PRSI on ARF count for COAP?

S

Slim

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Hi. My wife drew from her ARF in 2022 and is considering doing so in 2023 and possibly each year until 2029 when she will turn 66. Each draw attracts prsi class S.

Will this 8 years of class S entitle her to a pro rata Contributory State Pension? She has no other class A afaik, except, possibly, some class A in the early 80s as a teenager. Thanks in advance.
 
If she doesn't reach the 520 minimum full rate paid contribution level, she would still qualify for a pro rata pension, as using the class S contributions, she will have reached the minimum 260 full rate paid contributions needed.

She should check her Prsi record as she might, as you say, have some class A contributions. Some of these could be from her pre establishment years.
 
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S class said:
I think it's either 52 or none.
If the ARF drawdown is at least 5000 euro it's 52.
If less it's none.
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Doesn't seem to work like that in practice. I'm looking at a payslip on file for a client who took a single withdrawal out of an ARF of >€10,000 in December 2022. She got 4 x S1.
 
Dave Vanian said:
Doesn't seem to work like that in practice. I'm looking at a payslip on file for a client who took a single withdrawal out of an ARF of >€10,000 in December 2022. She got 4 x S1.
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It is probably showing as one month's income. Which is 4 weeks Prsi.
As she has drawn down more than 5000 euro it should show as 52S on her Prsi contributions record. She should check her Prsi record and notify DSP if it doesn't show 52S.
 
S class said:
It is probably showing as one month's income. Which is 4 weeks Prsi.
As she has drawn down more than 5000 euro it should show as 52S on her Prsi contributions record. She should check her Prsi record and notify DSP if it doesn't show 52S.
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Thanks for that. Would that not be for her / me to take up with the ARF provider rather than the DSP? I'd guess that the DSP would tell her "Well, XYZ ARF Company notified us of 4 S1 so that's what we have recorded."
 
Thank you both for your responses. She is credited with 52 was as per Zurich. Worth continuing to draw the €5,000 per annum then! Much appreciated.
 
Dave Vanian said:
Would that not be for her / me to take up with the ARF provider rather than the DSP? I'd guess that the DSP would tell her "Well, XYZ ARF Company notified us of 4 S1 so that's what we have recorded."
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The whole ARF and class S Prsi situation is a complicated mess. Class S is normally related to self employment and paid to DSP in a yearly lump sum. The ARF is paid under PAYE rules. Your client should not rely on the ARF provider to ensure she gets her entitlement to 52S. All she has to do if she does not have 52S on her record, is to inform DSP that she had an ARF drawdown of over 5000 euro and they will then be aware that she is in fact entitled to 52 class S contributions. They will be aware of the exact size of her drawdown as they know the total amount of Prsi paid on her behalf by the ARF provider. The DSP operate strictly to the rule book. If she meets the rules she gets her Prsi entitlement.
 
Thanks again. I'll tell her to check the record in the first instance.

(I'm now wondering if your Askaboutmoney username was inspired by your love for the Irish Social Welfare system or Mercedes cars? ;))
 
Dave Vanian said:
Thanks again. I'll tell her to check the record in the first instance.

(I'm now wondering if your Askaboutmoney username was inspired by your love for the Irish Social Welfare system or Mercedes cars? ;))
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It was inspired by the knowledge I have gained in the last 10 years from being in lots of different Prsi combinations. In some combinations I gained and in one I lost out due to an avoidable slip up. I have no love for the Irish Social Welfare System but I do like to try and steer other posters away from some of the pitfalls.

I wouldn't say no to an S class Mercedes !
 
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Slim said:
Worth continuing to draw the €5,000 per annum then!
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It is and it isn't! Yes, you'll get the 52 Class S PRSI reckonable contributions, but if the value of her pension fund falls during the year, then she may be drawing capital from the fund rather than profit, which may not be a good thing in the longer run!

In that situation it may be worth considering not drawing anything but making a Voluntary PRSI Contribution instead!
 
Marsupial said:
It is and it isn't! Yes, you'll get the 52 Class S PRSI reckonable contributions, but if the value of her pension fund falls during the year, then she may be drawing capital from the fund rather than profit, which may not be a good thing in the longer run!

In that situation it may be worth considering not drawing anything but making a Voluntary PRSI Contribution instead!
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First paragraph noted!

Can you explain how she can make a voluntary contribution to avoid drawing from the ARF? Thanks.
 
She will have to make 4% drawdowns from her ARF from age 61.
If her ARF is approximately 40,000 euro she would exhaust her ARF by age 66.
Marsupial is pointing out that there is an alternative method to gain 52 S contributions.
This can be done by applying to make voluntary Prsi contributions at a cost of 500 euro per year. While this would preserve her ARF for longer, it would cost her more.
Even if she was to exhaust her ARF by age 66, she would then have some extra income from the state pension.

The best plan is to use the ARF to gain the necessary class S contributions.
 
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Marsupial said:
Arguably!

And if the AR Fund runs down to €0 before she turns 66, then apply to make voluntary contributions! ;)
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Slim has confirmed that his wife is getting 52S each year from her ARF and that she can run it for the next 8 years, so it makes no sense to tell her to consider making voluntary contributions.

If the stock market collapses before the 8 years are up, she could then make voluntary contributions as you suggest.
 
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