Voluntary PRSI contributions dilemma

[ATC110]

For the year 2022 I only have 26 weeks' Class A contributions.

I am required to submit a Form 11 (tax return) but have zero additional liability for PRSI due to self-employed income being below €5000.

It will cost €500 for the 26 weeks' contributions to make up the 2022 shortfall (26 weeks).

As it stands, if I continue to contribute to my record up to my 66th birthday (current retirement age), I will have just over (2086 contributions) the prerequisite 2080 contributions (40 years x 52) for a full Contributory State pension.

My rationale is that it may be worth paying the voluntary contribution now as an insurance policy in the event of missing future contributions, for whatever reason.

Is it worth making a voluntary contribution of €500 for 2022?

Thanks in advance.

 

[gipimann]

At the moment, I think the Department only count contributions to the end of the year preceding your 66th birthday. That may change if the "work till 70 option" proposal goes live.

https://www.gov.ie/en/publication/90d8b-changes-to-the-state-pension-contributory-what-you-need-to-know/
Might be worth checking to ensure the contributions you buy will be of benefit.

 

[ATC110]

At the moment, I think the Department only count contributions to the end of the year preceding your 66th birthday. That may change if the "work till 70 option" proposal goes live.

https://www.gov.ie/en/publication/90d8b-changes-to-the-state-pension-contributory-what-you-need-to-know/
Might be worth checking to ensure the contributions you buy will be of benefit.

If up to the end of the preceding calendar year I would have 2078 contributions.

 

[Marsupial]

In your situation, I wouldn't be making a voluntary contribution at this time. Bear in mind that you can do so at any time in the next 5 years, so if you later decide that you'd like to or need to, then you still can.

Bear in mind too that if you end up with 2078 contributions (I assume you have included all of your reckonable credits to arrive at this total?) then you'll get a pension of 2078/2080ths of the full pension! That's 99.9% of the full pension, so you'll be short by about 25 cent a week!

Ask yourself whether paying an upfront sum of €500 to get an extra €13 a year makes sense!

In order to be admitted as a voluntary contributor, a person must: ........

apply within 60 months (5 years) after the end of the contribution year during which they last paid compulsory insurance or during which they were last awarded a credited contribution. In very exceptional circumstances, this period may be extended at the discretion of the Minister

Full info here: https://www.gov.ie/en/publication/4...oluntary-contributions/#qualifying-conditions

 

[ATC110]

In your situation, I wouldn't be making a voluntary contribution at this time. Bear in mind that you can do so at any time in the next 5 years, so if you later decide that you'd like to or need to, then you still can.

Bear in mind too that if you end up with 2078 contributions (I assume you have included all of your reckonable credits to arrive at this total?) then you'll get a pension of 2078/2080ths of the full pension! That's 99.9% of the full pension, so you'll be short by about 25 cent a week!

Ask yourself whether paying an upfront sum of €500 to get an extra €13 a year makes sense!




Full info here: https://www.gov.ie/en/publication/4...oluntary-contributions/#qualifying-conditions

I have over 10 years to go to age 66 so the 5 year window may expire.

Yes, I realise the potential 2078/2080 contributions but I'm thinking if anything happens in the meantime that I stop contributing.

But in that case I could maintain my record by making voluntary contributions up to retirement age.

 

[Marsupial]

I have over 10 years to go to age 66 so the 5 year window may expire.

Yes, I realise the potential 2078/2080 contributions but I'm thinking if anything happens in the meantime that I stop contributing.

But in that case I could maintain my record by making voluntary contributions up to retirement age.

Exactly. Another consideration is that the €500 annual charge for making voluntary contributions may well increase in the next few years.

So there's no right answer; although if you do buy them then you'll also be paying for peace of mind - which may well be of significance to you.

 

[S class]

Have you counted in your pre entry credits ?

If you cease employment in the future you could sign on for credits. You can't get credits based on class S, but if you got 1 class A contribution after ceasing class S employment you can then get credits at no cost

 

[S class]

.

 

[ATC110]

Have you counted in your pre entry credits ?

If you cease employment in the future you could sign on for credits. You can't get credits based on class S, but if you got 1 class A contribution after ceasing class S employment you can then get credits at no cost

Yes, my calculation includes paid contributions and credits.
I am now paying Class A so potentially being able to sign on for credits is an important consideration.

 

[murphaph1]

Is there a copper-fastened guarantee that 2080 stamps will be enough to entitle one to a full state pension? I think I would err on the side of caution and pay the €500 for the 26 stamps if I was a full ten years away from retirement but that's just me.

 

[Uafásach]

My wife recently asked Social Welfare how many stamps are required for a Contributory State pension. They replied 520.
She had over 520, so was pleased!

It's only when we keep reading the various sites that we established that 2080 are required for a 'full' Contributory State pension.

You'd think Social Welfare would share this info freely!

At least the pension is in proportion to the stamps you have versus the 2080 target.

And, of course, will it be 2080 in 10yr time!.

 

[Marsupial]

Is there a copper-fastened guarantee that 2080 stamps will be enough to entitle one to a full state pension? I think I would err on the side of caution and pay the €500 for the 26 stamps if I was a full ten years away from retirement but that's just me.

You may as well ask for a copper-fastened guarantee that you will reach the age of 66 and thus be able to draw a State pension, full or otherwise!