Question
I am
retiring from work when I turn 66 and will be eligible for a reduced-rate State
Pension (Contributory) of €198.60. My husband is getting his full State Pension
(Contributory) of €233. He thinks we would be better off if he claimed for me
as a qualified adult on his pension. Is he correct? If we do this, will all the
money be paid to him?
Answer
If
your husband claims for you as a qualified adult on his pension, then his
pension will consist of €233 plus an increase of €209 – a total of €442. The
increase is automatically paid directly to you (although you can request that
it is paid with your husband’s pension). If you decide to claim a reduced rate contributory
pension then the total for you both will be €431.60. Therefore, it would appear
that you are indeed better off being a qualified adult.
However,
there are other factors that you should take into account. While your husband’s
pension is not means tested, the Increase for a Qualified Adult is means tested.
This means that any income you have in your own right from employment,
self-employment, savings, investments and capital (for example, any property
except your own home) is taken into account. If you have joint savings or
investments with your spouse, half is taken into account.
You
also need to look at the tax situation. Your husband is entitled to claim a
PAYE tax credit (€1,650) with his pension. Even though the Increase for a
Qualified Adult is paid directly to you it is not a social welfare payment to
you so you cannot claim a PAYE tax credit of €1,650. However if you claim a
social welfare payment in your own right (for example, your reduced-rate
pension) you can claim a full PAYE tax credit.
You should analyse both options carefully and
do detailed calculations, taking all the factors that affect how much you
receive into account. After you do the calculations, you may find that you are
better off claiming the reduced-rate contributory pension in your own right.
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