Monday 24 April 2017

State pensions: your guide to what's available for retirement


AM considering taking out my own private pension but before I proceed I would like to know more about the state pension available. Can you please give me a guide as to what is currently available?

This can be quite a complex issue and one that is a bit of a maze for most people. Before we look at what payments might be available to you, let us first look at what milestones you need to achieve before any state pension benefit becomes payable.

1) Age The current 'retirement age' you need to achieve is 65. However, The Social Welfare and Pensions Act 2011 made a number of changes to the qualifying age for State pensions. The qualifying age will rise to 66 in 2014, 67 in 2021 and 68 in 2028. So: If you were born on or after 1 January 1948 the minimum qualifying State pension age will be 66. If you were born on or after 1 January 1955 the minimum qualifying State pension age will be 67. If you were born on or after 1 January 1961 the minimum qualifying State pension age will be 68 2) PRSI Contributions

People in employment pay contributions to the Irish Social Insurance Fund. The contribution you pay depends on your earnings and occupation and therefore it is called Pay Related Social Insurance (PRSI) contribution. There are currently 11 different PRSI Classes. They are A, B, C, D, E, H, J, K, M, S and P. The social insurance payments to which you may become entitled depend on the PRSI Class you are in and the number of years you have paid into this Insurance Fund What typesofagerelatedstatepensionareavailable? Step 1 - State Pension (Transition) This is payable to people aged 65 who have retired from the workforce. If you have earnings, they must be less than €38 a week from employment or €5,000 a year from self-employment. From 1 January 2014 the State Pension (Transition) will no longer be paid. This means that there will then be a standard State Pension age of 66 years for everyone.

Step 2 - State Pension (Contributory) The State Pension (Contributory) is payable from the age of 66. You are allowed to have income from any other source while you receive this pension, but both the income and the pension are taxable.If you don't qualify for the State (Contributory) Pension? State Pension (Non-Contributory) You may qualify for this State (Non-Contributory) Pension if you are aged 66 or over, you do not qualify for the State (Contributory) Pension, ou pass a means test and you meet certain residency conditions Whatarethemaximumrates payable? The State (Contributory) Pension is €230.30 per week with an increase of €153.50 for an additional qualified adult under age 66 or an increase of €206.30 for an additional qualified adult aged 66 and over. The State (Non - Contributory) Pension is €219 - 229 per week depending on your age with an increase of €144.70 for an additional qualified adult.

According to the CSO, average life expectancy is projected at 86.5 years by 2041 for men and 88.2 years by 2041 for women. You can expect to live for 20 years in retirement. Whilst it can be daunting, there are plenty of ways and means of supplementing your income on retirement, provided you don't leave it too late. Your best ally is time. The sooner you start, the easer it is. Jim Doyle ACMA QFA is a partner in RDA Accountants offering full accountancy, business advisory, tax advisory and financial services. RDA Accountants | 5 Upper George Street, Wexford | Louisville House, Waterford Road, Kilkenny | 053 91 70507 | RDA Wealth Ltd trading as RDA Accountants is regulated by the Central Bank of Ireland

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