PRSI, Welfare, and Pension Presentation at Galway University
Brendan Casey, a PRSI Consultant, conducted a presentation at Galway University on behalf of Cornmarket Group Financial Services. The presentation covered three principal categories of Public Servants based on their employment dates and entitlements to pensions under PRSI. It also highlighted important dos and don'ts for pre-April 1995 retirees regarding Social Welfare benefits and PRSI contributions.
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PRSI & Welfare Pension Presentation Galway University Tuesday 5th December 2023 On behalf of Cornmarket Group Financial Services Presented by: Brendan Casey PRSI Consultant PRSI Consultancy Ltd Brendan@prsiconsultancy.com M 087 6899610 1
There are 3 principal categories of Public Servants 1. Employed Pre-April 1995 or was a Pre-April 1995 Public Servant immediately prior to taking up permanent and pensionable service post- April 1995 2. Employed after 6th April 1995 and prior to 31st December 2012 who will be entitled to a Supplementary Pension when not claiming Welfare or being employed 3. Took up employment in the public service since 1st January 2013 2
1. Public Servant employed pre-6th April 1995 (PRSI @Class D) PRSI @Class D does not cover entitlement to the State Pension Contributory Class D employee is exempt from PRSI on concurrent employment (Class J) or self-employment (Class K) No entitlement to Job Seekers Benefit after retirement Assuming at least 40 years in Public Service, you or your spouse retain a guaranteed entitlement to a Survivors Contributory Pension if and when one predeceases the other. Anomaly: If you are divorced and have not remarried or are not cohabitating, you are entitled to the Survivors Contributory Pension if your ex dies, irrespective of them having remarried. Because a Public Servant gets a full pension after 40 years service, there can be sufficient time 3 remaining before age 66 to qualify for a reduced Social Welfare Contributory Pension
Pre-April 1995 retiree: Welfare Dos and Donts Don t immediately sign on at the nearest Intreo office (Employment Exchange) because, having been previously been insured @ Class D rate of PRSI, the Credits they will award will only give cover for the Survivors Contributory Pension Don t apply to become a Voluntary Contributor because they will admit you as a VC that only covers the Survivors Contributory Pension 4
Pre-April 1995 retiree: Welfare Dos and Donts Do request a copy of your Social Welfare Insurance record which will show all weeks of PRSI contributions paid and credited prior to your employment in the public sector. Copy can be requested online if registered with MyGov.ie or Lo Call 0818 690 690 from Welfare s PRSI Records Section in Buncrana, Co Donegal 5
Pre-April 1995 retiree: Welfare Dos and Donts If you already have at least 260 weeks of reckonable PRSI Contributions Paid (credits don t count) you will at least qualify for a Mixed Insurance Pro-Rata State Pension Contributory at age 66 If you have potential to get 520 weeks of reckonable PRSI Contributions Paid before age 66 you will qualify for a reduced regular State Pension Contributory at age 66 6
Pre-April 1995 retiree: Welfare Dos and Donts If you are short of the 260 weeks of PRSI Contributions Paid for a Mixed Insurance Pro-Rata State Pension Contributory plan to achieve that target before age 66 by resuming employment for at least the number of weeks required If you are short of the 520 weeks of PRSI Contributions Paid required for the regular State Pension Contributory you can either resume employment paying PRSI or alternatively, provided you already have 260 reckonable weeks paid, make up the difference by paying Voluntary Contributions 7
Pre-April 1995 retiree: Welfare Dos and Donts Always plan to take up at least ONE week of Class A employment before the end of the year of retirement as this will guarantee having Change of Status Credits backdated from the week you took up employment to the 1st January of the previous year. You could, potentially, add 100 weeks of credits to the records that will be used when calculating your State Pension Contributory pension. Note: The Change of Status Credits will never appear on any records supplied to you by the Department however, they will be included when they are making a formal decision on your State Pension entitlement) 8
Pre-April 1995 retiree: Welfare Dos and Donts Sample: Retiring 1st November 2024 (43 weeks @ Class D, not used in Welfare pension calculation), takes up employment paying Class A on the 1st December 2024, the reckonable for pension records for 2023 and 2024 changes to 2023: 52 Change of Status Credits 2024: 1 @Class A + 48 Change of Status Credits Warning: If retiring towards the end of the year, do not have holiday pay due as this could increase the number of weeks @ Class D on your record and could leave no post-retirement weeks in the year: if 52 Class D for 2024 then any Class A paid will be cancelled 9
Pre-April 1995 retiree: Welfare Dos and Donts If you are also Self-Employed at the time you retire from the Public Service, the PRSI on your Self-Employment changes from Class K to Class S from the date of retirement. Your accountant may remit 52 weeks @ Class S for the year of retirement however as no overlap of Class D and Class S is allowed your record for Welfare pension purposes (if you retired 1st November 2024) for 2024 will be:- 2024: 43 Class D and 9 Class S Change of Status Credits are not given when you resume employment paying the Class S rate of PRSI as a self-employed person, they are only applied when you pay a Class A rate of PRSI 10
