Query re S class stamp and vol contributions

[Mike Rosoft]

Hope this isn't too long winded but here goes.........

I will turn 66 on 1st Jan 2027 and as of that date I calculate I will have 501 reckonable contributions made up of 336 class A and ORD, 156 class S and 9 reckonable credits (see contribution statement attached). So I'll be 19 contributions short of 520 and the plan is to defer pension until end of May to get the remaining S class stamps via my ARF by once again drawing down €5K from it and continuing to pay PRSI.
Worked from 1977 up to Dec 2023 with majority of working life on a D stamp in public sector until retirement Dec 2023. Received €5K ARF income for this year and previous two. Received one A class stamp at end of 2023 to avail of change of status credits that hopefully will change the D contributions of 2022 and 2023 into reckonable A credits when I reach the 520 mark. I assume I'll be in the 10-14 bracket of yearly average contributions when I get to the 520.

My PRSI contribution statement shows 52 S class stamps for 24 and 25 but I had been advised when I started the ARF that I needed to pay €650 in vol contributions in order to receive these S class stamps but like I said they're on my record. It appears that I am precluded from making vol contributions until I reach the 520 threshold. I want to nail down these S class stamps but DSP haven't replied to my letter seeking clarification. I was under the impression that you couldn't make vol contributions after 66 so I'd like to get this vol contribution thing clarified before Jan 27.

My questions are:
Can anyone offer any guidance re vol contributions in my case?
Does pension deferral strategy make sense?

 

[ClubMan]

My PRSI contribution statement shows 52 S class stamps for 24 and 25 but I had been advised when I started the ARF that I needed to pay €650 in vol contributions in order to receive these S class stamps but like I said they're on my record.

Presumably you were drawing €5K or more from your ARF in 2024 and 2025 in which case you'll have paid 52 class S contributions which are reckonable for pension purposes? The same will apply to 2026 if you draw another €5K+ for this year in case that matters?

 

[Mike Rosoft]

Yes Clubman €5K drawn down in 24, 25 and this year.

 

[Robovac rider]

Hi Mike,

I will turn 66 on 1st Jan 2027 and as of that date I calculate I will have 501 reckonable contributions made up of 336 class A and ORD, 156 class S and 9 reckonable credits (see contribution statement

You currently have 492 full rate paid contributions. You are short 28 to reach the 520 target. Your 9 Reckonable credits don't count for this target.

Received €5K ARF income for this year and previous two.

Yes this is correct because you had a 5k or more ARF drawdowns.

Received one A class stamp at end of 2023 to avail of change of status credits that hopefully will change the D contributions of 2022 and 2023 into reckonable A credits

You will get 52 COS for 2022 and 51 COS + 1 class A for 2023.

I assume I'll be in the 10-14 bracket of yearly average contributions when I get to the 520.

Yes you are guaranteed to be in the 10 - 14 bracket.

My PRSI contribution statement shows 52 S class stamps for 24 and 25 but I had been advised when I started the ARF that I needed to pay €650 in vol contributions in order to receive these S class stamps

This advice was incorrect. The €650 minimum class S contribution does not apply to ARF drawdowns.

Can anyone offer any guidance re vol contributions in my case?

You don't need to make voluntary contributions. In fact you would not qualify in 2027 because you will be receiving class S from your ARF drawdown in 2027.

Voluntary contributions are allowed up to age 70 but are not required in your case.

Does pension deferral strategy make sense?

Absolutely. You should defer for 28 weeks into 2027.
Then having reached your 520 target you can claim your COAP.

Prsi weeks for 2027 begin on Fridays. So you can defer your COAP to begin on the 28th Saturday in 2027. On that Saturday you will have obtained your required extra 28 class S contributions.

Make sure to have at least 5k ARF drawdown before that date.

Apply to have your COAP paid at your local post office. This is an extra guarantee just in case there are any errors on your Prsi record. When you get your COAP confirmation notice and assuming all is correct and you have reached the 520 target, you can then change your payments to your bank account.

Information on pension calculations after age 66.

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...

www.askaboutmoney.com

 

[Mike Rosoft]

Thank you so much for that detailed response Robovac! The bit about my 9 reckonable credits particularly useful if a tiny tad disappointing.