Are civil service pensions funded?


Anyone getting a considerable lump sum is getting it from their employer not from PRSI.

Statutory redundancy is capped at 600e per week - 2 weeks per year + one week - even though PRSI is uncapped. If someone+employer is paying 4%+11% PRSI - over say 20 years at for example 80k that's around 240,000 in PRSI to get back 600x(20x2)+600 = 24600 in statutory.

600e has not been increased since 2005.
 
As pointed out the call on the SIF is pretty low.

A more important point is that an established civil servant has zero risk of involuntary unemployment yet has to pay Class A PRSI at a rate ostensibly to be eligible for jobseeker’s benefit which they will never need.
 
The biggest giveaway in terms of pension is the state pension. Full state pension at the moment it is available to workers who pay minimum 10 years
This statement is totally misleading.

The only class of worker who could qualify for full state pension with 10 years contributions is a worker who only started working at age 56 and continued working without interruption up to age 66.

It would only work for a worker whose birthday falls on 1st January.

Very few workers fit into that category.
 
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Even if you pay full A rate PRSI for 40 years, the state pension is very generous relative to the contributions required. This is compared to the pension contributions, additional pension contributions and full PRSI required for public sector pensions which include the state pension entitlement for workers who started since 1995. Am I correct in saying that you don't currently need 2080 full PRSI contributions to qualify for the full state pension, but this is changing soon?
 
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The averaging method allows full pension to a person with yearly average of 48. This is being phased out starting in 2025. The working time span can run for 50 years from age 16 to 66. A person who first worked at age 16 would need 2400 contributions to average 48. They would however get full pension under the TCA method. Some people have gained an advantage under averaging, but very few people with only 520 contributions would manage to achieve full pension.

A person who first started work at age 26 could achieve full pension with 1920 contributions.
 
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Does anybody have info on D stamps and if they can be used in any way (or not) to assist in getting a contributory pension? Thanks.
 
D stamps are only reckonable for a widows or widowers pension.

There are opportunities to gain class A or S contributions after retirement from class D employment.

Read this thread and links for details.

 

In fairness to (pre-09) public servants the real inflexibility is the (post facto) income taxation ex officio. Does anywhere else in the world have sectoral specific income taxation?
 

The point is that the market value of the benefit is circa €1m. And I’m told that annuities are back in vogue due to the radically changed interest rate environment.

Newer State employees aren’t quite as lucky as their more experienced colleagues, but the salient point is that they’re not paying market value to obtain their pension benefits. A point ‘de unionz’ conveniently choose to ignore.
 
As a household that benefited from redundancy 4 times... I have trouble to consider it as an advantage as we had twice the statutory redundancy payment and 2 payouts that were far from life changing. However, each time we ended up in jobs that did not necessarily fit and changed again fairly promptly, causing months of uncertainty. Getting older, we are now fairly conscious that if a redundancy happens later in life it could be more difficult to find a suitable position. Redundancy don't only happen when there are jobs around...
 

+1 I would find it difficult to agree with the argument that the possibility of a redundancy payment followed by an immediate new job is a perk, compared with a job with no possibility of redundancy.
 
I looked at the latest incarnation - the career average pension scheme. It is integrated with the OAP but for simplicity I looked at the cost of the benefits above the CSP threshold. The benefits for one year's contribution of 6.5% are 3.75% lump sum plus 1.25% pension. They also have a calculator for additional voluntary top-ups. For a 30 year old to purchase these benefits they are would be charged 34.45%!! Presuming this latter figure is broadly based on commercial terms we can see that the 6.5% to augmented to 34.45% by the employer. This is better than the best employer subsidised arrangement in the private sector.
 

Have a look at this circular. Some organisations get career average Single Scheme benefits but the organisation must throw in an employer contribution. The required employer contribution is 3 times the employees' contribution and this might or might not be the full cost. The norm in private sector schemes is that the employer will only match the employees' contributions - one times the employees' contributions - up to a maximum ceiling.
 
Thanks @LDFerguson. Just to be clear. The letter says only a few affected employers need actually pay the 3 x contribution but it is still the economic cost for all affected public servants. I wasn't a mile off, though it seems that the voluntary terms are a bit harsh. (subsequently clarified by @Protocol)

Don't forget the ASC as well as the normal 6.5% contribution.

Yes, the notional employer contribution is large.
Ah! That all hangs together so. Anyway main point is that the Employer contribution is about 3 times the employee contribution and far better than any private sector DC scheme.
Member of the Single Public Service Pension Scheme

2019Rate2020+Rate
€0 to €32,000Exempt€0 to €34,500Exempt
Over €32,000 to €60,0006.66%Over €34,500 to €60,0003.33%
Over €60,0007%Over €60,0003.5%
 
+1 I would find it difficult to agree with the argument that the possibility of a redundancy payment followed by an immediate new job is a perk, compared with a job with no possibility of redundancy.
I agree that redundancy can be hugely traumatic and financially disruptive. However I have some friends who have got their house deposit on the basis of being made redundant and finding a similar job quickly. It depends of course on the job market and and the age/qualifications of the person being made redundant. Also voluntary redundancy schemes can be very popular for those who need an immediate lump sum and have a plan for carrer change, study etc.
 
@Itchy Hmm! That muddies the picture. That report seemed to assume pension age would increase to 68, which only affects Single Scheme but certainly not enough to justify the 3x figure contained in the official circular of 2016.
So it would seem that "gold plated" should be confined to the earlier schemes and the latest scheme appears to be in line with a good private sector employer supported scheme.
 
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Looking at a Private DC vs Post '95 PS Pension

Private DC Figures
  • €65,000 annual salary over 40 years - doesn't vary for simpler calcs
  • 6.5% annual contribution - no match by employer
  • conservative 7% growth
Total private pension pot after 40 years : € 898,361.46
lump sum of €97500
leaves € 898,361.46 - €97500 = € 800,861.46 in pension pot
annual income = presume a 4% withdrawal rate = € 800,861.46 * .04 = €32,034.46 pa

PS Pension:

lumpsum = salary * years * 3/80 = 65,000*40*3/80 = €97,500
annual income = (salary*years/80)- Contributory State Pension) = (salary*years/80)-13312) = €19,188 pa

Notes:
No employer contributions ignored for Private DC pension
Extra ASC charge ignored for PS pension
Add the inflexibility of PS pensions outlined in the above posts - and it adds to the poor comparison with private DC pension.

What am I not seeing here?
(and just before everyone piles in with small details that aren't in my assumptions that make negligible differences to the figures - it has to be a major omission for the PS pension to catch up with the DC pension.)