Single Public Service Pension Scheme

deiseman17

Good Evening,

Just a quick question In relation to the Single Public Service Pension Scheme. I've been told that it's the average earnings throughout your service ie 30 years for example. For arguments sake if the earnings were €50k per annum each year what would the annual payout be and a gratuity at the end of the 30 years? What are the pros and cons of this pension scheme if someone could simplify what the annual payments would be, obviously inflation will fluctuate but at present. Thanks

luckyboy

Not sure if this query is in the right place but using your numbers, I think the annual pension would be €18,750. Gratuity would be €56,250. Your example assumes 30 years of service, which would give you 3/4 of the full pension entitlement (if you had the full 40 years, you’d get €25k and a €75k lump sum). However, as there are increments to be had, the starting and finishing salary levels will differ (ignoring possible promotions or getting higher scale).

deiseman17

It's absolutely not in the right place,just seen that now. Thanks for that. Could you tell me how you calculated this as it is all very confusing to me. Thanks again. Very much a great help to me.

Rothmans

Your annuity (i.e. annual pension) accrues at a rate of 0.58% of your income each year up to (3.74 times the PRSI pension), after which any benefits accrue at 1.25%. That is to say,any amount of income earned in excess of €51,595 (€265.30 x 52 weeks x 3.74) would accrue at a rate of 1.25% per annum, and any amount below that would accrue at a rate of 0.58% per annum.

So, for the sake of simplicity, let's say you earned €50,000 for each of your 30 years, this would entitle you to an occupational pension of €50,000 x 0.58% x 30 years = €8,700 per annum.

You will be entitled to draw this public sector occupational pension upon reaching normal retirement age (now 66).

Like every other worker who makes A rate PRSI contributions, public or private sector, you will also be entitled to the PRSI Contributory State pension. What that will be by the time you retire obviously remains yo be seen, but it certainly won't be as generous as the rate today.

In short, you need to get cracking on setting up your private pension, as the days of the so called 'gold-plated' pensions are long gone for newer civil servants.

deiseman17

Hi Rothmans, thanks very much for that reply. That clears it up somewhat. On top of the salary of let's say €50,000 is overtime and allowances. Is this factored in also or is it run off your base salary? Thanks again.

Rothmans

It depends. What part of the civil service are you in? Overtime is never considered pensionable income. Generally, unsociable hours are pensionable.

deiseman17

just trying to figure this whole pension thing out as it's not as good as previous schemes. It's to get a rough estimate of what the gratuity would be and the pension payments before paying into AVCs.

Rothmans

https://www.boards.ie/discussion/comment/120277734#Comment_120277734

Garda pension will be worth 13k after 30 years, give or take. Provided you stay on a core roster, as the unsociable hours will bring a reasonable amount of your income above the 51.5k threshold. If you are in certain jobs such as gardai, prison officer, firefighter etc, the excess is accrued at 1.43% as opposed to 1.25%. If you earn 10k in unsociable hours above the the threshold (which is attainable provided you don't take annual leave on Public Holidays and Sundays, and minimise annual leave on nights), that will give you an extra €4,290 (€10,000 x 1.43%) per annum above the €8,700 fugure mentioned above ( i.e. c 13k). If you go onto a non-core roster, your pension will be very negatively affected, as you will lose out on a huge amount of unsociable hours payments. So I hope you have no desires to become a detective, or a community garda.

Lump sum should be worth 60k to 70k. Your employer is obliged to furnish you with an 'Annual Benefit Statement' every year which outlines exactly how much pension you have worked up that year, both in terms of your annuity and lump sum, as well as outlining the cumulative benefit you've worked up. Every employer in the public and civil service is obliged to provide this statement every year to any employee on the Single scheme. Have you been getting these statements?

deiseman17

Thanks again for your reply. It is very depressing looking at that after 30 years work but it's better to know now and plan for the future! I'm sure I have those statements somewhere that I will have to dig out. The only option is promotion to increase the salary and contributions annually. Thank you for taking the time to explain

Rothmans

No problem. Get started on those AVCs though. You will have to retire at 60, but won't be able to draw to Contributory Pension until 66/67/68, so you'll need something to plug that 8 year gap, as there's no way you'll live on 13k per annum.