The major advantage of having the one week of PRSI @Class A paid after retirement is that you have Changed your Status from previously been a Modified Class D PRSI Contributor and can now sign on at your nearest Intreo Office for State Pension reckonable credits while waiting to take up more regular employment or self-employment at a later date. The Class A rate of PRSI also allows you to explore the Voluntary Contribution option, however as a previously employed person, the VC option can be very expensive as it is charged at 6.6% of previous salary. A rule of thumb would be that for every (52 week) year you add to your PRSI records you increase your weekly Welfare State Pension by circa 6.60, therefore paying 3,300 for a year of VC to get an additional 320 a year in your Welfare Pension is not a good investment 11
PostRetirement: Welfare Dos and Donts There are 3 Voluntary Contribution rates V1 for those who were previously insurable @ Class A rate of PRSI are charged 6.6% of previous earnings (previous earnings of 60,000 =VC @ 3,960 a year) V2 for those who were previously self-employed and insurable @Class S rate of PRSI are charged a flat rate of 500 for the year V3 for those who were previously insurable @ Class D rate of PRSI are charged 2.2% of previous income (previous earnings of 60,000 =VC @ 1,320 a year) Because admittance as a VC is predicated on the Class of PRSI you last paid prior to application, it may be prudent to have a post-retirement 5,000 download from an ARF which will have a Class S PRSI liability and then apply to become a VC, Having now been a previous Self-Employed contributor (Class S) will allow you to be admitted as a V2 payee being charged at only 500 for a year as a VC contributor 12
Sample Pre April1995 Retiree case Born 1968 Employed for period (less than 260 weeks) before joining Public Service in January 1992 Retired May 2025 with superannuation pension from 30+ years service Resumed employment post-retirement paying Class A PRSI and reached the target of 260 weeks of reckonable PRSI paid in 2026 which gives a title to a Mixed Insurance Pro-Rata Welfare Pension of 45 at today s rates. 13 Continued to work or sign on for credits to age 66, increased their Welfare pension to 96.70 at today s rates
An Other Date of Birth Date 1st PRSI paid Date of Pension Pension calculated from 13/10/1968 03/07/1988 13/10/2034 1988 At aged 66 12/10/2034 Paid 40 52 50 42 Credited 12 Apr-Apr 88/89 89/90 90/91 91/92 92/93 93/94 1 Class D 10 52 52 Public Service Jan '92 14
2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 52 Change of Status Credits Retired May 2025 +Class A 52 17 35 52 PRSI Paid 271 >12th Oct can be used Regular Credits 82 Class D 1674 Weeks: 0 15
Mixed Insurance Pro-Rata Pension Reckonable weeks paid 271 82 353 1674 2027 Credits Reckonable total Non reckonable Total Full Pension rate @2,080* weeks Notional pension 265.30 258.5 Pension 43.9 Total reckonable weeks 353 16
2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 Change of Status Credits Retired May 2025 +Class A 52 17 35 52 52 52 52 52 52 52 52 41 PRSI Paid 676 >12th Oct can be used Regular Credits 82 Weeks: 17
Regular State Pension Minimum of 520 required Reckonable weeks paid 676 82 758 Credits Reckonable total Full Pension rate @2,080* weeks 265.30 96.7 Total reckonable weeks 758 18
2. Employed commenced 6th April 1995 to 31st December 2012 They are liable to pay a Class A rate of PRSI and their Superannuation Pension will be integrated with Welfare payments of Benefits and Pensions As Class A PRSI contributors they have entitlement to the full range of Welfare Benefits and Pensions immediately upon retirement, They can claim Jobseekers provided Welfare are satisfied they are available for, capable of, and, actively seeking employment . If the Supplementary Pension is greater than the Welfare payment you can claim the balance of the supplementary pension. The maximum weekly Supplementary Pension for a person with 40 years service is 265.30 ( 13,844 a year). The Supplementary Penson is payable when not employed or on a Welfare payment. Jobseekers Benefit ceases after 9 months
Employed after 5th April 1995 and prior to 31st December 2012 For a Public Sector employee who is born in 1968 or afterwards, the maximum Welfare Pension will only be paid to those with at least 2,080 weeks of PRSI Paid and Credited during their working life. If you retire after 35 years Public service the chances are likely that, by not working post-retirement, you may be short of the 2,080 weeks target that would have guarantee the maximum State Pension. However, the Superannuation Supplementary Pension may cover the shortfall in the State Pension entitlement for the rest of your life. If your only employment was the 35 years
Employed after 5th April 1995 and prior to 31st December 2012 Child Caring Credits, that can increase your State Pension entitlement, can be claimed for periods of post retirement if you maintain you have ceased employment to care for a child under age 12. Only one parent can claim Child Caring credits at any one time. If that parent is not the named party on the Child Benefit payment they would be advised to complete the Form HM1 https://www.gov.ie/en/form/ad8b9-homemakers-scheme- application-form-hm1/ to be the registered party who will be claiming Child Caring Credits to be included in their State Pension Contributory calculations.
