However, as it currently stands, I wouldn’t have enough PRSI contributions to qualify for the full state pension if I retire at 60. Is it possible to bridge this gap so that I would qualify by then? Could I do so while living in Spain? I could work part-time doing bar work while in Spain.
Máire, Co Laois
A To qualify for the contributory state pension, you generally need at least 520 full-rate paid PRSI contributions – equivalent to 10 years’ worth of paid work.
One way you can make up for any shortfall is to apply for voluntary PRSI contributions to the state pension, which allow people to maintain or improve their pension entitlements when they’re no longer covered by compulsory PRSI contributions. These contributions can be helpful if you have ceased employment, are self-employed, or are approaching pension age.
If you’ve already paid at least 520 full-rate PRSI contributions (which you likely have), you can continue to build your record by paying a flat yearly amount, even while living abroad. Voluntary contributions typically cost between €500 to €600 a year, depending on your circumstances and your PRSI class.
If you spent time out of the workforce caring for children full-time, you should check with the Department of Social Protection to see if you’re entitled to any credited social insurance contributions for this period. While these contributions don’t help you qualify for the state pension initially, they can help increase your pension rate once you’ve passed the 520 paid contributions threshold.
Today’s news in 90 Seconds – Sunday, August 3rd
Working part-time in Spain won’t earn you Irish PRSI contributions, but thanks to EU rules, time worked in Spain and social insurance paid in Spain can be combined with your Irish record when calculating your pension. That said, Spanish contributions would only count towards a separate pro-rata Spanish pension.
If your main goal is to qualify for the full Irish pension, voluntary contributions mentioned above are the most direct and reliable route.
Keep good records and you’ll be in a strong position to retire in Spain at 60 and still receive your Irish state pension at 66. If you’re entitled to it, you can apply for the state pension at 66 from abroad, and it can be paid to you wherever you live.
‘Are we entitled to tax relief when our eldest child starts college in September?’
Q We have three teenage children and our eldest child is due to start college this September. It will be a four-year undergraduate degree. As this is the first time we’ve faced college costs, we’re under a good bit of pressure financially. We were wondering if we might qualify for tax relief on the student contribution charge?
Mairéad, Co Waterford
A You’re not the only parents to be worried about college fees. The student contribution charge was cut to €2,000 from €3,000 through cost-of-living measures introduced in the previous two budgets. But anxiety over college expenses for the upcoming academic year were heightened earlier this summer after Higher Education Minister James Lawless suggested that the end of cost-of-living packages in the next budget would mean that fees would increase by €1,000.
Tax relief on tuition fees does allow you to claim back up to a fifth of the cost of the student contribution charge for qualifying courses. Unfortunately, you cannot claim this relief if you only have one child in third-level education.
However, you will be eligible for tax relief when your second child starts third-level education. If the annual student contribution charge is still at €3,000 at this stage and you still have two children in full-time tertiary education, the relief would be worth €600.
In the meantime, there are other ways you can ease the financial burden of sending your eldest child to college. Make sure your child receives all the discounts they’re entitled to, as this should help limit day-to-day living costs.
Students usually get discounted travel rates (as well as various other discounts) through the TFI Student Leap Card. If your child is facing an overly long commute to college every day, renting may be unavoidable. If this is the case, explore all rental options. For instance, if you have a relative living near the college, they could earn as much as €14,000 in rent a year tax-free, under the rent-a-room scheme, by renting out a room in their home to your child.
If staying with a relative is not an option, be sure to shop around. The cheapest rent is typically available to those who stay in “digs” or who share accommodation. While some digs are only available to rent for five nights a week, with students expected to return home at weekends, five-night accommodation is still generally cheaper.
Email your questions to Gabrielle Monaghan, at gabrielle.monaghan@independent.ie
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