Galwayhurl

https://www.boards.ie/discussion/comment/120277696#Comment_120277696

Are you saying that if a single pension scheme worker wants to retire at say 63, they wont get the state pension aspect of their pension until 66?

I thought it was an integrated pension? And that the total (referrable amounts plus State Pension aspect) would just be deducted as per the table in the circular?

E.g I would receive 95% of what I would receive if i were to retire at 66.

Rothmans

https://www.boards.ie/discussion/comment/120300466#Comment_120300466

That's exactly what I'm saying.

I assume you are referring to circular 18/2017.

You will not get the Contributory pension until you reach 66, or whatever the pension age is when you retire. When they use the term 'integrated', it is meaningless, as it doesn't confer any extra pension entitlement on you that you would not otherwise have, were you not a member of the Single Scheme.

Assuming, the pension age is 66 when you retire, if you retired at 63 years of age, you will be entitled to an actuarily reduced pension of 90% of the benefit you've worked up.

For simplicity's sake, say you were on 50k per annum every year until you retired at age 63 after 35 year's service.

You will have worked up a pension of 35 years x €50,000 x .58% = €10,150.

However, if you retired at 63, it will be reduced to 90% of €10,150, i.e. €9,135 per annum.

Now, if by the time you retire, the Contributory pension age is 68, your occupational pension will be further reduced to 83% of it's value i.e. €8,424.

That's what you'll have to live on for those years between retirement and being eligible to receive your contributory pension. And the Contributory pension will certainly not hold the same value in years to come.

lydsie

I am just looking into this myself. I have only been in the public sector (ETB worker) for 3 years but have no other pension. Completely clueless about the whole thing tbh!

I am in my early 40s so it is time to do something about it! I, like everyone, pay lots of taxes!! Grumble. So, I wonder whether it would be better to buy back % of my pension or do a separate AVC. At least some of my tax will then go into my retirement fund. Does anyone have any experience with this?

Also, Cornmarket seems to be the provider most public sector worker use. Would people recommend them?

Thank you in advance.

Geuze

Here is a guide to buying extra benefits in the Single PSPS:

https://singlepensionscheme.gov.ie/for-members/scheme-information/ataglance/purchase-of-additional-benefits/

Sierra Oscar

https://www.boards.ie/discussion/comment/120534326#Comment_120534326

Apologies for bumping an old thread, but has anyone here actually gone about purchasing extra benefits through the PSPS? Is it relatively straightforward to do?

You rarely hear anyone talk about it and there appears to be very little awareness of the option.

I've been thinking about setting up an AVC with Cornmarket but after doing some research I'm somewhat skeptical about how the investment funds are managed and the expected return, and there are hefty management fees associated with the AVC. I am thinking that purchasing extra benefits through the PSPS may be more attractive.

Does purchasing extra benefits attract the same tax relief that AVC's do?

I'm not too concerned about mandatory retirement ages. Talks are already well underway to increase the mandatory retirement age for the likes of Gardaí to 62, it'll be closer to 67 in years to come I'd say. That's ultimately how the Government will bridge the gap between retirement and receipt of the State contributory pension.

@Sierra Oscar

@Sierra Oscar

You don't have to buy a PRSA AVC via Cornmarket.

You can do some more research and buy one on an excecution only basis with 100% Allocation and 1% AMC terms. How does that compare to what you've been offered?

What's the issue with how the investment funds are being/going to be managed?

Sierra Oscar

https://www.boards.ie/discussion/comment/120766033#Comment_120766033

I know I can purchase a PRSA AVC seperately and manage it myself, but I'm wondering what the benefits are of simply purchasing additional contributions via the PSPS itself and how you can go about doing so.

