My occupational pension also takes in to consideration the state pension.
My pensionable salary on leaving employment is different to the actual salary that I was on because there is an offset made for the state pension.
SlugBreath, your pensionable salary is what it is. The reason for the offset is because your PRSI contributions are going towards the part of your pension that is supposed to be taken care of by the State pension.
The rest of the salary is the "occupational" part.
Integration doesn't start when you retire, it starts when you began in your employment.
The offset identifies the contribution (if any) you made to the pension scheme.
Here it is explained in the Superannuation handbook for Civil Servants:
"10.1 Officers appointed prior to 6 April 1995 do not pay explicit employee
contributions in respect of their main scheme benefits. Officers appointed on or after
that date pay the following contributions
(a) 1.5% of gross remuneration (i.e. basic salary plus any pensionable
allowances)
(b) 3.5% of net remuneration (i.e. gross remuneration - as indicated at (a)
above – less twice the annual rate of the maximum Contributory State
Pension (CSP) currently payable by the Department of Social and Family
Affairs to a single person without dependants)."
This is the offset.
When it comes to calculating the final pension and again using the "integrated" method a formula was devised to "offset" the part of the pension that is to be taken care of by the State Pension:
On a 60k pensionable salary with an entitlement to 40/80ths (half pay) 30k this is what the calculation should look like:
Weekly SCP: €233.30
Annual SCP: €12,131.60
3.33333 times annual SCP: €40,438.66
1/200th of salary below 3.333 SCP for 40 years: 40438.66/200*40 =
€8,087.73
1/80 of salary above 3.333 SCP for 40 years: (60,000 - 40438.66) / 80 * 40 =
€9,780.67
The rate of the State pension is multiplied by 3.333333 to identify the "occupational" part of the pension that is covered by personal pension contributions. Both these figures above are added together and this is the "occupational" part that the employer is responsible for - they total
17,868.40.
If the pension scheme promised 40/80ths of 60k, then this is clearly not 40/80ths - the difference is
12,131.60.
You can do that calculation on any salary, here are some examples:
50k:
Weekly SCP: €233.30
Annual SCP: €12,131.60
3.333 times annual SCP: €40,438.66
1/200th of salary below 3.333 SCP for 40 years: (40438.66/200*40 =
€8,087.73
1/80 of salary above 3.333 SCP for 40 years: (50,000 - 40438.66) / 80 * 40 =
€4,780.67
Total =
12,868.40
40/80th entitlement 25,000
Shortfall =
12,131.60
45k:
Weekly SCP: €233.30
Annual SCP: €12,131.60
3.333 times annual SCP: €40,438.66
1/200th of salary below 3.333 SCP for 40 years: 40438.66/200*40 = €8,087.73
1/80 of salary above 3.333 SCP for 40 years: (45000 40438.66) / 80 * 40 = €2,280.67
Total =
10,368.40
40/80th entitlement 22,500
Shortfall =
12,131.60
70k
Weekly SCP: €233.30
Annual SCP: €12,131.60
3.333 times annual SCP: €40,438.66
1/200th of salary below 3.333 SCP for 40 years: 40438.66/200*40 =
€8,087.73
1/80 of salary above 3.333 SCP for 40 years: (70000 - 40438.66) / 80 * 40 =
€14,780.67
Total =
22,868.40
40/80th entitlement 35,000
Shortfall =
12,131.60
80k
Weekly SCP: €233.30
Annual SCP: €12,131.60
3.333 times annual SCP: €40,438.66
1/200th of salary below 3.333 SCP for 40 years: 40438.66/200*40 =
€8,087.73
1/80 of salary above 3.333 SCP for 40 years: (80000 - 40438.66) / 80 * 40 =
€19,780.67
Total =
27,868.40
40/80th entitlement 40,000
Shortfall =
12,131.60
When they changed the age of the state pension it exposed a major problem because of the profound lack of understanding into how "integration" is supposed to work. The rate of the state pension is being deducted - not "integrated" leaving people who must retire at 65 with a massive shortfall.