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If I choose to retire at 60 and draw down my private pension will I be paying PRSI on this?

  • 07-03-2022 10:41pm
    #1
    Jeremy Sproket
    Registered Users Posts: 431 ✭✭


    My main concern is that if I decide to retire early and draw down my private pension early, will I be paying PRSI from my pension payments that I receive so I can keep up my state pension entitlement.

    If my private pension is PRSI exempt then I'll have to think twice about retiring at 60.



Comments

  • #2
    ari101
    Registered Users, Registered Users 2 Posts: 2,835 ✭✭✭ari101


    If it is an occupational pension (not an approved retirement fund or similar) you should not pay PRSI.

    You might find your contributions to date could be sufficient by 60 for a full state pension, for example, if you started work early you may have 40years worth of contributions, so you might qualify despite stopping paying prsi. Get your PRSI records from Welfare online to see how many you have and then look at what you need to qualify. I'm not sure if voluntary contributions would be an option if you are short but you could contact welfare to find out.



  • #3
    Jeremy Sproket
    Registered Users Posts: 431 ✭✭Jeremy Sproket


    Thanks.

    I'm 28 now. I have been working since I was 22. So 62 would be the earliest I could retire then :(

    What do you mean by "voluntary contributions"?



  • #4
    Jim_Hodge
    Registered Users, Registered Users 2 Posts: 11,223 ✭✭✭✭Jim_Hodge


    https://www.boards.ie/discussion/comment/118759411#Comment_118759411

    To be honest, if you're only 28, there's no way of knowing what will be applicable in another 30+ years



  • #5
    ari101
    Registered Users, Registered Users 2 Posts: 2,835 ✭✭✭ari101


    And there I was thinking you were in your 50s and planning for a hopefully soon to be retirement. 😁

    There is an option to voluntarily pay PRSI in certain circumstances where it is not being deducted to maintain/protect your social welfare benefits, but it's not an area I have had dealings with to understand the rules.

    It is good to be aware that you need to aim for 40 years contributions, or where less than this, a minimum of 10 years and an average of 48 contributions/year between commencing insurable work and retirement age to get a full state pension under current rules. But as Jim says, who knows what rules might apply by then... The way the actuarial hole in our social welfare system is I doubt the current levels of payments will remain sustainable.



  • #6
    Jim2007
    Moderators, Business & Finance Moderators Posts: 10,419 Mod ✭✭✭✭Jim2007


    https://www.boards.ie/discussion/comment/118759411#Comment_118759411

    The current pension scheme won't even exist by the time you are 62 because it is unsustainable. So at some point in your working career it will have to change to one that will be based on the pensioner relying more on savings. All you can do is load up as much as you can and hope for a good transition.



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