29 September 2017
    
IN THIS ISSUE
Quintas Newsletter
Introduction
Budget 2018
State Pensions - How do I qualify?
Michael O' Leary - Up against the Ropes
Women bear the brunt of our pension shortfall
Company Accounting Act - Are we there yet?
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State Pensions - How do I qualify?
by Chantelle Kennelly
 

During Income Tax Season, one area that is heavily queried by clients is that of PRSI Contributions and eligibility for the state pension. Here, we outline the requirements for both the contributory and non-contributory state pension as per the Department of Social Protection and general information for each;

Contributory State Pension Requirements;

  1. Must be at least 66 years of age.
  2. Must have started paying PRSI Contributions before reaching the age of 56 years.
  3. Must have paid at least 520 full rate social insurance contributions, which would equate to circa 10 years contributions. However, only 260 of these 520 may be voluntary contributions.
  4. Must have had a yearly average of at least 10 paid or credited full rate contributions between 1953 and the end of the last tax year before the individual’s 66th birthday.

The contributory state pension is not means tested and is based on the number of social insurance contributions paid by the tax payer as described above, therefore an individual could still have other sources of income and receive the contributory state pension. The pension is taxable, however most taxpayers would have sufficient tax credits to shelter the tax due.

Non-Contributory State Pension Requirements;

  1. Must be living in Ireland under the habitual residence condition.
  2. Must be at least 66 years of age.
  3. Must satisfy a financial means test.

The financial means test assesses cash income including employment income and the value of capital held, for example, Savings, Investments, and Property etc. The means test does however exclude the family home. As with the contributory state pension, the non-contributory state pension is also taxable.

The rules surrounding the state pension are quite complex therefore it is advisable to apply for the pension within sufficient time limits. The Department of Social Protection recommend that an individual should apply 3 months before reaching their 66th birthday and 6 months before, if contributions have been paid in different countries. We are advising our clients to request their social contribution record if they are within 10 years of turning 66. This allows us to ensure that the record is correct and plan if required, by making voluntary contributions through tax returns.

To request your PRSI Record, you can do so on www.MyWelfare.ie and by logging into your MyGovID online account. If you do not already have an account, you can create one by providing an email address and some personal information. Further information can be found on www.welfare.ie or alternatively you can contact the Tax Team in Quintas on 021-4641400.