40 starting a public service job

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Hi all looking for some high level guidance for my wife who is starting a public service job for first time. My wife is 40 this year and is just about to start a new job in the HSE. She has always worked in the private sector and has a pension pool from that at the moment which is around 50k with Irish Life. What is her best options re pension now that she is starting in the public sector as she will be starting from zero. Can she merge private pension with public or no benefit? Also possible that she might only spend 5-10 years in public sector then back to private. if she does work for remaining 20 years in the public sector how does it work, her pension is prorated based on number of years service or maybe no benefit in her paying into pension as starting so late? I'm well aware of 40% tax benefit of paying into private pension and letting it grow tax free until maturity. Any tax benefit in the private sector contributions? Also her salary will be around the 90k mark. Appreciate any info at all.
 
Pension deductions are automatic, it is prorated, would roughly equate to her average salary over her time in service divided by 80 (Edit: mutiplied by her number of years in service) index linked, the actual calculations are a bit more complex. On 90k over 20 years she'd roughly receive something in range of 20-22k per annum in addition to the state pension assuming enough PRSI stamps etc. She can make additional contributions via AVCs on top of that, which would be a separate defined contribution fund, either by talking to corn market or some other broker, the existing private pension would normally just stay invested as a separate fund.
 
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Your wife will be joining the Single Public Service Scheme (SPSPS). Have you had a read of the information booklet? (https://singlepensionscheme.gov.ie/...22/11/Updated-Member-Booklet_ENG-NOV-2022.pdf)

Every year she will build up some benefits towards a retirement annual pension and a retirement lump sum. The more she earns the more she contributes towards these benefits. The SPSPS is not a "final salary" scheme, as the legacy PS schemes are, ie, in the SPSPS her pension is determined by her career average earnings, not her final salary. The earlier promotions (and salary increases) come in the career the better for pension purposes.

Her "normal pension age" (NRA) in the scheme is whatever the State Pension Age is at the time - currently this is 66 but it may rise to 67/68. She can take retirement benefits before this but they will be actuarially reduced (Cost Neutral Early Retirement). Otherwise if she leaves before normal retirement age her retirement benefits are frozen until NRA (a Preserved Pension).

It would make a lot of sense for your wife to add to her pension through an AVC or PRSA-AVC, if her finances allow. She can get tax relief at her marginal rate (often 40%) on any contributions up to the Revenue age limits (up to 25% of salary for age 40-50, inclusive of contributions to the main scheme). This can go towards maximising the tax free lump sum at retirement up to Revenue limits (1.5 *final salary) and towards income in retirement.

There is a scheme by which people can transfer private pension pots into the SPSPS. I don't know much about it, other than it seems cumbersome. If the pension pot in Irish Life is secure I am not sure what the point would be.
 
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RonnieShinbal88 said:
On 90k over 20 years she'd roughly receive something in range of 20-22k per annum in addition to the state pension assuming enough PRSI stamps etc.
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My understanding is the single pension scheme is an integrated pension scheme so the 20-22k includes the state pension rather than the state pension being paid on top of any public sector entitlement.
 
skrooge said:
My understanding is the single pension scheme is an integrated pension scheme so the 20-22k includes the state pension rather than the state pension being paid on top of any public sector entitlement.
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More specifically, it includes the proportion of the State Pension that was covered by PRSI contributions during membership of the SPSPS. For 20 years that would 0.5 of State Pension. Of course the inclusion is only notional - the person's actual State Pension is determined by the DSP on the total PRSI record.
A better way to put the above "rough estimate" for the Occupational Pension would be (20/22k - 0.5*State Pension). But it can only be very "rough" as it depends on career average earnings.
 
There is a lump sum also, 3.75% of the cumulative gross salary, I believe that would be 20*90k*3.75% which is 67.5k, but presumably her salary would go up over time also.
 
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