Pre 95 public sector workers and Prsi until age 70.

[ClubMan]

Benefit payment 65.

FYI...

Benefit Payment for 65 Year Olds

Benefit Payment for 65 Year Olds is for those aged 65 who have stopped work or self-employment who satisfy the PRSI conditions. It may be paid from your 65th birthday until your 66th birthday.

www.gov.ie

Payment for people who retire at 65

If you retire at 65, you may qualify for a benefit payment until you reach 66. The payment is similar to Jobseeker’s Benefit, but you don’t need to be looking for work or sign on at your local Intreo centre.

www.citizensinformation.ie

 

[Magilla]

Thank you.

 

[Clare12]

Hi S class.
Accidentally came across these posts on a Google search about PRSI and public sector.
Would appreciate any clarification you could give me.
In public sector employment since 1982 on D rate. Paid about 3 A rate for some reason at the start of this employment. I may need to query this. I am in same employment for approx. 43 years with 31.5 years actual service due to work sharing for a number of years. No career break taken. 63 years old this year.
If I retire at 65, is it possible to get any form of contributory state pension. I have the option of paying S rate as spouse is a farmer. This would give me 5 years of paid contributions from 65 to 70 years. Could the balance be paid as voluntary contributions to bring it to 10 years, the minimum required for a COAP. Any advise would be very much appreciated here.

 

[S class]

Hello @Clare12

You can only begin to get Reckonable paid contributions after you cease your class D employment.

So if you retire at age 65, you have a possible 5 years up to age 70 to get these extra contributions.

This gives you an opportunity to gain 260 full rate paid contributions. These can be either class A or class S.

With 263 full rate paid contributions you can qualify for a pro rata pension.

You cannot pay any extra voluntary contributions. Every contribution must relate to an actual Prsi week. You only have 260 Prsi weeks from age 65 to 70. These all need to be either class A or class S, so there are no extra Prsi weeks available for voluntary contributions.

Do you have any AVCs. If you have, these can be used via an ARF to get your necessary class S contributions.

If you don't currently have any AVCs you can make these up to your retirement date.

I am not sure if working for your husband would provide extra Prsi contributions. Is the farm registered as a business ?

If it is you should be able to get Prsi contributions from farm employment. This could be class A as an employee.

1 class A contribution would allow you to get change of status credits to add to your Reckonable paid contributions to improve your pro rata pension.

If you were a farm employee you would only need to earn €38 per week to gain a class A contribution for that week.

This would only involve the payment of approximately 9% employers Prsi. So it would cost approximately €3.50 per week.

This is a lot less than the minimum €650 per year charge for class S.

 

[Clare12]

Thanks very much S class. Appreciate the update you have given.
'With 263 full rate paid contributions you can qualify for a pro rata pension.' Is it an option when I retire at 65 to buy 5 years voluntary contributions, is there any advantage in doing this?
And one final question. Is there a disadvantage in having three A rate prsi on record in 1982?

 

[S class]

I added some extra information to previous post before you replied.

You don't have the option to pay voluntary contributions.
You must already have a minimum of 260 full rate (class A or S) contributions before you are allowed to be a voluntary contributor.

There is no disadvantage in having 3 previous class A contributions. Every extra contribution gives you another small portion of the COAP.

Most likely you will also have some pre entry credits to add to your other credited and paid contributions. Every extra credit counts.

 

[Clare12]

Thank you for all this info S class, it's a bit overwhelming. I may come back to you with additional questions, if you wouldn't mind.

 

[S class]

Yes ask more questions if you need to.

Just to clarify about your husband employing you.
If a person is employed by their spouse no Prsi contributions are allowed.

If you were employed in a business owed by your husband you would be entitled to Prsi contributions.

If the farm is not a business, you could be employed by a neighbour on their farm as an employee and you would be entitled to Prsi contributions.

The easiest way to get the Prsi contributions is from ARF drawdowns of 5k or more per year.

 

[Clare12]

Am i correct in saying. With 263 S or A contributions from 65 to 70, the weekly contributory pension would be extremely small i.e. 35 euro, using current pension rate for the calculation, or is my calculation incorrect?
Just to clarify, farm isn't a business, but i do have family member with a business, so thanks for that advice.
I presume there would be no need for ARF if opting for the business route.

 

[S class]

Pre 95 retiring with 30 years service

Am working part time for the past few years and want to keep doing so until retire at 60. Salary is currently about 32k and on lower tax bracket. When should I start paying into a lump sum AVC to bring upto the 1.5 times salary when I retire. And is the purpose of this so that I can claim 20%...

www.askaboutmoney.com

Information on pro rata pensions here.

