Transferring public sector pension to private sector pension

Ginger Ninja

Hi all,

I recently started a job in the private sector (moved from public sector) and want to transfer over my public sector pension. However when I contacted my previous employer about it I was informed that a transfer of service is only possible within the Irish Public Service. Is this correct i.e I cannot transfer a public sector pension to a private one?

Thanks all.

wench

Correct, because in the public sector there is no actual pension fund to transfer. Your contributions have already been used to pay current pensioners.
You get a 'preserved benefit', so when you retire they will pay you a pension based on your amount of service and the pay for the equivalent job then.

Henry Ford III

DB schemes are expensive, so your preserved benefit will be valuable.

Financial advisors will never advise a transfer out of a solvent private DB scheme. It's bad advise.

PaulM1977

Leave it where it is.

coylemj

Ginger Ninja wrote: »

I recently started a job in the private sector (moved from public sector) and want to transfer over my public sector pension.

Not alone is this not possible, it would be complete lunacy to do it if it was. A public sector pension pays you a % of current pay which is even better than a private sector DB scheme which typically starts off paying you a % of your final salary but the increases you get over time will be at best index-linked (i.e. covering inflation) if you have a very generous employer but usually less so the gap (in % terms) between your pension and the salary of someone doing your old job will gradually widen. With a public sector pension the link is preserved because the pension is based on a fixed % (set when you retire based on service) of current pay for your old grade.

A preserved benefit in the public sector doesn't equate to a pile of cash with your name on it in some departmental fund, the pensions are paid out of current revenue so there is no fund to transfer.

lstmd

I have worked for seven years in the public sector. I now work in the private sector. What do I need to do if anything to ensure I receive public sector pension when I retire.

coylemj

lstmd wrote: »

I have worked for seven years in the public sector. I now work in the private sector. What do I need to do if anything to ensure I receive public sector pension when I retire.

You need to do nothing until you reach either 60 or 65, it depends on your preserved benefit. Contact the department a couple of months before you reach the retirement age.

Henry Ford III

coylemj wrote: »

Not alone is this not possible, it would be complete lunacy to do it if it was. A public sector pension pays you a % of current pay which is even better than a private sector DB scheme which typically starts off paying you a % of your final salary but the increases you get over time will be at best index-linked (i.e. covering inflation) if you have a very generous employer but usually less so the gap (in % terms) between your pension and the salary of someone doing your old job will gradually widen. With a public sector pension the link is preserved because the pension is based on a fixed % (set when you retire based on service) of current pay for your old grade.

A good private db scheme (they are rare and well funded ones are also getting rarer) will also pay benefits based on final salary. Infact they are known as Final Salary Schemes.

Hani Kosti

Henry Ford III wrote: »

A good private db scheme (they are rare and well funded ones are also getting rarer) will also pay benefits based on final salary. Infact they are known as Final Salary Schemes.

What about CARE?

ANXIOUS

Henry Ford III wrote: »

DB schemes are expensive, so your preserved benefit will be valuable.

Financial advisors will never advise a transfer out of a solvent private DB scheme. It's bad advise.

That is an incredibly sweeping statement and one that is not correct.

Henry Ford III

ANXIOUS wrote: »

That is an incredibly sweeping statement and one that is not correct.

What makes you say that?

ANXIOUS

The fact that you made a sweeping statement and implied that their is never a reason to transfer out of a DB scheme. You should know better than to make statements like that, there are plenty of good reasons to take a transfer.

Henry Ford III

ANXIOUS wrote: »

The fact that you made a sweeping statement and implied that their is never a reason to transfer out of a DB scheme. You should know better than to make statements like that, there are plenty of good reasons to take a transfer.

Care to list them?

ANXIOUS

Henry Ford III wrote: »

Care to list them?

How many do you want?

1. Over 50 and need access to retirement funds, trustees of DB scheme won't allow early retirement. So transfer it out and get access from 50, 16 years earlier than if you waited.

2. Leave through redundancy and waive your right to a lump sum to increase your package. Transfer out of the scheme to a PRSA (subject to meeting the criteria) and then retire it and you've got the right to your lumpsum back.

So there you go two very valid reasons to transfer out anymore and I may have to charge.

Henry Ford III

ANXIOUS wrote: »

How many do you want?

1. Over 50 and need access to retirement funds, trustees of DB scheme won't allow early retirement. So transfer it out and get access from 50, 16 years earlier than if you waited.

2. Leave through redundancy and waive your right to a lump sum to increase your package. Transfer out of the scheme to a PRSA (subject to meeting the criteria) and then retire it and you've got the right to your lumpsum back.

So there you go two very valid reasons to transfer out anymore and I may have to charge.

Ah here!

1/. Transfer to what? At what value? You'd be taking a huge hit by doing so. Furthermore ARF type options aren't available - an annuity is compulsory in those circumstances.

So you'd advise taking a likely derisory t.v. and then buying an annuity from age 50+?

2/. Again a t.v. at a likely substantial discount to make good for a silly earlier decision.

You won't be earning any fees with advice like that.

coylemj

Henry Ford III wrote: »

A good private db scheme (they are rare and well funded ones are also getting rarer) will also pay benefits based on final salary. Infact they are known as Final Salary Schemes.

Which I pointed out in the post that you quoted, relevant extract below ...

coylemj wrote: »

.... A public sector pension pays you a % of current pay which is even better than a private sector DB scheme which typically starts off paying you a % of your final salary ....

But no private DB scheme will pay their pensioners the increases that a public sector pensioner will get over time.