Dáil Éireann Debate, Wednesday - 24 November 2004
162 Mr. Crawford asked the Minister for Social and Family Affairs if a farmer who has opted for the EU retirement pension scheme, with land leased to a qualifying farmer, can pay PRSI in their own right, in order to be eligible for contributory old age pension at the age of 66; and if he will make a statement on the matter. [30576/04]
View answerThe farm retirement scheme, which is administered by the Department of Agriculture and Food, is designed to encourage farmers aged between 55 and 66 years to retire from farming and transfer use of the land to a younger farmer. The objectives of the scheme are: to provide an income for qualifying farmers who decide to stop farming; to encourage the improvement, where necessary, of the economic viability of the remaining agricultural holdings; and to reassign agricultural land to non-agricultural uses where it cannot be farmed economically.
Farmers who retire early under the scheme can draw a pension of up to €13,515 a year for up to ten years. The scheme receives 50% co-funding from the European Union. Persons intending to retire under the scheme must cease commercial farming permanently and the land must be transferred, leased or gifted to an eligible younger farmer. Having entered the scheme, the retiring farmer must not return to farming at any stage in the future unless all monies already received by way of pension are refunded.
Social welfare legislation provides that any payments received by way of pensions are excluded from the definition of reckonable emoluments for the purposes of calculating PRSI contributions. Accordingly, recipients of a farm retirement pension are not liable for PRSI contributions in respect of that payment. In such cases, depending on the circumstances, it may be possible for the farmer to pay voluntary PRSI contribution to maintain or build entitlement to old age contributory pension.
Where a recipient of a farm retirement pension has another source of income, for example from an insurable employment, the earnings are reckonable for PRSI purposes and liable to PRSI at the appropriate class — generally PRSI classes A or J. Contributions paid at PRSI class A can contribute towards the accrual of old age contributory pension.
Recipients of farm retirement pensions with reckonable income, including rental income from land or other property, are liable to PRSI class S on that income, providing the income is above the insurable limit which is currently, €3,174 per annum. Contributions paid at PRSI class S can help to maintain or improve entitlement to old age contributory pensions.
Farmers should also be aware that the amount of the farm retirement scheme pension is reduced if the retired farmer becomes entitled to one of the following social welfare pensions: old age contributory pension; old age non-contributory pension; widow-widowers contributory pension at age 66; widow-widowers non-contributory pension at age 66; retirement pension; invalidity pension; and blind person's pension.
