Retirement: Advice on accessing benefits between 65 and 66

While many people now retire at 66, you can still access State benefits for 12 months if you retire at 65, as John Hearne explains

Planning ahead: While many people now retire at 66, there are supports available to those who choose that 65 is their preferred retirement age. 

These days, most people tend to retire at 66. But what if you want to go a year earlier, at 65? 

The state pension age is 66, so does that mean you’ve got to find some other way of funding your life for those twelve months?

The good news is that you should be able to leave early and secure state benefits to tide you over.

First of all, let’s look at private pension arrangements. If you’ve got a private sector pension arrangement like a group scheme or a PRSA, then yes, you can retire before 66. In occupational pension schemes, early retirement is generally possible with the employer's and/or trustees' consent from age fifty onwards. Under personal pension arrangements, retirement benefits can be taken from age sixty, while under PRSA arrangements, early retirement from employment is also possible from age 50.

Depending on what age you leave employment however, you may not be able to receive all of the benefits. Check with the administrators of your scheme to find out.

When it comes to the state pension, the situation is a little more complex.

While you can’t claim the state contributory pension until age 66, it is still possible to retire at 65 and claim a form of Jobseeker’s benefit for the twelve months until you reach qualification age.

As a general rule, Jobseeker's benefit is paid for either nine months or six months. In February 2021 however, a special exception was made for those between 65 and 66 who wish to retire, and who meet the PRSI requirements. People in this bracket don’t have to be looking for a job and nor will you need to sign on at the local Intreo centre.

To qualify for this benefit payment, you must be 65, have stopped working, live in Ireland and satisfy the social insurance or PRSI requirements.

While these requirements are quite complex, the reality is that most retirees, including the self employed, should qualify for the benefit. It’s still worth reviewing them here however.

The first definition you need to know is this: The ‘governing contribution year’, which you’re going to hear about in a minute, is the second last complete tax year. So for example, if you’re claiming in 2022, the second last complete tax year is 2020.

If you were an employee, you must have paid at least 104 PRSI contributions at Class A, H or P or have paid at least 156 PRSI contributions at Class S and have paid or credited at least 39 PRSI contributions at Class A, H or P in the aforementioned governing contribution year. A minimum of 13 weeks must be paid contributions, though there are exceptions to this which we’ll get to in a minute.

You could write a book about the different PRSI classes, but most workers in Ireland pay Class A contributions. This covers employees in industrial, commercial and service-type employment with gross earnings of €38 or more a week from all work, as well as civil and public servants recruited from 6 April 1995 and Community Employment workers from 6 April 1996.

Class H refers to defence forces personnel while Class P refers largely to those who make most of their money from share fishing. Class S meanwhile covers the bulk of the self employed, including farmers.

If you don't have those 39 PRSI contributions in the governing contribution year, you can use 26 PRSI contributions paid in the governing contribution year and 26 paid in the year immediately before this.

And if you don’t have 13 paid contributions in the governing contribution year, you must have paid 13 contributions in any of the following years: the two years before the governing contribution year, the last complete governing contribution year or the current governing contribution year.

If you were self-employed, you must have paid at least 156 PRSI contributions at Class S or have paid at least 104 PRSI contributions at Class A or H and have paid 52 PRSI self-employment contributions at Class S in the governing contribution year.

Again, despite the complexity of these rules, the fact is that most retirees qualify, and to restate, you don’t have to be available for full time work, and nor do you need to sign on.

What’s more, you can take up an educational course while drawing the benefit without running the risk of losing it.

You can also continue in what’s called ‘subsidiary employment.’ This is work that could have been done while you were in full-time employment and outside your normal working hours. Suppose for example you worked a full-time job during the day and had a part-time job in the evening. The part-time job is known as subsidiary employment if you were able to do it without it affecting your full-time job.

The rate of payment is €220 per week, with an increase of €146 if you have an adult dependent. There are also increases available for child dependents: for a child under 12, the full rate is €42 and the half rate is €21, and for children over 12, the equivalent rates are €50 and €25.

Note too that you can’t claim an increase for a qualified child with your payment if your spouse, civil partner or cohabitant has an income of over €400 a week. You get a half-rate if your spouse, civil partner or cohabitant earns between €310 and €400 a week.

The best way to apply for the benefit is online at mywelfare.ie using a MyGovID account. You can still get a paper form and apply that way, but to get it, you’ll need to email this address: [e-mail]. Provide your full name and address and request the form in the body of the mail. An application form will then be posted to you.