Newbie questions re public sector

Gumbo

The_Honeybadger wrote: »

With the new pension does anybody know if you can buy additional years if you are a late entrant?

Financially not worthwhile in my opinion.
I was quoted 13k to buy one year at one stage.

Better to open an AVC if you start in the PS and you know you wont have full service.

The_Honeybadger

kceire wrote: »

Financially not worthwhile in my opinion.
I was quoted 13k to buy one year at one stage.

Better to open an AVC if you start in the PS and you know you wont have full service.

Yes I’m a new entrant at a relatively senior level. I won’t have full service if I stay until retirement. Pension offereing isn’t great tbh and I am looking at AVC’s and other options.

caviardreams

The_Honeybadger wrote: »

Yes I’m a new entrant at a relatively senior level. I won’t have full service if I stay until retirement. Pension offereing isn’t great tbh and I am looking at AVC’s and other options.

I thought for those on the 2013 single scheme that it was not even possible to buy back years?

The_Honeybadger

caviardreams wrote: »

I thought for those on the 2013 single scheme that it was not even possible to buy back years?

Yes you are right. Kceire was saying it’s not worth it even if you could. You can open a separate approved avc though and your employer will collect the contributions.

Riskymove

Clareman wrote: »

If you have the public service pension you don't get the "state" pension and you have to wait until 68 when you get it, is that right?

that's correct, it is an integrated pension scheme

it is a growing issue now for people given the extension of OAP up to 68 and probably higher over time

technically you can go o the dole or seek a supplementary pension but there are issues around that.

It is likely something that will be looked for by Unions to be resolved to give certainty to pensioners.

Also, does the money come out of salary or is it seperate?

it is deducted from wages

the public services pension looks extremely poor compared to private pensions which is a major shock to me I always thought the 2 reasons to join the public service was job security and pension.

if you are going to work in PS for 40+ years and move up to a certain level the PS pension is still very good

the issue is for people now joining as only part of a career who may already have a private pension or people who retire at a lower grade

Geuze

Riskymove wrote: »

PAYE, PRSI, USC

Pension contribution is now around 13% I think depending on grade. The employer does not contribute anything but the scheme is different to a traditional private sector funded investment scheme.

PS pay 6.5% pension conts, but it is not 6.5% of your gross pay. It is complicated.


The 2008/2009 crisis saw another pension cont introduced, the PRD, now renamed the ASC.

It is also complicated.

https://circulars.gov.ie/pdf/circular/per/2018/21.pdf

For new entrants to the PS, since 2014, the ASC will be:

First 32,000 = 0%
Next 28,000 = 6.66%
Balance = 7%

In 2020, this becomes:


First 32,000 = 0%
Next 28,000 = 3.33%
Balance = 3.5%

Clareman

Riskymove wrote: »

that's correct, it is an integrated pension scheme

it is a growing issue now for people given the extension of OAP up to 68 and probably higher over time

technically you can go o the dole or seek a supplementary pension but there are issues around that.

It is likely something that will be looked for by Unions to be resolved to give certainty to pensioners.






it is deducted from wages




if you are going to work in PS for 40+ years and move up to a certain level the PS pension is still very good

the issue is for people now joining as only part of a career who may already have a private pension or people who retire at a lower grade

Thanks a million for taking the time to reply, much appreciated. As a 40+ year old who has never worked for the PS I think it would be madness to join the PS now, private pension seems a far better option for me.

Geuze

Clareman wrote: »

Sorry for jumping in here but can someone explain the public service pension for new hires.

If you have the public service pension you don't get the "state" pension and you have to wait until 68 when you get it, is that right? Also, does the money come out of salary or is it seperate? If you have a private pension you can draw on it at any stage after 60 I think. Looking at the link posted above the public services pension looks extremely poor compared to private pensions which is a major shock to me I always thought the 2 reasons to join the public service was job security and pension.

Everybody paying enough PRSI will receive the State Pension Contributory (SPC), including PS hired since April 1995.

The thing is that the PS pension and the SPC are integrated.

Kilmolin

For staff who join the Public Service after 2013 it not an issue as they can not claim any pension until they reach state pension age (now 66, 67 in 2021, 68 in 2028).