When you retire from your class D employment and get at least 1 class A contribution.
(This must be class A. Class S will not allow you to get change of status credits)
This gives you change of status credits for your retirement year and the previous year.

For example if you retired 20 weeks into the year and immediately took up class A employment.

For your retirement year you would get 20 Reckonable credits + 32 class A contributions. You would get 52 reckonable credits for the year before retirement.

So now you have an extra 72 Reckonable credits and I think you also have 72 less class D contributions counted in the pro rata calculation.

Presumably you get extra pre entry credits.
You might now have a total nearing 100 credits.

These extra Reckonable credits are added to your 263 Reckonable paid contributions.

Approximately 363 Reckonable contributions combined with 72 less class D will improve your pro rata calculation, but your COAP will be quite small.

I presume there would be no need for ARF if opting for the business route.

The ARF is unnecessary for extra Prsi contributions.

It might however be beneficial, especially if you are currently paying tax @ 40% and will be paying at 20% in retirement.

Making AVCs might also allow you to get some extra tax free lump sum on top of your public sector pension tax free lump sum.

Thread 'AVC information for pre 95 Public Sector employees.'
https://www.askaboutmoney.com/threads/avc-information-for-pre-95-public-sector-employees.238695/

 

[S class]

@Clare12

When you are calculating your possible pro rata pension deferred to age 70, the amount of full COAP is increased €363.90.
This amount should be used in the formula.

 

[Clare12]

Thank you S class, you are a fountain of knowledge.

 

[Clare12]

When you retire from your class D employment and get at least 1 class A contribution.
(This must be class A. Class S will not allow you to get change of status credits)
This gives you change of status credits for your retirement year and the previous year.

For example if you retired 20 weeks into the year and immediately took up class A employment.

Hi S class, with regard to the above, if I retired end of 2027, had a few class A paid contributions immediately after retirement, would the balance of D for 2027 and all of 2026 qualify for change of status? This could give me nearly 100 reckonable contributions, and possibly reduce D rate by the same amount. I am trying to work out the the best method of qualifying with the least financial outlay.

I have checked the spouse farm partnership prsi contributions option, but any prsi payments convert to K while i am still a public sector employee paying modified rate , so no advantage to going this route I think. Maybe you could confirm this for me. Section below from Revenue site.

"Individuals in the following employments will be classed as PRSI Class K9 and will pay the rate in the table below;

• modified rate contributors for example, civil and public servants recruited prior to 6 April 1995, with self-employed earned income from a profession or trade and any other unearned income such as rental or investment income
• employees and occupational pensioners with no additional earned self-employed income but who do have unearned income only such as rental income, investment income, dividends and interest on deposits and savings"

When retired, can I then opt for farm partnership where 5000 income is allocated to me and pay the required PRSI, approx. €650 per year. Would this classify as S rate or still K? See below.

"https://www.ifa.ie/pensions-retirement/"

If all the above aligned, I would have approx. 7.5 years A/S contributions. I just can not reach that magical number of 520.

Thank you in advance.

 

[S class]

if I retired end of 2027, had a few class A paid contributions immediately after retirement, would the balance of D for 2027 and all of 2026 qualify for change of status?

Yes, all D for 2027 and 2026 would qualify for change of status.

But change of status credits are not counted towards your required target of 260 full rate paid contributions in order to qualify for a pro rata pension.

Change of status credits are only added to your Prsi record when you have reached 260 class A and class S contributions.

You need to cease your class D employment on your 65th birthday at the latest. This is the only way to give you enough time up to age 70 to reach the 260 full rate target.

You could stretch this to three weeks after you birthday, but I would not recommend this as any miscalculation of the actual Prsi weeks could result in you missing the 260 target.

I have checked the spouse farm partnership prsi contributions option, but any prsi payments convert to K while i am still a public sector employee paying modified rate

Yes, you cannot get any full rate paid contributions until after your class D employment ends.

When retired, can I then opt for farm partnership where 5000 income is allocated to me and pay the required PRSI, approx. €650 per year. Would this classify as S rate or still K?

I am not familiar with this farm scheme.
Is this earned self employment. I presume you are classed as working on the farm.

Anything that is considered as earned self employment will always be class S. If this is the case you will get class S after you have retired from the class D employment.

Make sure that you have €5000 from this scheme in your retirement year and also in the year of your 70th birthday.

This could mean paying €650 in both of these years in order to gain a lot less than 52 reckonable class S for these two years.

To clarify this, say your birthday is 1st March.

