Voluntary PRSI contributions for pension

[Decision Tree]

Hi All

I am aged 50 and a private sector PAYE employee paying class A PRSI. I'm thinking about retiring at 60. I'm wondering can I avoid a gap in my PRSI contributions after age 60 for the contributory state pension.

I read here recently that it's possible to make voluntary PRSI contributions after I stop working at 60 to maintain my record for state pension purposes. Looking at voluntary contributions on welfare.ie I see this -

"If you paid PRSI at Class A, E or H you pay a high rate contribution of 6.6% of your reckonable income in the previous tax year, subject to a minimum payment of €500"

In my case after 60 I would have income from share dividends, gains from sale of shares, rental income, deposit interest. I would also have two pension buyout bonds and I might draw down one of these during this time.

Can anyone explain what is meant by reckonable income in this context ? What portions of my assets or income would I need to pay 6.6% on ?

Thanks

 

[jpd]

Your un-earned income (share dividends, rental income, deposit interest, pension payments) will enter in the PRSI calculation when you fill your annual return. If you are not in employment nor retired, then I think you will be assessed for Class S PRSI payments which are 5.5% of total income with a minimum payment of € 500 pa and which will count towards your PRSI contributions.

 

[dub_nerd]

I'm in this situation, having retired at 47. I've never got a PRSI statement to check I'm on Class S but I presume so. The rate is 4%. Last year, with deposit interest rates so low, I got hit for the €500 minimum for the first time. You'll also pay tax and USC on dividends, rental income etc.

 

[Decision Tree]

Appreciate your replies folks, I think I understand how it works now. And it's good to get confirmation the option to maintain contributions exists. I will check with Welfare on the applicable class and rates when it gets closer to the time.

Thanks
Decision