Can You Afford to Step Back? Why Everyone Needs a Pension Plan

Hugh MacEneaney

Handing the reins to the next generation shouldn’t mean handing over your only income. Too many farmers delay letting successors take the lead because they can’t afford to cut back. A simple plan now by paying the right PRSI and having an additional pension, gives you choice, dignity and smoother succession. Without needing to look for support from the incoming generation.

Why PRSI matters; State supports are there to help, but the non-contributory payment is means‑tested and designed as a last resort. Making the correct PRSI (social insurance) payments during your working life builds entitlement to the State contributory pension, this is a steadier, non‑means‑tested income. Check your PRSI record today: missing years can leave permanent gaps that reduce or eliminate entitlement. You can check your record online on My Welfare or by phoning the Department of Social Protection on 0818 690690 or 01 4715898. The Citizens Information Service can also help.

If you farm part-time alongside other employment, it’s easy to assume all is well. PRSI payments made via an employer covers that job, but self‑employment farm income must be properly declared and contributions made.  Make sure both income streams are recorded so you don’t create gaps in your record that negatively impact entitlements later.

Your accountant can help you set up a private pension. These are sometimes called AVC’s. An Additional Voluntary Contribution or private pension top-up is a practical tool for farmers. Contributions qualify for immediate tax relief, reducing your current tax bill while building a pot that benefits from tax‑deferred growth. For many, small regular AVCs deliver sizeable extra income over time and are more tax‑efficient than saving in a taxed account. That extra income can be the financial buffer that lets you step back from managing the farm without losing security.

Inadequate pension income has been shown to stall succession.  When the older generation can’t afford to hand over because they still require a financial income from the farm, the farm transfer is put on the long finger. That puts family relationships and farm productivity at risk. Having a reliable pension plan clears this bottleneck: it creates predictable income for the succeeding farmers and lets successors assume responsibility with confidence.

Practical steps to take now;

• Check your PRSI record and see if you can correct any gaps
• Talk to your accountant or a regulated financial adviser about AVCs and pension options suited to irregular farm income
• Start small: regular AVC contributions compounded over years are powerful and are very tax efficient
• Have an open family plan for succession once the financial picture is clearer.

You may never stop working the land, but with the right PRSI record and a pension top‑up you can choose when and how to step back and not be forced by financial matters. As the Irish Proverb says; “Ní hé lá na gaoithe lá na scolb.” A windy day is not the day for thatching!

The above first appeared in Securing the Future of Irish Farms: Approaches for Generation Renewal (PDF), produced as part of Teagasc Generational Renewal Week 2026.