Pensions explanation please - should I switch?

highly1111 · 19-10-2020 2:46pm #1

Hi All

I hope that someone can help me with a clear explanation.

I'm a pre-2010 entrant and on the first pay scale. When I entered teaching jobs were few and far between and I covered a lot of maternity leaves / career breaks and was last on the department payroll and pension back in 2016. However, now I'm on a private contract and my current school contribute 15% of my salary into my pension (yes 15%!!!)

I've been given a nod that due to a retirement next year I'm next in line for a department job if I want it. Aside from job security, am I better off pension wise moving to the department pension and would I have to "buy back" years? I believe my net pay would be substantially affected as at the moment I pay 5% into my pension but this would increase on a department contract. Is the trade off worthwhile?

I've tried to call post primary payroll to find out the value of my pension with them but I can never get an answer!

If anyone has any advice it would be much appreciated.

Thanks

rainbowtrout · 19-10-2020 5:40pm

That depends on whether you are currently being paid the same salary on the private contract as you would be on the department contract. On the whole I would say you would be better off on the department pension. Job security is a big one, the dept pension provides a pension and a lump sum.

You could at some point in the future be made redundant from the private contract. Do you get paid for the summer? Many of the private contracts pay for 10 months of the year. Eligibility for posts may be another consideration down the line if you're into that sort of thing.

highly1111 · 19-10-2020 6:57pm

rainbowtrout wrote: »

That depends on whether you are currently being paid the same salary on the private contract as you would be on the department contract. On the whole I would say you would be better off on the department pension. Job security is a big one, the dept pension provides a pension and a lump sum.

You could at some point in the future be made redundant from the private contract. Do you get paid for the summer? Many of the private contracts pay for 10 months of the year. Eligibility for posts may be another consideration down the line if you're into that sort of thing.

Thanks a million. I'm on the same pay as department scale and am paid all year round. I'm just wondering how the department pension works - lump sum based on contributions and annual pension of.....??? Then I can compare it to my private pension.

Thanks again

Millem · 19-10-2020 7:10pm

highly1111 wrote: »

Thanks a million. I'm on the same pay as department scale and am paid all year round. I'm just wondering how the department pension works - lump sum based on contributions and annual pension of.....??? Then I can compare it to my private pension.

Thanks again

There are pension seminars on zoom this week with ips financial.
Would you be the new pension scheme?
That was on today. The 2004-2012 one is on tomorrow at 4.30. This is the link for tickets if anyone is interested.
https://www.eventbrite.ie/e/teacher-pension-retirement-planning-2004-2012-entrants-tickets-114884241860

Monotype · 19-10-2020 7:17pm

You'd be on the new pension scheme.
If you were to start today on the old income payscale and the new pension scheme, for 40 years of work, you'd get about €32K pension, whereas (assuming the same rates of pay at 20% contribution) you'd end up with about €35K pension if you continued. Both including state pension.

However, it might not be that clear cut.
Edit: Re checked those calculations. Overestimated the private pension a bit. Probably somewhere in the region of €35K. As for contributions, your 5% wouldn't be far off what you'd be putting in with ASC and the various pension levies.

You wouldn't be very well off on the public pension - you might want to keep the private going, even at a reduced rate.

rainbowtrout · 19-10-2020 11:14pm

Since you took up the private contract have you done any dept paid subbing hours in the school? If you have had dept paid hours inclusive of subbing with less than a 6 month break between hours then you could still be on the old (better) pension scheme.

Does the school pay you increments in line with the Dept pay scale?

To keep it simple the dept pension is lump sum plus 1/80 of your final salary for each year worked up to a max of 40 years (40/80ths so half your final salary).

The calculation is done the same way for the new pension (i.e. the 1/80th bit) but it is multiplied by career average earnings, so add up your annual income for each year worked/contributed and divide by the number of years worked. That's going to be lower than the previous calculation which is based on the highest point on the payscale that you reached.

Treppen · 19-10-2020 11:51pm

What's the charges like on the private pension. Is it a PRSA with Management Fee + Contribution Fee.
I took one out yonks ago but been meaning to change as the fund is down the toilet and I'm still charged management fee for the pleasure(BOI :rolleyes: wouldn't ya know) .
If you are going to put a halt on it, you would want to find out what the rate is to manage it every year while it's parked.

I'm not sure but I would assume the new public sector pension is also subject to the ASC and 1.5% Spouse and Child. This does not contribute anything towards a pension so consider it an extra tax.

I suspect you would need to talk to a pension advisor who straddles public and private sector. PSRA in Maynooth know their stuff (in terms of public sector anyway!) No connection, just got advice from them before.

Be careful with AVC's etc. There are a few pension brokers who would only be too happy to sign you up and take the commission. Look outside the bubble of Extra money into and AVC = Extra out upon retirement .... would you be better off saving that money for a rainy day, paying off a mortgage earlier? Once you put the money into AVC it's locked in.

Also, I've heard that fee paying schools tend to want to push the privately paid employees onto department pay as it costs them money as the years and payscales go on. If they got you onto a dept. paid position they could nearly hire 2 new teachers privately paid ( not on full hours). So you mightn't be exactly given the opportunity to say no, which is a weird position to be in for a teacher :pac: .

Geuze · 20-10-2020 11:25am

highly1111 wrote: »

Hi All
I've tried to call post primary payroll to find out the value of my pension with them but I can never get an answer!

If you join the Single PS scheme, all info is here:

https://singlepensionscheme.gov.ie/

Geuze · 20-10-2020 11:40am

highly1111 wrote: »

Thanks a million. I'm on the same pay as department scale and am paid all year round. I'm just wondering how the department pension works - lump sum based on contributions and annual pension of.....??? Then I can compare it to my private pension.

Thanks again

PS pensions all based on years of service, accrual rates, and salary.

Lump-sum = (yrs) (3/80)(career average earnings)

Pension = (yrs)(1/80)(career average earnings) ** integrated with State Pension

highly1111 · 18-11-2020 10:24pm

Thanks a million for all of this.

Manic few weeks in work but coming back and will be focussing on all of this properly over the weekend.

Much appreciated boardsies!

themusicman · 19-11-2020 8:59am

Am I correct in thinking that if you move to a departmentally paid job you have no option about joining the pension scheme....and that your decision is really going to be what to do with the pension pot you have already built up over the years..

That would really be a long conversation with a pensions expert...and would be in my opinion money very well spent to get the best advice possible.....it could save you a fortune over time

Pensions explanation please - should I switch?

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