Michael McGrath (Cork South Central, Fianna Fail)
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241. To ask the Minister for Employment Affairs and Social Protection the class of PRSI paid by persons under 66 years of age in respect of income from an approved retirement fund; if such PRSI paid is reckonable for the purposes of the State pension (contributory); and if she will make a statement on the matter. [48608/18]

Regina Doherty (Meath East, Fine Gael)
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Approved retirement funds or ARFs are funds managed by a qualifying fund manager into which an individual may invest the proceeds of their pension fund when they retire. The income and gains of such funds are exempt from tax within the fund. Any amounts withdrawn from an ARF are referred to as a distribution. A distribution is treated as income from an employment. It is subject to income tax and the fund manager must operate the PAYE system on it.

Under social welfare legislation any payments received by way of pension are not regarded as reckonable emoluments for the purposes of self-employed pay related social insurance (PRSI). However, unlike annuity products, ARFs are not pensions but are treated as assets. Distributions from ARFs fall within the charge to Class S self-employed PRSI, or if the recipient of the distribution is a modified class contributor, Class K.  Class S contributions may be used to qualify for the State pension (contributory). Class K PRSI contributions do not give entitlements to any social insurance benefits. 

I trust this clarifies the matter for the Deputy.