@Sierra Oscar

@Sierra Oscar

Long post on it over on AAM https://www.askaboutmoney.com/threads/should-i-buy-years-or-contribute-to-an-avc-prsa.60842/

Sierra Oscar

https://www.boards.ie/discussion/comment/120768460#Comment_120768460

Thank you!

That article is from 2007 and pre-dates the existience of the Single Public Service Pension Scheme, is the content still relevant?

I assume the purchase of additional benefits is similar to the AVC in terms of the tax relief and it is deducted at source?

CramCycle

https://www.boards.ie/discussion/comment/120768720#Comment_120768720

I didn't think you could do it with the new scheme, just people say you can but it's actually just AVCs.

CramCycle

I could be wrong BTW

Sierra Oscar

https://www.boards.ie/discussion/comment/120768775#Comment_120768775

You can now purchase additional retirement benefits under the Single Public Service Pension Scheme since 2019, it's outlined in DPER Circular 15/2019. There doesn't seem to be much discussion about it anywhere so I'm just trying to get my head around it myself.

The circular doesn't give much information (I understand they cannot stray into giving financial advice) other than saying it may be useful for those who joined the public sector mid-career and who need to boost their retirement benefit. That doesn't really apply to me as I will have full service, but I'm wondering if it is still worth exploring over an AVC. There are no setup, commission or administrative costs afterall.

DPER-Circular-15-of-2019-Purchase-and-Transfer-of-Retirement-Benefits-under-the-Single-Public-Service-Pension-Scheme.pdf

CramCycle

Well I must email pensions about that

Geuze

https://www.boards.ie/discussion/comment/120768775#Comment_120768775

You can, see post 14 above:

https://singlepensionscheme.gov.ie/for-members/scheme-information/ataglance/purchase-of-additional-benefits/

CramCycle

https://www.boards.ie/discussion/comment/120770742#Comment_120770742

The link wasn't working for me in the earlier post

Novice Self-Build

This is very useful. I am 20 years to retirement and in the public service 5 years. I am awaiting info from our pensions team on how to buy additional years. I could do a lump sum or increase my monthly contribution. I would like to get the fullly 40 year entitlerment by the time I retire. Has anybody done this?

Jim2007

https://www.boards.ie/discussion/comment/120924570#Comment_120924570

Buying 20 years pension benefits with 20 years to go is going to be expensive and if you do have the money on hand to do that, it might be beneficial to sit down with a financial planner and discuss your options and how best you can maximize your income in retirement.

Novice Self-Build

My wife has a high second income so maybe increasing my monthly contribution by 1000 a month would be a better option and reduce my current tax bill.

divillybit

@Novice Self-Build just wondering what you decided on regarding buying additional years?

Novice Self-Build

https://www.boards.ie/discussion/comment/121009631#Comment_121009631

Waiting to hear back from the pension team internally. I requeted a quote earler in the summer.

Novice Self-Build

I have finallly got a reply but not sure what it means. I have taken screen shots from the correspondance.

Any insight would be most welcome! Thanks

divillybit

@Novice Self-Build I can't advise on the above but I did meet with an independent pension consultant as I was looking to buy additional years but to buy additional years service was prohibitively expensive. It made much more sense to set up a private pension and start paying into that. I'm in my late 30's and only joined the Civil service last year.

I ended up getting a new private pension being set up with the intention to put 500 euro a month towards it. Have a different pension from my old employer with about 30k in it. That 30k is being moved to a different pension provider. What I learned from the pension consultant was that legally I can't roll my pension pot from my previous employment into the new scheme I'm not paying into.

nhg

Tax Relief:

If you are planning on receiving Tax Relief on your pension contributions bear in mind that an AVC (clue is in the name) is tied to a particular employment & tax relief is calculated based on your age in that year and the gross income in that employment less any contributions already paid through your salary and/or any additional monthly payments.

You can pay as much as you like into an AVC/PRSA /RAC pension but you mightn’t get tax relief on it unless you have a taxable income to offset it against. Remember the financial advisor is getting a cut from your contribution so may be pushing you to the max - not everyone is 100% trustworthy & honest….. if unsure get a 2nd opinion…..