For staff who joined between 1995 and 2013, the occupational pension is combined with the state pension to give the total.
The state pension cannot be claimed until the ages above, but a staff member joining between 1995 and 2004 can retire from age 60; its 65 from 2004 to 2013. That does leave them short of the state pension for some years, but despite the reservations expressed above, the supplementary pension is designed precisely to fill that gap. The two serious reservations I am aware of are:
- you cannot be in insurable employment and draw it
- you must draw any other Social Welfare benefit
However, that said, the supplementary pension should completely make up for the gap.
So
Supplementary pension = Traditional pre 1995 pension - (current occupational pension + social welfare benefits)
The social welfare benefit could for example be the dole.
The main drawback is that you cannot be in insurable employment. If (say) a retiree who joined in 1996 retires with a substantial pension and starts work again, they could not claim the state pension (too young) and will not get the supplementary pension as they are in work.
if that same person joined in 1994 (Class D PRSI) there is no social welfare element to the pension so the full amount is payable.

Riskymove

Geuze wrote: »

It is complicated.

indeed

I think the 13% is a ball park based on the experience to date for those on previous schemes

it will vary depending on salary

Clareman

Geuze wrote: »

Everybody paying enough PRSI will receive the State Pension Contributory (SPC), including PS hired since April 1995.

The thing is that the PS pension and the SPC are integrated.

So everyone working for the entire adult life (say 45 years) is entitled to €248.30 per week at 68, how much "extra" would someone joining the PS now for the next 20 years get?

Riskymove

Kilmolin wrote: »

, the supplementary pension is designed precisely to fill that gap.

yes but as you set out there are issues arising

Unions would like to see a similar but more certain approach to filling the gap.

Riskymove

Clareman wrote: »

So everyone working for the entire adult life (say 45 years) is entitled to €248.30 per week at 68, how much "extra" would someone joining the PS now for the next 20 years get?

it will depend on what salary they earn each year of those 45

Riskymove

Clareman wrote: »

Thanks a million for taking the time to reply, much appreciated. As a 40+ year old who has never worked for the PS I think it would be madness to join the PS now, private pension seems a far better option for me.

well of course you would have your private pension, your public pension and the state pension

it really does depend on the level of your job

Clareman

Riskymove wrote: »

it will depend on what salary they earn each year of those 45

Lets say it's the average public sector salaray in both cases, €47,400.

Source: https://www.businessworld.ie/financial-news/Average-public-sector-wages-are-47-400-in-Ireland--567926.html

Riskymove

Clareman wrote: »

Lets say it's the average public sector salaray in both cases, €47,400.

at 48,000 and using certain assumptions about increases etc the estimator estimates:

lump sum 82k

pension 12.7k

OAP 13k



that is someone starting at 48k now and working until 2063

Geuze

Clareman wrote: »

So everyone working for the entire adult life (say 45 years) is entitled to €248.30 per week at 68, how much "extra" would someone joining the PS now for the next 20 years get?

As the new PS is based on career-average earnings, then it's impossible to say.

It's not easy to find the benefit accrual rate - have you found it?

https://singlepensionscheme.gov.ie/for-members/scheme-information/

https://singlepensionscheme.gov.ie/wp-content/uploads/2017/12/Scheme-Booklet.pdf

Geuze

Clareman wrote: »

So everyone working for the entire adult life (say 45 years) is entitled to €248.30 per week at 68, how much "extra" would someone joining the PS now for the next 20 years get?

See p16 of Scheme Booklet.

caviardreams

Riskymove wrote: »

at 48,000 and using certain assumptions about increases etc the estimator estimates:

lump sum 82k

pension 12.7k

OAP 13k



that is someone starting at 48k now and working until 2063

Is the lump sum not 1.5* average salary so 72k?
And then the annual payment is half average salary so 24k in total including OAP?

This is based on full years of service of course (40 and upwards)

Also it is a total bug bear of mine that benefits are capped based on 40 years service, even if you have paid in for more e.g. 45. Especially now the retirement age goes up to 70. I feel you should not have to pay pension contributions above 40 years service as it's very unfair that two people with 40 and 45 years service on identical salary get the same benefits when one has contributed more. (End of rant, sorry!)

Riskymove

caviardreams wrote: »

Is the lump sum not 1.5* average salary so 72k?
And then the annual payment is half average salary so 24k in total including OAP?

