Working in retirement
Some people take early retirement in order to take up another job or to become self-employed. Many people aged over the "normal"retirement age are employed. There are a small number of occupations that have statutory upper age limits but, in general, there is no rule which prevents people over the age of 65 from being employed or self-employed. Many self-employed people continue to be so well past the "normal" retirement age.
If you were a permanent and pensionable public servant, your pension may be abated if you go back to work in the public sector. It is generally not possible to further contribute to an occupational pension scheme after the normal age of retirement.
In general, there is no upper age limit for employment and there is no single fixed retirement age for employees. If you are employed, your retirement age is set out in your contract of employment. Some contracts of employment have a mandatory retirement age (that is, the age at which you must retire), but they also have provisions for earlier retirement generally and/or on grounds of illness. The usual retirement age in contracts of employment is 65. Many have provisions for early retirement from age 60 or from age 55 and most have provision for early retirement on health grounds.
In some cases, there is a statutory retirement age. These retirement ages arise in jobs that are established by law and the law sets out the maximum age of staff. If your contract of employment includes a mandatory upper age limit, then you must retire when you reach that limit. However, it is open to you and your employer to negotiate another contract.
If you are subject to a statutory or mandatory retirement age in your job, there is nothing to prevent you taking up a different job when you retire or taking up self-employment.
Effect on social welfare payments
If you are receiving any social welfare payment other than the State Pension (Contributory) or Widow's, Widower's or Surviving Civil Partner's (Contributory) Pension, working will affect your entitlement.
Jobseeker's Benefit or Allowance
If you are getting Pre-Retirement Allowance it may be possible to do some work and retain some entitlement.
State Pension (Contributory)
If you are receiving the State Pension (Contributory), you may work or be self-employed without affecting your entitlement. However, any increase for a qualified adult may be affected if your spouse, civil partner or cohabitant works.
If you are receiving an occupational pension, then you may also work or be self-employed and if you are receiving a private sector pension, working or being self-employed does not usually affect it.
However, most public sector pension schemes are subject to what is called abatement if you return to work in the public sector. The precise conditions may vary from one scheme to another but, in general, abatement means that the pension is reduced in order to ensure that you do not earn more between the pension and the income from employment than you would if you had remained in employment. If you are getting a public service pension and you go to work in the private sector, your pension is not affected.
Contributions to occupational pensions
If you are employed, you may contribute to the new employment pension scheme if you are eligible. Most occupational pension schemes do not cater for contributions over the age of 65 but it is possible that some do. It is possible to get tax relief on contributions up to age 70.
If you are self-employed or your new employment does not include an occupational pension, you could decide to make arrangements for a personal pension. Again, the upper age limit for tax relief for such contributions is 70.
Protective employee legislation
Most legislation dealing with the protection of employees does not have an upper age limit. So, if you are an older worker, whether full or part-time, you are covered by protective legislation dealing with the following areas:
- Information about your terms and conditions of employment
- Holidays and leave
- National minimum wage
- Maximum working hours, rest periods, Sunday working, night working
- Health and safety at work
- Minimum notice - the amount of notice is related to the length of service
If you lose your job and your employer owes you money for arrears of pay, holidays and a number of other items, you may claim this from the Social Insurance Fund.
Under the Unfair Dismissals Acts, dismissal on the grounds of age is unfair with certain exceptions. People who must leave employment when they reach the retirement age stated in their contract may not claim unfair dismissal.
If you are made redundant you may be entitled to a redundancy payment.
The Employment Equality Acts 1998-2015 prohibit discrimination on 9 grounds including that of age (with certain exceptions). They apply to all ages above the age a person is statutorily obliged to go to school (16 currently). You can read more in our document, Age equality in employment.
Social insurance (PRSI) contributions
If you are aged under 66 and you are employed or self-employed, you are liable to pay PRSI in the normal way. This applies regardless of what you did earlier. For example, if you are a former public servant and you take up a job in the private sector, you have to pay full PRSI. In these circumstances, you may be able to qualify for a pro-rata old age contributory pension.
You only pay PRSI on your income from employment or self-employment. You do not have to pay PRSI on your pension from a former employment.
If you take up part-time work or low paid work, you are still in the PRSI system but you may not have to pay anything. If you earn less than €352 a week, you don't have to pay PRSI. If you earn over €38, your employer has to pay and you have full cover. Once you step over the €352 limit, you have to pay on all your income from work. A new PRSI credit was introduced in 2016 which reduces the amount of PRSI payable for people earning between €352.01 and €424 per week. The credit is tapered and the amount of the credit depends on your earnings.
You are not liable for PRSI contributions after the age of 66 - this is the case whether or not you are employed or self-employed. If you do not have enough contributions at age 66, you cannot add to them after that. Unlike some occupational pension arrangements, there is no facility to retrospectively pay PRSI contributions.
If you are aged 66 and in employment, your employer pays a small PRSI contribution to cover you for occupational injuries. This is called Class J social insurance.
Universal Social Charge
You pay the Universal Social Charge (USC) if your gross income is more than €13,000 per year. It does not apply to social welfare or similar payments. Reduced rates of USC apply to people aged 70 or over whose aggregate income for the year is €60,000 or less and to certain medical card holders under 70.
Income tax applies to almost all income. People aged 65 and over are subject to the same general tax rules as everyone else but they do get tax exemption limits below which they pay no tax and some extra tax credits. There are specific tax arrangements for people aged over 65 including the taxation of occupational pensions and the taxation of social welfare payments.