To claim any pension tax relief in a previous year, the payment MUST be made & the relief claimed through your income tax return (eForm 11 self-assessed or eForm 12 if PAYE) from Revenue by 31st October of the following year i.e. to claim additional tax relief for 2022 the pension payment must be made by 31st October 2023 & the claim submitted in your 2022 income tax return by 31st October 2023 (either through MyAccount or ROS).

There is no extension to filing date for pension contribution claims, the extension date is for online self-assessed (eForm 11) income tax filers only (if they have pension contributions to claim they must have paid & filed before 31/10 also)

nhg

If your tight on time & haven’t received the Pension Contributions Certificate from your policy provider, simply submit all the details including policy number etc on a word doc or excel to Revenue before 31st October & submission the proper Policy Certificate once you receive it

Also bear in mind that you might be receiving tax relief on pension contributions now but you might have to pay income tax on some of your pension when drawing it down, up to certain limits are tax free & your State Pension Contributory is also taxable & will be using up some of your tax credits…..

https://www.boards.ie/discussion/comment/121259555#Comment_121259555

My reading of that is that it would cost €120 per month to buy €1,000 pa in additional pension. Open to correction as I've never advised on purchasing additional pension in PS.

A (rough) quote for a low cost AVC PRSA (100%/1%), €120pm level, with a growth rate of 4.6% pa would generate a fund of circa €33,500 after 17 years. What level of annuity pension that would buy in 17 years time is anyones guess. If it was right now, it would be circa €1,100 pa for two 65 year olds.

Some people like certainty. Some people may take the risk that the fund value of the PRSA might be higher/lower and like the possibility of ARFing the fund.

If you're going to buy an AVC or AVC PRSA with 95% allocation and 1.5% AMC, and then stick it in a cash fund, buy the certainty instead.

Hotblack Desiato

https://www.boards.ie/discussion/comment/121300640#Comment_121300640

The whole point of tax relief on pension contributions is that it's the gross amount that's invested.

It's far far better to be taxed on the way out rather than on the way in. Especially as few will have a large enough pension to pay much higher rate tax if any at all, and once over 70 you get higher tax allowances.

Novice Self-Build

I am going to put 10k in towards my lump sum and another 10k against increasing my monthly payout. At the very least it will mean 10k to my pension instead if the tax man.

wads35

Do not pay into an AVC without first getting some serious advice. I'm the same as you on the same pension. You should be getting a pension statement every year telling you what your pension and lump sum currently stand at

An AVC has management fees and other fees each year . It's also at risk of decreasing in value .

However you are able to make one lump sum payment into your public service single scheme pension . This is not at any risk as it's guaranteed by government and you still get the tax breaks

But take advice 😉

Only found this out myself in the last few weeks

valarmorghulis

Hi all,

Would anyone have any advice in terms of purchasing "referable amounts". I am just about to join the public service at 36. I understand that under the Single Pension Scheme it is not open to you to purchase Notional Service. However, you have the option to purchase referable amounts. 

I also understand I could make Additional Voluntary Contributions (AVC’s) to a separate Revenue-approved pension arrangement if I wished to independently increase my retirement benefits outside of the Single Scheme and with regards to AVC’s, that this would be a private arrangement between me and an AVC provider.

If there were any rough calculations to try and catch up for those 16 years so to speak assuming I entered at 20 and was to retire at 60, for exp, after the 2 year vesting period and provided you could work the minimum 9 Full-Time Equivalent (FTE) years as a member of the Single Scheme as outlined in the circular.

I have used the calculator and I am shocked at how low the pensions now are compared to family etc from pre 2013,1995, as in 3 times less per year.

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

It seems I will have to be purchasing the max allowable referrable amounts to try and catch up, it would be helpful in terms of budgeting of the next few years and to know annual limits either in lump sum or increased contributions and if there was any calculator to try and show what impact they have.

Thank you