Voluntary PRSI contributions

H

homeowner

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Can anyone explain how much you need to pay for voluntary PRSI contributions if you stop working before retirement age? Various posts on here have said it costs €500 per year. However that appears to be Class S only.

Voluntary social insurance contributions

Voluntary social insurance contributions can help you qualify for a social insurance payment in the future. Find out more about making voluntary contributions.
www.citizensinformation.ie www.citizensinformation.ie
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.

For the majority of workers, who are Class A, it would appear that if we stop working prior to accumulating enough contributions to get the full state pension, it would cost 6.6% of our last PAYE salary per year to make up the shortfall. eg if I earned 50K per year in 2024 and stopped working in January 1 2025 needing to buy 5 years of contributions it would cost me (50,000 x 6.6%) = 3,300 x 5 = 16,500? Is that correct?

Regular PRSI rates for Class A are 4%.

PRSI Class A Rates

www.gov.ie www.gov.ie

Am I reading this wrong?
 
Just sign on for Job Seekers Benefit when you stop working which will give you 9 months of credits and then continue to sign on for credits once that period expires. Won't cost you anything.
 
Flybytheseat said:
Just sign on for Job Seekers Benefit when you stop working which will give you 9 months of credits and then continue to sign on for credits once that period expires. Won't cost you anything.
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I don't want the hassle of pretending to be available for work for 8 years.
 
homeowner said:
I don't want the hassle of pretending to be available for work for 8 years.
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You'd only have to pretend for 9 months as presumably you would not qualify for Job Seekers allowance which is means tested but could still continue to sign on just for credits. See below from the key post:

13. If you are signing for credits and not working do you need to be available for and seeking work?
Answer: Yes. Anybody resident in the state, in good health and not otherwise occupied, as in for instance, fulltime caring, can state that they are available for work. Seeking work can be anything from reading the situations vacant page of the newspapers. You will be required to agree to these rules when signing on.
In practice retirees will not be pursued to seek employment and anybody over age 62 is not required to engage with Social Protection in any job placements or training schemes.
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Flybytheseat said:
You'd only have to pretend for 9 months as presumably you would not qualify for Job Seekers allowance which is means tested but could still continue to sign on just for credits. See below from the key post:
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Does "signing on for credits" mean that you don't need to be working but you will get the equivalent of PRSI contributions recorded to count towards your pension credit total? Apologies I have never claimed social welfare, never been unemployed, I worked abroad for 6 years early in my career and I want to stop working at 58 leaving me 14 years short for full state pension, I am 51 now.

Does this mean someone who has never worked automatically gets full pension as they get "credits" for their whole working life and someone who worked for say 25 years doesn't get full pension because they didn't complete 40 years?
 
homeowner said:
Does "signing on for credits" mean that you don't need to be working but you will get the equivalent of PRSI contributions recorded to count towards your pension credit total? Apologies I have never claimed social welfare, never been unemployed, I worked abroad for 6 years early in my career and I want to stop working at 58 leaving me 14 years short for full state pension, I am 51 now.
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Yes as I understand it
homeowner said:
Does this mean someone who has never worked automatically gets full pension as they get "credits" for their whole working life and someone who worked for say 25 years doesn't get full pension because they didn't complete 40 years?
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As I understand it they would not be entitled to credits as to gain credits you have to be on Jobseekers (i.e. have worked before you went on JSB).
 
My understanding is that credits only count if you have 520 paid prsi. They can be used to help the average rule. I am unclear on how they count in the tca calculation.
 
To get any level of State Pension you need at least 520 PAID A (or S) contributions. After that, credits count fully. So whether the Pension is calculated on the Average method or the Total Contribution Approach, Credits are as good as Paid Contribution's.
If you are “signing on” for credits, you do technically need to be “available for and genuinely seeking employment “. If you are signing on for credits over age 62, you will not be required to take part in “the activation process”. But if you are under 62, the Intreo office will want to see you regularly and to investigate what you are doing about getting a job (interviews etc), maybe send you on a training course etc.
 
Conan said:
After that, credits count fully. So whether the Pension is calculated on the Average method or the Total Contribution Approach, Credits are as good as Paid Contribution's.
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Is this corrrect ? I understood that there was a limit on the number of credited contributions that could be included.
 
There is a limit of 520 credits reckonable for the Contributory pension using TCA.
The Averaging calculation method will be fully phased out when the OP reaches age 66.
 
S class said:
There is a limit of 520 credits reckonable for the Contributory pension using TCA.
The Averaging calculation method will be fully phased out when the OP reaches age 66.
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But the max credits can go to 1040 (20 years) if they include Homecaring Period credits.
 
Thats correct.

A person who doesn't have any Homecaring credits is limited to 520 reckonable credits under TCA. Other credits are included in this total (pre entry and change of class for example).
 
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Conan said:
But the max credits can go to 1040 (20 years) if they include Homecaring Period credits.
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You are complicating this by now introducing Carer Credits for which specific rules apply, and which are currently in the process of changing. These apply to a relatively small number of cases. The rules relating to regular credits (i.e. those award in the case of JB/JA etc) which are much more common are very different and much more restricted.

For the record it is completely incorrect to state that "So whether the Pension is calculated on the Average method or the Total Contribution Approach, Credits are as good as Paid Contribution's" given that:
  • Credits are limited to a maximum of 520 under normal circumstances and 1020 in those cases where Carers credits are included. Paid contributions alone are eligible up to the maximum. Higher limits apply for carers will apply when the new Long-Term Carers Contribution scheme is finally introduced.
  • Regular credits alone (even if they exceed 520) will not qualify you for the SPC, as a minimum of 520 paid contributions are required. So whereas 520 or more paid contributions alone will entitle you to a pension, 520 or more regular credits alone will not. Again this is different in the case of Carer's credits in certain circumstances.
 
Freelance said:
You are complicating this by now introducing Carer Credits for which specific rules apply, and which are currently in the process of changing. These apply to a relatively small number of cases. The rules relating to regular credits (i.e. those award in the case of JB/JA etc) which are much more common are very different and much more restricted.

For the record it is completely incorrect to state that "So whether the Pension is calculated on the Average method or the Total Contribution Approach, Credits are as good as Paid Contribution's" given that:
  • Credits are limited to a maximum of 520 under normal circumstances and 1020 in those cases where Carers credits are included. Paid contributions alone are eligible up to the maximum. Higher limits apply for carers will apply when the new Long-Term Carers Contribution scheme is finally introduced.
  • Regular credits alone (even if they exceed 520) will not qualify you for the SPC, as a minimum of 520 paid contributions are required. So whereas 520 or more paid contributions alone will entitle you to a pension, 520 or more regular credits alone will not. Again this is different in the case of Carer's credits in certain circumstances.
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I never mentioned "Carer Credits".
 
Conan said:
I never mentioned "Carer Credits".
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You did mention signing on for credits and elaborated on the details of claiming Jobseekers Credits. This was the issue being discussed. You implied in post #13 that there was no limit to the amount of Jobseekers credits allowed as reckonable under TCA.
 
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