Voluntary PRSI contributions

K

Kev1964

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I may be in a situation where my normal PRSI payments and/ or credits may be ending soon. I am not working and about to start drawing a retirement income from an annuity and a small UK DB scheme. I believe neither are subject to PRSI deductions.

I would like to consider paying voluntary contributions.

I see the rate is 6.6% or a minimum of €500.

Does anyone know what amount the 6.6% applies to? I couldn’t find it clearly explained. Thanks.
 
Kev1964 said:
Does anyone know what amount the 6.6% applies to?
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It’s 6.6% of PRSI paid in your final compulsory year or €500, whichever is higher.

I read once on AAM that it was €500 per annum after your first year but have never seen this confirmed in DSP guidance.
 
There are three rates. 6.6%, 2.6% and flat rate €500. The rate applying depends on the contribution rate previously paid or credited. “The amount of voluntary contribution you pay in any contribution year is a percentage of your reckonable income in the previous tax year, subject to a minimum charge of €500 for the High Rate and €250 for the Low Rate.”

Further details here and here
 
Thanks, I’ve seen and read both of those websites. So yes I’ve seen that I must pay 6.6% of reckonable income. What is meant by reckonable income? Especially in my case my income is not reckonable for PRSI due to its nature.
 
If you are paying PRSI currently then the amount you are paying currently will be based on your current reckonable income. The amount you pay in the first year of voluntary contributions will also be based on this reckonable income. If your situation is more complicated you might be better off calling them and asking. The number is on the brochure I linked to. I found that division quite helpful in the past.
 
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Kev1964 said:
I may be in a situation where my normal PRSI payments and/ or credits may be ending soon. I am not working and about to start drawing a retirement income from an annuity and a small UK DB scheme. I believe neither are subject to PRSI deductions.
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You can remain signing on for credits while claiming your pensions.
If you currently have at least 520 full rate paid Prsi contributions, less than 520 class A credits and are resident in the state you would not need to be making voluntary contributions. Credits are of equal merit for qualifing for contributory pension and free of cost.
 
Thanks S class. I may not qualify for credits due to being overseas, hence my enquiry about voluntary contributions. I need to cover 6 years before state retirement age.

I‘d just like to know how to work out the cost of these so it’s 6.6% of what?

If this option is too expensive my fall back option to maintain PRSI contributions is rental income but my preference is to sell the relevant property rather than rent it out.
 
Kev1964 said:
I‘d just like to know how to work out the cost of these so it’s 6.6% of what?
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From the link above:

The amount of voluntary contribution you pay in any contribution year is a percentage of your reckonable income in the previous tax year, subject to a minimum charge of €500 for the High Rate and €250 for the Low Rate.
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Its 6.6% of your previous years class A earnings.
When you no longer have class A earnings i.e. when you just have pension earnings you will pay 500 euro per year.
 
S class said:
Its 6.6% of your previous years class A earnings.
When you no longer have class A earnings i.e. when you just have pension earnings you will pay 500 euro per year.
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Thanks S Class - That's what I needed to know. I couldn't find that on any Gov.ie location. Much appreciated.
 
Just reading this thread and I wondering if you can choose not to pay the voluntary contribution in the year immediately after you cease employment, so that you are not paying 6.6 % of your final salary of the previous year, but pay the 500 Euro for all subsequent years. Or do you always have to pay the first year at 6.6% before it reduces to 500 Euro per year.
 
You can skip that year.
Unless the extra Prsi in that year is critical to making up your needed contributions it makes no sense to pay more than 500 euro for that year.
 
On the subject of Class A and S contributions, I would be interested to know if you could answer the following : If a person is in employment on Class A PRSI for the first 6 months, then is unemployed ( and on unemployment benefit ) for a month on credited PRSI contributions and eventually switches to self employment and earns around 20000 Euro for the remaining part of the year, what will their PRSI statement of contributions look like? My understanding is that they will be allocated 52 S class contributions for their self employment of 20000 Euro alone? But will their PRSI statement actually show 26 weeks of Class A paid, 4 weeks of credited Class A and 22 weeks of Class S ?
 
The statement will show 26 weeks of paid class A, 4 weeks of credited class A and 22 weeks class S.
 
ohrose said:
will their PRSI statement actually show 26 weeks of Class A paid, 4 weeks of credited Class A and 22 weeks of Class S ?
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Forumuser said:
The statement will show 26 weeks of paid class A, 4 weeks of credited class A and 22 weeks class S.
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My own view is that the columns in the statement will reflect the following:

- Paid Contributions: 26 A, 52 S

- Credited Contributions: 4 (I don't think 'Class' nomenclature applies to this column)

- Combined Reckonable Contributions and Credited Contributions for Pension: 52

I don't think pro-rating applies to Class S stamps from self-employment.
 
Can you end payment of voluntary PRSI contributions once you get over the 2080 line? Or must you jump through the hoop of earning a PRSI stamp again to stop voluntary payments? On welfare.ie is says . .

When do I stop paying voluntary contributions?
You stop paying voluntary contributions in the last completed contribution year before you reach age 66.
You also cease to be a voluntary contributor, if you become liable to pay compulsory PRSI again, as either an employed, or self-employed contributor.
 
I think that’s just poorly worded guidance.

You can stop paying them whenever you want. The clue is the word “voluntary”
 
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