 cons would have an average of 19.

If they retired this year they would qualify for a pension of 180.70 euro per week.

If they deferred their pension to 1st January 2025 and gained an extra 45 cons they would then have a divisor of 51 and 995 cons and would have an average of 19.5.
This would be rounded up to 20 and they would qualify for a pension of 236.10 euro per week. They would have to factor in the loss of 10% of the difference between their total cons method calculation because of the phasing out of the averaging calculation method.

This would reduce their pension by approximately 10 euro to 226.00 euro per week.

They would gain an extra 2355 euro in their yearly pension.
They would loose up to one years pension, a maximum loss of 9396.40 euro.
The maximum break even time would be approximately 4 years.
This time would be much shorter if their birthday falls later in the year.

There is a larger gap in pension payment between average 10 (110.80 euro) and average 15 (180.70 euro), so there is an opportunity for a person nearing average 14.5 to deferr their pension claim.

If you are claiming the contributory pension shortly and are advantaged by the averaging calculation method it would be well worthwhile getting out your calculator and your Prsi contributions record and doing some homework.

This information could be of advantage to pre 95 public sector workers who have taken early retirement.
Click to expand...


Rejigging that worked example for my missus, whose 66th birthday will be in late December 2026, reveals that if she decides not to claim her SCP until 01-01-2027 - literally 10 days later! - and is able to pay VCs for 2026, then she'll be able to move from the 15-19 Band up to the 20-29 Band, which as you say, is worth an extra 20% a week. Even with the cost of the VCs and the phasing out of the YAM, it seems like a complete no-brainer to me!
UPDATE: I've calculated that reaching break-even will take less than 18 months.

One possible complication that may arise is how early in 2027 she'll be able to pay VCs for 2026? But even with that delay, she'll still be paid full arrears when those VCs go through.
 
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Hi lads,

A quick question for you - I'm a pre 95 civil servant but have 217 PRSI contributions before I started work there. I have an AVC and I intend to retire at 62.5 so the ARF will contribute some S class stamps so I figure I will have some 602 PRSI stamps. Will I get a SW pension based on this (roughly 29% of the current pension of about €4,500 per annum based on the current rules?

Best,

Opus 2018
 
@Opus2018 Yes a mix of 602 reckonable paid contributions gives you €4504.

Try to get at least 1 class A contribution from employment shortly after you cease pre 95 employment this will get you extra reckonable change of status credits to boost your COAP.

These credits will fill in for your modified class Prsi in your retirement year and the previous full year. Your ARF will provide class S from your retirement date up to the end of your retirement year and beyond this up to age 70 max.

With change of status credits you will get 52 Reckonable Prsi contributions for your retirement year.(Mix of class S and credits)

You should also have pre entry credits. These are not indicated on your psri contributions record, but will be included in your COAP calculation.

Also sign on for credits alongside claiming Class S from your ARF. These are useful if you want to claim Benefit payment 65.

More information in these threads.

Key Post - PRSI and planning retirement

This Key Post is in the form of a FAQ where I don't know many of the answers. I will update the post as I get answers. 1. PRSI payable on reaching state pension age Answer: 0 (Class M) 1a. Does this relate to the start of the tax year in which you become 66? Or to after your birthday? Answer...
www.askaboutmoney.com

Pre 95 public sector workers and Prsi until age 70.

This category of workers may not be able to qualify for the contributory pension at age 66. If they don't qualify they will remain liable to Prsi on rental and investment income up to age 70. They will pay class K Prsi on their unearned income. This is charged at 4% and gives no reckonable...
www.askaboutmoney.com
 
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Hi Robovac rider,

Thanks so much for this - could you tell me a bit more about pre-entry credits and would it be better to retire before year's end, draw down 4$ of the AVC and claim extra credits?

Many thanks again!

Opus2018
 
Opus2018 said:
could you tell me a bit more about pre-entry credits
Click to expand...

