Question regarding Deferred Contributory Pension

[Jack Frost]

Hi all,

I have deferred my pension for one year up to January 2027 in order to bring me up to an average of 15 to 20, which will increase my pension. As a sole trader my 2026 contributions will be taken into consideration in their calculations. I have been advised by the Dept Of Social Protection to inform them in writing.

Because I will just barley make it into that 15 to 20 bracket, with an average of 14.53,, which rounds up to 15. My question is am I locked into that draw down date of 1/1/2027, once I have notified them in writing, if its a case that my calculations are wrong, and that I am few stamps short to reach my average, or is it possible to extend it for another while in order to reach my target.
To put it another way are you locked into the date that you submit in writing or can you change it before you draw down your pension.

Any advice, appreciated.

 

[Robovac rider]

No you are not locked into a certain date.
The best procedure is to apply to start on 1/1/2027.
Opt for payment at your local post office.
The reason I suggest this is because you are allowed to defer an awarded pension provided you have not accepted any payments.
You have total control to reject the post office payments by simply not collecting them.

If it turns out that you are short of average 15, you can contact DSP and reject your pension until a later date of your choice.
You would need to defer until 1/1/2028 to get a higher average.

Check out this thread.

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

Were you previously in class A employment?
If so have you counted pre entry credits.

 

[Jack Frost]

Thanks Robovac for the information, that what I want clarified, as I am just on the border of the higher rate, and yes I have previous class As from the late 70's, and I have factored in the pre-entry credits, the only fly in the ointment was that I came across the following quote on the Revenue website, which means that I must add an extra year to my divisor from 49 to 50 years. From Revenue website it says "There is a short tax year in the 2001 year, due to the change in the tax years (which creates an additional year in calculating the yearly average)."

Thanks again for your response.

 

[Robovac rider]

@Jack Frost
The short year will not make any difference. The years counted for the averaging calculation are full calendar years. The count begins from the start of the calendar year you first paid a PRSI contribution. This year is year 1.

The count stops at the end of the last full calendar year before you claim your COAP.

So full calendar years are what's relevant, not manufactured tax years.

It would be no harm to immediately apply for your COAP, to begin up to 6 months backdated. This will give you an exact calculation of your current averaging figure.

If this turns out to be 15 you have gained extra COAP.

If it's less than 15, reject it and then reapply in 2027.

 

[Jack Frost]

Aha...that's great news, I will apply forthwith and see how it goes.. thanks again, much appreciated.

 

[Jack Frost]

Just checking again on calculating the divisor they use..if I started paying PAYE in September 1977..for 4 years..then public service up to 2018... Deferred pension to January 2027 in order to get into the 15-20 bracket..by adding 52 class S stamps for 2026. Is the divisor 49 or 50.. ..I can't get a straight answer from DSP.. thanks in advance

 

[Robovac rider]

The claim year for your COAP is not counted.
So it's from 1977 to 2026 inclusive. So your divisor is 50.

If you need to defer to January 28 make sure to notify DSP that you wish to defer before your COAP claim date.

Don't rely on waiting beyond this date because you have chosen payment at the post office. This could be rejected as happened here.

https://www.askaboutmoney.com/threads/prsi-and-planning-retirement.232440/page-15#post-2020670

 

[Jack Frost]

Thanks for the clarification Robovac rider...looks like I miscalculated it...I thought thr divisor was first year =1977 minus last full year =2026 which is 49....but it must be 2027 minus 1977 equals 50... as the divisor.

On another note i already deferred my drawdown to January 2027... and I asked DSP over the phone if I can defer it again until 2028 in order to gain the extra S stamps..she told me I can't defer it twice...so am I right to inform them in writing that I am rejecting the pension..and then reapply in 2028.

Any advice welcome....thanks again for your guidance.

 

[Robovac rider]

The divisor period is inclusive. You have to count the full first and last year. This calculation is 2026 - 1977 + 1 = 50

she told me I can't defer it twice...so am I right to inform them in writing that I am rejecting the pension..and then reapply in 2028.

I honestly don't know.
The amount of rules involved in DSP schemes is ridiculous.

Currently you have rejected your first COAP offer. So technically speaking you have not yet actually deferred it. A deferred pension should be a pension which is in existence and has been started later than your 66th birthday. DSP staff answering phone calls are not necessarily experts in all the rules, so they might be assuming that your COAP has already begun and are stating that it cannot be further deferred.

Assuming you have not yet been sent your COAP reward letter, you could try ringing or emailing DSP and telling them you want to cancel your current application.

I presume they cannot barr you from applying again at a later date. As you have the required Prsi contributions to qualify for a COAP you are legally entitled to receive it.