Prsi voluntary contributions after early retirement

Spud50

Registered User
Messages
13
I am planning on retiring early this December (I’m 55) and am going to live off savings for a few years to build the pension up a bit .( so will have no income)
I have 35yrs + of PRSi paid at Class A and want to pay voluntary contributions for the next 5 yrs until I draw down my pension at 60.
My question is do I have to pay the first PRSI contribution @6.6% of my previous years salary for the first year ( which would be a big chunk out of saving) and 500€ every year thereafter or can I pay 500€ every year from the outset and contact social welfare before old age pension to pay any shortfall??

also the form mentions an Agent ? Can I just make the payment myself or do I need to go through someone?
 

bstop

Registered User
Messages
349
If you can manage to open a PRSA and invest at least 10,000 euro before you resign and then when you retire at age 60, set up an ARF. Make monthly drawdowns from the ARF and you would achieve 52 S class Prsi contributions per year from age 60 to age 66. These S class contributions are rekonable for the contributory pension. By doing this you could avoid the necessity of making voluntary Prsi contributions.

Another way could be, if you apply for Jobseekers Benefit you would get A class Prsi credits for 9 months and then continue to sign on for credits and you could achieve your 40 years of Prsi contributions.
 
Last edited:

Spud50

Registered User
Messages
13
If you can manage to open a PRSA and invest at least 10,000 euro before you resign and then when you retire at age 60, set up an ARF. Make monthly drawdowns from the ARF and you would achieve 52 S class Prsi contributions per year from age 60 to age 66. These S class contributions are rekonable for the contributory pension. By doing this you could avoid the necessity of making voluntary Prsi contributions.

Another way could be, if you apply for Jobseekers Benefit you would get A class Prsi credits for 9 months and then continue to sign on for credits and you could achieve your 40 years of Prsi contributions.
so @bstop if i open up a PRSA with 10k and presumably draw it down now from January (age 55) which i believe i can do as i am currently a PAYE employee , will that PRSA make s class contributions every year from 55 to 60 ??? until i set up an ARF at 60
 

bstop

Registered User
Messages
349
It depends on your current employment pension. If you have an occupational pension related to your current employment you can only set up an ARF when you start to receive your occupational pension which you implied would start at age 60. You will not start getting S class Prsi contributions until you begin drawing down your ARF. If you are able to set up the ARF at age 55, then you could get S class Prsi contributions from age 55 to age 66.

You only get S class contributions from an ARF and not from a PRSA.

10000 euro is the minimum that Irish Life will allow for the setting up of an ARF. Zurich require 20000 euro. 10000 euro is therefore the minimum amount required. Ideally you should aim to maximize the size of your ARF by investing the maximum allowable contributions to a PRSA for 2021 and 2022. You will need to invest for 2021 before 31st October 2022.
 

LDFerguson

Registered User
Messages
4,339
i wont have an ARF till 60

Is the main pension scheme a Defined Contribution pension scheme? If so, it might be worth exploring the possibility of taking your benefits now and setting up the ARF now for the reasons that @bstop mentions. Just draw the bare minimum out of the ARF for the first few years to get your Class S PRSI contributions. It has the advantage of using up Tax Credits during that period.
 

Spud50

Registered User
Messages
13
thanks @LDFerguson , it is a DC , but presumably if i start drawing on the ARF i will have to take 4% per annum minimum which i dont want to do yet, i want to leave it for another 4 or 5 years
 

LDFerguson

Registered User
Messages
4,339
thanks @LDFerguson , it is a DC , but presumably if i start drawing on the ARF i will have to take 4% per annum minimum which i dont want to do yet, i want to leave it for another 4 or 5 years

No - there's no requirement to take any income from the ARF until the year in which you turn 61. That's when the 4% requirement comes in. Before then, you could choose to take a lower withdrawal - ideally enough to get your Class S contributions but pay little or no tax.
 

RedmondC

New Member
Messages
9
If you can manage to open a PRSA and invest at least 10,000 euro before you resign and then when you retire at age 60, set up an ARF. Make monthly drawdowns from the ARF and you would achieve 52 S class Prsi contributions per year from age 60 to age 66. These S class contributions are rekonable for the contributory pension. By doing this you could avoid the necessity of making voluntary Prsi contributions.

Another way could be, if you apply for Jobseekers Benefit you would get A class Prsi credits for 9 months and then continue to sign on for credits and you could achieve your 40 years of Prsi contributions.
Thank you so much for this post. I am planning to stop next year at 53 and pay voulintary which would be 3k a year but doing it as you suggest will save a fortune. But is S class just for self employed or can a paye worker get them if as you say I pay PRSI on a small afr drawdown?
 

bstop

Registered User
Messages
349
Thank you so much for this post. I am planning to stop next year at 53 and pay voulintary which would be 3k a year but doing it as you suggest will save a fortune. But is S class just for self employed or can a paye worker get them if as you say I pay PRSI on a small afr drawdown?
Anybody with an ARF is subject to S class Prsi. You do not need to be self employed.
 

dub_nerd

Registered User
Messages
1,973
If you have unearned income which you are charged PRSI on -- rental income, share dividends, deposit interest -- all those things are normally credited as Class K with no benefit entitlements. However, if unearned income is your only source of income, AND it amounts to >5k per year (which makes you a "chargeable person" and subject to minimum EUR 500 PRSI payment), you will get Class S credits instead. Saved me a lot compared to VCs, made up the 5k from a combination of deposit interest and UKIT dividends. I got a couple of PRSI statements over the years to confirm they were credited at Class S.

 
Last edited:

bstop

Registered User
Messages
349
If you have unearned income which you are charged PRSI on -- rental income, share dividends, deposit interest -- all those things are normally credited as Class K with no benefit entitlements. However, if unearned income is your only source of income, AND it amounts to >5k per year (which makes you a "chargeable person" and subject to minimum EUR 500 PRSI payment), you will get Class S credits instead. Saved me a lot compared to VCs, made up the 5k from a combination of deposit interest and UKIT dividends. I got a couple of PRSI statements over the years to confirm they were credited at Class S.

Yes that is correct.

Unfortunately when a person starts taking benefits from an occupational person they will have other income subject to Prsi class M. This means that their investment or rental income reverts back to Prsi class K.

However if they also have an ARF then their investment or rental income stays at Prsi class S.
 
Last edited:
Top