Credited social insurance contributions

A credited social insurance contribution is a contribution given to you and recorded on your social insurance record. This page explains the rules on credited contributions for students, carers, homemakers, voluntary development workers and people who retire early.
www.citizensinformation.ie www.citizensinformation.ie

Pre-entry credits when you start work​

When you start work you are automatically given pre-entry credits. These credits are normally given once. They cover you from the beginning of the tax year in which you start work, up to the actual date you start work. The credits also cover you for the 2 previous income tax years.

Your pre-entry credits can help you to qualify for the following social insurance payments:
Pre-entry credits can also help you qualify for the State Pension (Contributory). However, the credits will only cover you from the beginning of the tax year in which you start to work up to the actual date you start work.

Pre-entry credits are not given at Class B, C, D, J and S.
Click to expand...
 
Thanks Clubman,

So if I started work in 1985 and say I earned 17 stamps from June of that year, I'd get added stamps from the start of the year?

Best,

Opus2018
 
@Opus2018

Check out this thread for strategies for your retirement year.

Key Post - How pre 95 public sector early retirees can maximise their potential retirement year Prsi contributions,.

This information relates to modified rate Prsi employees. Typically class B or class D. When these employees cease paying modified Prsi, opportunities open for them to pay for, or receive free of charge reckonable Prsi contributions. They are entitled to 'change of status' credits if they...
www.askaboutmoney.com
 
Hi Robovac rider,

Thanks so much for this! :) So say I decide to retire on 31/12/2028. Should I earn 1 class A stamp in early 2029 before drawing down my AVC or it is sufficient that I simply draw down my AVC in January 2029? or.....

Should I retire in 2028 say Q4 and repeat the process above? Does this get me an extra 52 stamps?

Best,

Opus2018
 
@Opus2018 Ideally if you could retire late into 2028 and get 1 class A contribution before the end of 2028, you could maximise your Reckonable Prsi contributions.

This plan would give you 52 reckonable change of status credits for 2027 and 51 reckonable change of status credits + 1 reckonable class A contribution for 2028. Then start your ARF in 2029 to get 52 class S for 2029 onwards.

If you wait until 2029 to get your 1 class A contribution. You will miss out on 52 reckonable credits for 2027.

With this plan you would get 52 COS credits for 2028. For 2029 you would get 51 COS credits + 1 class A. If you then begin your ARF in January 2029 you will also get 52 class S for 2029. But these will overlap with your 51 COS credits in 2029. So this effectively wastes the COS credits for 2029.

In any situation simply starting your ARF will not generate COS credits. To qualify for COS credits you must have at least 1 class A contribution.

You should consider signing on for Jobseekers credits after your class A employment in order to leave the possibility for qualification for Benefit payment 65 open.

You are allowed to claim Jobseekers credits alongside receiving class S from your ARF.
 
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Robovac rider said:
@Opus2018 Ideally if you could retire late into 2028 and get 1 class A contribution before the end of 2028, you could maximise your Reckonable Prsi contributions.

This plan would give you 52 reckonable change of status credits for 2027 and 51 reckonable change of status credits + 1 reckonable class A contribution for 2028. Then start your ARF in 2029 to get 52 class S for 2029 onwards.

If you wait until 2029 to get your 1 class A contribution. You will miss out on 52 reckonable credits for 2027.

With this plan you would get 52 COS credits for 2028. For 2029 you would get 51 COS credits + 1 class A. If you then begin your ARF in Jan uary 2029 you will also get 52 class S for 2029. But these will overlap with your 51 COS credits in 2029. So this effectively wastes the COS credits for 2029.

In any situation simply starting your ARF will not generate COS credits. To qualify for COS credits you must have at least 1 class A contribution.

You should consider signing on for Jobseekers credits after your class A employment in order to leave the possibility for qualification for Benefit payment 65 open.

You are allowed to claim Jobseekers credits alongside receiving class S from your ARF.
Click to expand...

Very useful Robovac, I am coming to an age where this all becomes relevant! May 2030 is my state retirement date.
 
