buying back years

M

mmquest

Guest
Hi
I am a teacher and I am buying back years at the moment. My husband reckons I'm wasting my money and I should pull out of this?

What do others think? Are some of you pulling out of this?

I know its hard to predict whether the govt will have money or not in 20 years time to pay our pensions!

Just interested in what others think.
 
mmquest said:
Hi
I am a teacher and I am buying back years at the moment. My husband reckons I'm wasting my money and I should pull out of this?

What do others think? Are some of you pulling out of this?

I know its hard to predict whether the govt will have money or not in 20 years time to pay our pensions!

Just interested in what others think.
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I/we are pondering this very issue at the moment. Mrs. Slim will be short about 5 years at retirement age. So, she opened a PRSA in 2006 and it has held up, just. We have paid in for 2010 and are considering a purchase of 5 years through the work. It is very expensive and the benefit seems relatively small, i.e. 5/40ths of final salary[whatever that is in 2023] for pension and 15/80ths for the lumpsum. Not too concerned about state's ability to pay as governments seems to manage in the long run (naive?). Jury still out.
 
I'm buying back 10 years myself and am wondering whether its worth it anymore.Would like to hear as many opinions as possible on this...
 
An additional issue for public servants hired post-'95 who pay the full PRSI stamp is that the government is both raising the old-age pension age to 68 and abolishing the transition pension.

Net, it looks as if full stamp public servants hired before 2004 who had a contractual entitlement to draw pension from age 60 will in fact have to go to 68 or draw their public service pension minus the OACP between ages 60 and 68.

The vast majority of public servants wouldn't even countenance living on their pension minus €11k.

So buying back years to ensure a full pension at 60 may be a pointless exercise.

Pre-95 recruits escape this change.
 
If the pension value is stated as '2/3rds final salary less the OACP', and there is no OACP for the years 65-68, does the pension suddenly = 2/3rds final salary for those years?
 
Complainer said:
If the pension value is stated as '2/3rds final salary less the OACP', and there is no OACP for the years 65-68, does the pension suddenly = 2/3rds final salary for those years?
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PS pensions are usually 1/2 of FS, never 2/3.
 
OK, so if the pension value is stated as '1/2 final salary less the OACP', and there is no OACP for the years 65-68, does the pension suddenly = 1/2 final salary for those years?
 
Complainer said:
OK, so if the pension value is stated as '1/2 final salary less the OACP', and there is no OACP for the years 65-68, does the pension suddenly = 1/2 final salary for those years?
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I am speculating somewhat, but I suspect that the retirement age for that category of public servants is moving up to the higher age.
 
Slim said:
I am speculating somewhat, but I suspect that the retirement age for that category of public servants is moving up to the higher age.
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I don't think it is, at least not explicitly because there are all sorts of issues around accrued rights and constitutional issues about the holders of such rights having them protected as if they were property rights.

My guess is that they will have to pay you a pension at 60 if you fall within the pre-2004 category but that you won't see the OACP kick in until 68.

I am surprised that the public sector unions haven't sought clarification on the issue.

I'm not even sure the government has thought it out fully. It is clear in the Pensions Framework document that when the government says it is raising the pension age for public servants in line with the OACP age, they are only explicitly talking about new hires i.e. those whose pensions will be based on career averages etc.
 
mmquest said:
I know its hard to predict whether the govt will have money or not in 20 years time to pay our pensions!

Just interested in what others think.
Click to expand...

This is certainly a substantial risk. Given that the Govt are making an immediate short-term cash saving for every person who does buy back extra years, they really should look to give some certainty on this matter.

In terms of a general investment portfolio, it might be a good idea to think about reducing risk by spreading your bets, i.e. some public sector benefits and some private pension fund.
 
For post 95 PS workers who retire at 60 on the work pension only, and who have to wait until 66 or 67 or 68 to get the CSP, then a supplementary pension is paid to make the CSP shortfall, until the CSP kicks in.
 
Complainer, Oysterman,

if you have paid PRSI at class A, and so have to wait until 66 -67 -68 to get the CSP, then a supplementary pension is paid on top of the work pension from 60 onwards, until the CSP kicks in.
 
Protocol said:
Complainer, Oysterman,

if you have paid PRSI at class A, and so have to wait until 66 -67 -68 to get the CSP, then a supplementary pension is paid on top of the work pension from 60 onwards, until the CSP kicks in.
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Interesting, thanks for clarifying that. Would you have a link to a source as that would be useful?
 
Protocol said:
Complainer, Oysterman,

if you have paid PRSI at class A, and so have to wait until 66 -67 -68 to get the CSP, then a supplementary pension is paid on top of the work pension from 60 onwards, until the CSP kicks in.
Click to expand...

Does this supplementary apply if you retire at 65 - for the period from 65-68?
 
Circular PEN 07/05: Appendix 2​

Supplementary Pension.​


Employees who pay PRSI at the full (Class A) rate will be eligible to receive social welfare benefits and pensions. Because of this, the occupational pension of such an employee is co-ordinated with social welfare Old Age Contributory Pension. Similarly, superannuation contributions are co-ordinated and are at a lower rate than would be payable if the employee were in Class D PRSI.

Co-ordination is a common feature of pension schemes where employees are on full-rate PRSI. The purpose of co-ordination is to ensure that the aggregate of the co-ordinated pension and Social Welfare benefit approximates to the occupational pension payable to a person who is not on full-rate PRSI.
Because the co-ordinated pension will be less than the full occupational pension which would be payable if the employee were in Class D PRSI, there is provision for payment by the Department of a Supplementary Pension in certain circumstances.

A Supplementary Pension may be paid where the person

(a) is not employed in any capacity which involves the payment of a social insurance contribution and

(b) due to circumstances outside his or her control, fails to qualify for certain Social Welfare benefits or qualifies for such benefits at less than the maximum personal rate. The Social Welfare benefits in question are :
Unemployment Benefit
Disability Benefit
Invalidity Pension
Retirement Pension
Old Age Contributory Pension.

The Supplementary Pension will generally be equal to the difference between the full occupational pension (i.e the pension which would have been payable if the pension had not been co-ordinated), and the aggregate of

(i) the co-ordinated pension payable and
(ii) the personal rate of any actual social insurance benefit which may be payable.
 
I'm even more confused!!!!! :)


I dont have a clue about pensions.... so just wondering do people think I am wasting my time buying back years or should I continue with it. I'm post '95!
 
mmquest said:
I'm even more confused!!!!! :)
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Me too unfortunately. Thanks to protocol for providing the links, but I really can't work out from those links if the supplementary pension will fill the gap of the standard OACP age moving from 65 to 68.
 
Let us take two teachers retiring after 40 years service on pensionable remuneration of €60,000. State Pension = €12,000
One retires in 2013 at age 60 on PRSI class D i.e. pre 6th April 1995. This teacher will receive a pension of:
€60,000 x 40 years x 1/80 = €30,000 from the Department of Education but no State pension.
The other retires at age 60 in 2028 having started teaching after the 6th April 1995 i.e. PRSI class A. This teacher will receive a pension from the Department of Education of:
{€60,000 less €24,000 (Twice the state pension)} x 40 years x 1/80 = €18,000

Now if the teacher does not work elsewhere & receives no social welfare then a supplementary pension of €12,000 is paid by the Dept. Educ. to bring their total pension up to the €30,000 i.e. the same level as their D class counterpart.

As it stands the supplementary pension would be paid until the person returns to work or receives state benefits i.e. state pension.
 
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