Potential consequences on not having post-retirement PRSI Contributions or Credits: Treatment Benefits Your entitlement to Welfare s Treatment Benefit of Dental and Optical will cease after 2 calendar years after retirement.
Potential consequences on not having post-retirement PRSI Contributions or Credits: Qualified Adult payment A qualification to a reduced State Pension Contributory can affect your spouse s entitlement to a means-tested Qualified Adult payment, as the QA weekly rate is predicated on the weekly rate of your Social Welfare State Pension Contributory. If ye take up residence abroad the entitlement to the QA will cease. Tip, your spouse can still qualify for the maximum Qualified Adult payment if their weekly income is less than 100 or their capital does not exceed 57,000, jointly held assets or capital will be means tested on half their value.
Potential consequences on not having post-retirement PRSI Contributions or Credits: Survivors Contributory Pension The weekly rate of a Survivors Contributory Pension (Widows/Widowers Pension) can be reduced depending on the time of death of a spouse. A death of a spouse that is close to age 66 or later may reduce the weekly rate of the pension as the Average Test required may be stretched below a certain threshold The Short Yearly Average: The maximum Survivors pension rate is payable ( 265.30 > age 66) to those with an average of 39 weeks of PRSI Contributions in the last 3 or 5 years. If you cease having PRSI contributions either paid or credited post-retirement, within 2 years of retirement you will fail to qualify for the Survivors Pension under this test.
Potential consequences on not having post-retirement PRSI Contributions or Credits: Survivors Contributory Pension Long Yearly Average: If 48 or greater, you will qualify for the maximum weekly rate., currently 265.30 (at age 66) However, as ye both age, there is a reducing chance of having an Average of 48 if you have less than 40 years of employment. If the Long Average is between 36-47 the survivor will qualify for a reduced rate of 260.10 If the Long Average is between 24-35 you will qualify for a reduced rate of 254.00, A minimum of 1,200 weeks of PRSI contributions paid and credited (excluding child- caring) will guarantee an average in the range 24-35 over a 49 year period from age 16 to 65.