This is based on full years of service of course (40 and upwards)

No

The figures you quote would be correct for someone on the previous pension scheme i.e. pre-2014

such schemes are (with full 40 years service) based on a lump sum of 1.5x and a pension of 50% of your final salary

the new single pension scheme as outlined above is a very different approach

Also it is a total bug bear of mine that benefits are capped based on 40 years service, even if you have paid in for more e.g. 45. Especially now the retirement age goes up to 70. I feel you should not have to pay pension contributions above 40 years service as it's very unfair that two people with 40 and 45 years service on identical salary get the same benefits when one has contributed more. (End of rant, sorry!)

yes that is a common complaint

it will become more common now with increased retirement age


I noted that the recent scheme to allow people work to 66 (now defunct) worked on the basis that the person retire at 65 and then continue employment but drop to the first point on their pay scale while paying no further superannuation

some version of this could be implemented for people who hit 40 years but remain working

caviardreams

Thanks Risky that's good to know - I really thought the two schemes were largely the same except that pre-2013 was based on final salary and post-2013 was based on average salary! Ooops.

Well at least it is better than I thought for post 2013 then on the plus side!

caviardreams

Sorry to revisit this Risky are you sure the lump sum benefit would not be 72k in the above example?
Page 18 of the booklet on the scheme actually gives an example of somebody on 48k -
https://singlepensionscheme.gov.ie/wp-content/uploads/2017/12/Scheme-Booklet.pdf
Their monthly benefit they accrue is 150. This x 12 is 1800 accrued towards their lump sum in a year, and assuming 48k represents their average salary over the period, this means the lump sum would be €1800*40 = 72k.

Sorry again if I am wrong on this, perhaps you can explain how you get the 82k?

Riskymove

caviardreams wrote: »

Sorry again if I am wrong on this, perhaps you can explain how you get the 82k?

The estimator tool produced 82k for someone starting in PS
now and earning 48k now and working to 68

It assumes a certain level of increase in wage over time so it is not based on an average of 48k a year

caviardreams

Riskymove wrote: »

The estimator tool produced 82k for someone starting in PS
now and earning 48k now and working to 68

It assumes a certain level of increase in wage over time so it is not based on an average of 48k a year

Thanks Risky, that is very helpful. It must be the expected increases whereas I was taking it as the actual final average iykwim! It's a very complex area though and they could do with providing ore help for staff I feel - pensions are tricky enough!

Riskymove

caviardreams wrote: »

Thanks Risky, that is very helpful. It must be the expected increases whereas I was taking it as the actual final average iykwim! It's a very complex area though and they could do with providing ore help for staff I feel - pensions are tricky enough!

It's pretty impossible to do anything more than estimate pensions under the new scheme

All you can do is see what a certain average will result in but there is no real way to know what an individual's average will be in 40 years time

Factors are what level they reach and importantly, how long they spend at each level.

Obviously when people near their retirement in 30 to 40 years they will have concrete data 🀔

AndrewJRenko

Dingle_berry wrote: »

If you join the public sector you will probably get a defined benefit pension. Depending on your length of service and point on the payscale when you retire the money you'll get from that pension is defined - it is a certainty. The only way your contributions affect it is in calculating the length of service.

Yes and No. The level of certainty really depends on the goodwill of future governments. In Greece, public servants lost out badly on pension provision when the country effectively went bust.


Public servants have no 'pot of money' with their name on it - just a commitment for future regular payments.

lovely lady wrote: »

so, in simple terms - is the pension for the private sector or the public sector better?

No simple answer to be fair. The simplest that you could get is that the public pension is the safer bet. What's you're risk appetite?



A mix of public and private is probably a decent way to mitigate the risk.

seamie78 wrote: »

less contributory pension so that would leave nothing

That's not true.

Dingle_berry wrote: »

But there is no guarantee that there won't be a massive economic crash just before you retire...

With any pension fund, you should be moving your assets from equities to cash/bonds from about ten years before retirement to reduce the impact of any crash. This also reduces the potential growth.

Riskymove

AndrewJRenko wrote: »

That's not true.

can you elaborate?

AndrewJRenko

Riskymove wrote: »

can you elaborate?

Contributory pension is the same for public and private sector since the rules changed in the 90s.

Riskymove

AndrewJRenko wrote: »

Contributory pension is the same for public and private sector since the rules changed in the 90s.

since the 90s, the CS pension scheme is now integrated

this means while people get the OAP and a State pension, the state pension (i.e. 50% of final salary) is reduced by the level of the OAP

what the previous poster was saying is that if you were due a pension of say 12,000 that you would not get it at all but just the OAP (this is not quite correct as set out)

Sixtoes

Hi, can anyone calculate some pension figures for me.
42 year old coming from private sector. Starting salary €40K. €66k at retirement age. Say €1k increment per year.