Hi Robovac rider,

Again thank you so much for this info - so I should really retire in late 2028, get one A1 stamp before the end of the year, draw down say 5,000 from an ARF, pay over 650 to ensure my class S stamps of which hopefully I get 51 stamps for 2028 (what about the CS stamps I paid in 2028 though? I thought the maximum number of stamps can only be 52 in one year.). Do I also get 52 stamps for 2027 as well??

Then carry on paying Class S stamps from 2029 on? If my calculations are correct I think I'd get some 468 stamps until age 70, add to the stamps I already have and have some 685 stamps so that should net me just under 120 per week (6200 odd per annum). Would this be correct?

Best,

Opus2018
 
@Opus2018 There are different strategies you could plan.

1. Firstly you could aim to get to the 520 Reckonable paid contributions level at the earliest possible date. You could then claim your COAP immediately from that date. You are allowed to start your COAP from any date, it is not necessarily to wait until your next birthday.

(You could claim this COAP and if you are not satisfied with the amount awarded, you can reject this offer, provided you have not received any payments. You could them opt to defer further up to any future date or age 70)

2. Or you could aim to continue to gain Reckonable Prsi contributions up to age 70 and claim a larger pension from your 70th birthday.

You would need to carefully calculate out which of these plans would be more beneficial to you. You need to calculate how many years beyond age 70 you would break even at if you choose plan 2. Your general health condition and likely future lifespan would be very relevant.

If you decide to go for plan 1, it would be beneficial for you to get as many Reckonable paid contributions as possible. In this strategy you could pay 5k into your ARF in 2028. This will get you class S Reckonable contributions for the remainder of 2028 beyond your last modified Prsi payment week. So if you decide on this plan, if you retire earlier in 2028 you can get more Reckonable class S for 2028. Every extra Reckonable class S contribution brings your eventual COAP claim date 1week earlier.

If you decide to go for plan 2, you could delay your retirement date until December 2028. You are then not liable to take an ARF drawdown in 2028. You could start your first ARF drawdown in 2029. Under this plan there is no advantage in getting class S contributions in 2028 because you already have 52 reckonable change of status credits for 2028.

When you take an ARF drawdown of 5k or more Prsi is automatically deducted at source under the PAYE system. Because of this the the minimum €650 class S rule doesn't apply. The Prsi contributions are paid by the ARF provider. You don't need to do anything.
 
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Opus2018 said:
I thought the maximum number of stamps can only be 52 in one year.). Do I also get 52 stamps for 2027 as well??
Click to expand...
The maximum number of Reckonable stamps is 52 per year, but you can have a larger number of paid and credited stamps on your Prsi contributions record.

For example when you start to claim your public sector pension you will have 52 class M on your record.

You will have some years with a mix of class B or D, class A, class M and maybe some Jobseekers credits and class S.
You Prsi record starts to look like the alphabet!

Your pre entry credits and change of status credits will not be shown on your Prsi record. Don't worry about this. These credits will eventually be shown on your COAP calculation statement.

Your 2027 year will show 52 class B or D, but as above you will also have the hidden 52 change of status credits.

If a person has two separate PAYE employments they can have 104 class A on their Prsi record.

If a person has ARF drawdowns + other investment income (bank deposit interest for example) they can have 104 class S on their Prsi record.
 
Hi Robovac rider,

Thanks for much for the clarification! So given I have 217 Class A stamps already, if I retire in December 2028, get 1 Class A stamp for that year which will trigger 51 stamps for 2028 and 52 stamps for 2027? If I'm right then I go up to 321 stamps and I then draw down 5000+ from the ARF which attracts further class A stamps from 2029-2032 when I turn 66 mid year. (so 4*52 = 208) which means I get to 529 stamps so 529/2080 will get me about €80 a week if I defer to 70 I would get say €129 so it's marginal enough!

Thanks again! I really owe you one! ;)

Best,

Opus2018
 
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