Local Authority Pension Contributions

Alkers

I am trying to work out what the pension contributions for a new starter in a Local Authority would be?

The position advertised mentions a superannuation contribution of 1.5% of pensionable remuneration plus 3.5% of net pensionable remuneration but I also see from revenue that there are pension-related deduction payments of 10% on everything above €28,750? I'm not clear do all three apply and if so whether they are independently calculated or cumulative?

I am trying to work out how my take-home pay would compare if I took up an executive engineer position @ €48,209 Vs my current salary of €45k + 6% employer pension contribution - personal 14% pension contributions.

Also, I am 31 so will not have a full 40 year's service at retirement. Will this diminish the final pension significantly? Is it still likely to be the case that the LA pension will significantly outperform a private one? My current pension is currently worth approx 15k

Thanks!

Ace2007

Simona1986 wrote: »

I am trying to work out what the pension contributions for a new starter in a Local Authority would be?

The position advertised mentions a superannuation contribution of 1.5% of pensionable remuneration plus 3.5% of net pensionable remuneration but I also see from revenue that there are pension-related deduction payments of 10% on everything above €28,750? I'm not clear do all three apply and if so whether they are independently calculated or cumulative?

I am trying to work out how my take-home pay would compare if I took up an executive engineer position @ €48,209 Vs my current salary of €45k + 6% employer pension contribution - personal 14% pension contributions.

Also, I am 31 so will not have a full 40 year's service at retirement. Will this diminish the final pension significantly? Is it still likely to be the case that the LA pension will significantly outperform a private one? My current pension is currently worth approx 15k

Thanks!

Chances are that the state pension age will be 70 when you retire, plus you should have the option of buying extra years, so I wouldn't be concerned about getting the full 40. Each year less if just one less year of accrual.

Assuming the private pension is DC - all the risk is on you, whereas the government DB one the risk is on the government, i.e. they have to find the monies to pay you regardless if the fund goes tits up, and being a government, the probability of them defaulting is very very low.

Geuze

The standard pension cont is 6.5%, made up of the elements that you mentioned.

It's not actually 6.5% of your gross, it's more complex that that.

On top, you pay the PRD, which is up to 10 / 10.5%.

Alkers

Geuze wrote: »

The standard pension cont is 6.5%, made up of the elements that you mentioned.

It's not actually 6.5% of your gross, it's more complex that that.

On top, you pay the PRD, which is up to 10 / 10.5%.

10% in addition to the 6.5% above, that seems very high?

Riskymove

Simona1986 wrote: »

I am trying to work out how my take-home pay would compare if I took up an executive engineer position @ €48,209 Vs my current salary of €45k + 6% employer pension contribution - personal 14% pension contributions.

Also, I am 31 so will not have a full 40 year's service at retirement. Will this diminish the final pension significantly? Is it still likely to be the case that the LA pension will significantly outperform a private one? My current pension is currently worth approx 15k

Thanks!

You can use the pension modeler here:http://www.cspensions.gov.ie/modellers.asp

This is aimed at Civil Service but LA scheme is similar I believe


You can use this tax calculator to work out salary http://taxcalc.ie/budget-2018/

Riskymove

Simona1986 wrote: »

Will this diminish the final pension significantly? Is it still likely to be the case that the LA pension will significantly outperform a private one? My current pension is currently worth approx 15k

Thanks!

It is important to note that the two pensions are very different in nature

In the PS, your "contributions" are not invested but the other side is that you will know what your pension will be (in general terms)

As a new entrant your pension will be based on average earnings over your career and your years of service.

Your pension is also integrated with the OAP pension (so you don't get full occupational pension in addition to the OAP, the occupational open is reduced by the rate of the OAP)

If you don't work 40 years the pension is reduced but the modeler will show you by how much

as mentioned you could work for around 38 years if you do then a couple of years wont make a huge difference

Geuze

Simona1986 wrote: »

10% in addition to the 6.5% above, that seems very high?

Yes, the PS pay high pension conts since the PRD was introduced.

PS always paid 6.5%.

Note that for pre 1995 staff it's a straight, simple 6.5% of salary.

But for workers hired post April 1995 it's 6.5%, but not all of that is applied to all your salary. I haven't the time to explain that now.

The PRD was introduced as one of the three PS paycuts, back in 2009-2011.

The rates are 10% and 10.5%.

Under the Lansdowne Road agreement, pay restoration is slowly happening.

One way that it's happening is that the PRD exemption is increasing.

Geuze

PRD RATES AND THRESHOLDS

http://www.cspensions.gov.ie/faq5.pdf

Pre 2016 - exemption was 15,000, after that the PRD was 10% / 10.5%


2016

up to 26,083 = exempt
26,083 - 60k = 10%
over 60k = 10.5%

2017 threshold is 28,750

2018 exemption threshold is €28,750.

Geuze

In 2019 the PRD will be abolished and replaced by the ASC.

http://www.cspensions.gov.ie/faq5.pdf

"NB: Section 4 of the Public Service Pay and Pensions Act 2017 abolishes
PRD with effect from 1 January 2019, i.e. PRD will no longer apply
after 2018. It will be replaced by an “Additional Superannuation
Contribution” (ASC) payable by public servants on their pensionable
pay. ASC is provided for in law by Part 4 of the 2017 Act, and will
commence on 1 January 2019."

The ASC is on top of the normal 6.5% pension conts.

The ASC differs depending on the various PS pension schemes.

Geuze

Here are the ASC rates that will apply to members of the new PS pension scheme, since 2013:

https://www.per.gov.ie/wp-content/uploads/PSSA-2018-2020-FAQs.pdf

Q.2 I am a member of the Single Public Service Pension Scheme, what impact will the
changes have on my PRD?

For members of the Single Public Service Pension scheme the following rates of contribution
to the ASC will apply. On 1 January 2019, the exemption threshold for the new ASC will be
set at €32,000 per annum and rates will decrease from 10% to 6.66% for earnings between
€32,000 and €60,000 and from 10.5% to 7% for earnings above €60,000. On 1 January 2020
the exemption threshold will increase further to €34,500 and rates will decrease to 3.33% on
earnings from €34,500 to €60,000 and 3.5% above €60,000.


2019

up to 32k = exempt
32-60k = 6.66%
over 60k = 7%


2020

up to 34,500 = exempt
34,500-60k = 3.33%
over 60k = 3.5%