In your retirement year you will pay €650 and only gain reckonable class S from 1st March to end of December.

In the year of your 70th birthday you would pay €650 and only receive Reckonable class S from January to 29th February.

Class A from business employment would be cheaper and easier for these two years, if this is possible for you. Class A can be matched to the exact number of weeks in these two years.

 

[Clare12]

But change of status credits are not counted towards your required target of 260 full rate paid contributions in order to qualify for a pro rata pension.

Noted.

You need to cease your class D employment on your 65th birthday at the latest. This is the only way to give you enough time up to age 70 to reach the 260 full rate target.

August 2028 will be 65, hence thinking of retirement December 2027, as this will allow nearly two years change of status, if I make even 1 A rate payment after retiring in 2027 year, think I am correct here.

Make sure that you have €5000 from this scheme in your retirement year and also in the year of your 70th birthday.

Would i need to have this in 2027, .e year of retirement, considering I will have change of status for most of this year.
Noted re year of 70th.

If you are aware of other farm spouses getting class S from this scheme, you will also get class S after you have retired from the class D employment.

Will need to check this with welfare.

To clarify this, say your birthday is 1st March.

In your retirement year you will pay €650 and only gain reckonable class S from 1st March to end of December.

In the year of your 70th birthday you would pay €650 and only receive Reckonable class S from January to 29th February.

So my retirement year would be end of 2027 at 64.3 years. Paying 650 PRSI, after clarification with welfare for years 28. 29, 30, 31, 32 and 33. With reckonable class S from January to July for final year. Gives a total of approx. 7.5, inclusive of 2 years change of status.

I am still unsure if the cost outweighs the benefit.

But I understand much more about PRSI, pre 95 and pensions now.
Thank you kindly.

 

[S class]

August 2028 will be 65, hence thinking of retirement December 2027, as this will allow nearly two years change of status, if I make even 1 A rate payment after retiring in 2027 year, think I am correct here.

Yes, correct. This is a good plan.

Would i need to have this in 2027, .e year of retirement, considering I will have change of status for most of this year.
Noted re year of 70th.

No, you can start the farm scheme from 2028

I am still unsure if the cost outweighs the benefit

I reckon you will get about €50 per week COAP. This is at 2026 rate,
This should increase each year.

Hopefully the €650 per year Prsi won't increase, as it was increased quite recently.

650 x 6 =3900
Future pension over 2600 per year.
Allowing for income tax on COAP you should break even at age 72 - 73. If your health is good hopefully you will live a lot longer than this.

 

[Clare12]

I reckon you will get about €50 per week COAP. This is at 2026 rate,
This should increase each year.

Hi S class, would you mind explaining the difference between pro rata and partial pension? Are they calculated differently.

How is a mixed rate prsi calculated?

If I have in excess of 2080 D rate , are all included or are they capped at this figure for calculation purposes?
As an example, I have 50 years of contributions to 70, 2200 D rate and 350 A/S, what is the formula used for calculation.

Could you also clarify if S prsi rates remain as S after retirement, when I receive my D rate pension. I am unsure if pension is still classified as income and these convert to K.

Thank you.

 

[S class]

Pro rata and mixed class are the same. This only applies if you have between 260 and 519 class A and S.

I use the term partial pension to describe getting a portion of the COAP using the Total contributions and Yearly Average calculations.
Both of these calculation methods are only used if you reach 520 class A or S.

As an example, I have 50 years of contributions to 70, 2200 D rate and 350 A/S, what is the formula used for calculation.

Assuming you will have approximately 100 change of status credits. These probably should not be included in your total 2200 D contributions. So only 2100 should be counted.

The formula is 363.9 x 350 / 2100+350 = €51.98

Could you also clarify if S prsi rates remain as S after retirement, when I receive my D rate pension. I am unsure if pension is still classified as income and these convert to K.

Your public sector pension will be class M Prsi.
Class M does not prevent you from getting Class S from earned self employment or from an ARF.

 

[Clare12]

Hi S class, would you mind confirming the following please?
Do I need to have 260 A stamps before 66, or can these accumulate up to 70. This has been queried by my Accountant and is sowing a little seed of doubt. I am erring on the side of hope here, and he is incorrect.

 

[S class]

Do I need to have 260 A stamps before 66,

No.

You would only need 260 reckonable paid contributions at age 66 if you wanted to begin a pro rata pension at this age.

This is impossible for you.

Other than this, Reckonable Prsi (class A or S) is available to you up to age 70 because you will not be receiving a COAP payment.

From past posts on AAM it seems that a lot of accountants are not very knowledgeable on the Prsi rules.