Employed since 1st January 2013 Your Occupational Pension is a stand-alone pension and does not include a Supplementary Pension payment, accordingly that safety net does not exist. Because the Welfare Pension is not factored into their employment pension, all efforts should be made by these retirees to ensure they accumulate any additional PRSI contributions that would bring their record up to the 2,080 weeks of PRSI that will guarantee them entitlement to the maximum State Pension Contributory at age 66. 26
Employed since 1st January 2013 Qualification to the State Pension is an exact science and to have ownership of that entitlement they should request a copy of their Welfare records. They can plan to achieve the target of 2,080 weeks that will guarantee entitlement to the maximum weekly State Pension at age 66 by either resuming employment and paying PRSI contributions Avoid gaps in their Social Welfare records going forward. Anytime off work, sign on even if you do not qualify for an actual payment, by signing on you will be awarded Credits for each week of signing which will count towards your pension entitlement. If, and when, they reach the 2,080 weeks target they retain entitlement to the maximum pension rate. 27
State Pension Contributory qualification conditions when dob is 1968+ The rules for calculation of title to the State Pension Contributory under the Total Contribution Approach (aka Aggregate Contribution Method) are: A minimum of at least 520 weeks of reckonable* PRSI contributions are required to have been paid before reaching pension age 66 (credits do not count for this minimum requirement). *Pension reckonable PRSI Classes are A, E, F, G, H, N and S A Pension claimant with at least 2,080 weeks of PRSI paid and/or credited on their record qualifies for the maximum pension payment (currently 265.30 per week), any lower figure will have their weekly pension rate proportionately reduced. All periods taken off work, while resident in the state, to care for a child under the age of 12 or for periods caring for a person who required fulltime care and attention will be covered by Home-caring Credits and used in the pension calculations. The number of Home-Caring Credits is capped at 1,040 weeks.The number of regular credits is capped at 520 weeks. The number of ALL credits that can be used in the TCA method is capped at 1,040 weeks. Note: The Department will not award Child Caring Credits for any week they believe the claimant was in receipt of an income or not resident in the State. 28
Employed since 1st January 2013 If they cease employment and have children under age 12 and their spouse is still employed they should register with Welfare s Homemakers Section and be eligible to have Child Caring Credits up to the date of their youngest 12th birthday included when their State Pension is being calculated. Paying Voluntary Contributions at the VC1 rate (ex-employee) can be very expensive as it will be charged at a rate of 6.6% of previous salary. It is possible to reduce the potential VC charge by downloading a minimum of 5,000 in a year from an ARF and paying 52 weeks of Class S PRSI (minimum of 500 of PRSI) and apply in the following year to be admitted as a Voluntary Contributor, the charge for the VC2 rate(ex- Self-Employed) is an annual fee of only 500 29
General rules on Welfare Benefits and Pensions Job Seekers Benefit ceases after 9 months, however if you resume employment paying Class A rate of PRSI for at least 13 weeks you can re-qualify for Job Seekers Benefit for a further 9 months Illness Benefit lasts for 2 years and is means tested thereafter, however if the illness is medically assessed as permanent you can be put on Invalidity Pension which automatically transfers to the maximum rate of the State Pension Contributory at age 66 Self-Employed Class S PRSI does not cover Illness Benefit or Job Seekers Benefit Self-Employed Class S PRSI does cover qualification to Invalidity Pension 30
General rules on Occupational Injury and Disablement Benefit Occupation Injury only lasts for 6 months and, if still medically certified unfit to work, will revert to Illness Benefit. However, regardless of remaining out sick or resuming employment, the client can still claim a Disablement Pension or a gratuity depending on the severity of the illness An assessment by a Social Welfare Medical Referee on the degree of the disablement will be made. 31
No award of a Disablement Gratuity or Pension can be made if the disablement is assessed at less than 15%. Degree of Disablement Pension or Gratuity 20% and above Pension always payable. The pension may be awarded for life or for a provisional (finite) period Between 15% and 19%, where the assessment is for a limited period (provisional) Gratuity of > 17,560 is payable Between 15% and 19% for life Option of pension or gratuity 32
Disablement Benefit weekly Rates 100% disablement Maximum personal pension 251.00 20% to 90% disablement Reduced pension 90% 225.90 80% 200.80 70% 175.70 60% 150.60 50% 125.50 40% 100.40 30% 75.30 20% 50.20 Between 15% and 19% disablement you may get a lump sum, up to a maximum of 17,560 The percentage of Disablement can be medically re-assed at any future date and can be increased or reduced accordingly. A Disablement Benefit can be paid for life even in conjunction with the awarded of the State Pension Contributory at age 66 33
In Summary Pre-April 1995 Public Sector employees: Trouser a Defined Benefit Pension and actively plan to also qualify for a reduced State Pension: Mixed Insurance Pro-Rata Pension which only requires a minimum of 260 weeks of reckonable contributions paid before age 66 Regular State Pension if they have sufficient time to accumulate at least 520 weeks of reckonable contributions paid before age 66 Public Sector employees 1stemployed between Apr 95 and 31st Dec 2012 Be aware that a reduced State Pension Contributory entitlement may be payable at age 66 and depending on your years of service the Supplementary Pension may not make up the shortfall. Plan to maximise the weekly rate of the State Pension 1st employed in public sector 2013+ Plan to maximise their Welfare State Pension by accumulating at least 2,080 weeks of PRSI contributions paid or credited before age 66 34
Q&A 35
