Calculation of pension PRSI class A1

[Camino]

How is the public service pension calculated for staff entering service in 2006. Class A1 PRSI.
I was given a calculation of 1/80 x final salary minus 2 x OAP Pensions x no. of years service.
Pensionsbke salary is 25k less than salary Could this be correct? I thought it would be minus one OAP pension
Thanks if anyone can help?

 

[Conan]

You PS pension scheme provides two benefits:
- a pension of 1/80th of Salary for each year of service. So 40 years service gets you the max pension of 40/80ths (50% of pensionable salary - ie Salary less 2xState Pension)
Plus
- a lump sum of 3/80ths of Salary for each year of service (max 150% after 40 years).

The logic for the 2xOAP deduction, is that since your max pension will be 50% of salary, the State Pension (no longer referred to as the OAP) of c€13k represents 50% of c€26k of salary. So your PS pension then provides 50% of salary in excess of c€26k. When to two pensions are added together, your total pension would be 50% or Salary (assuming 40 years service).

 

[Early Riser]

I was given a calculation of 1/80 x final salary minus 2 x OAP Pensions x no. of years service.

Effective from 1 January 2004, the formula for the calculation of pension has been amended to:

"1/200th of pensionable remuneration up to less than 3 1/3rd times the State Pension, and 1/80th for pensionable remuneration in excess of this limit.
Lump Sum: The lump sum is 3/80ths of pensionable remuneration for each year of service subject to a maximum of 120/80ths. This payment is currently tax free"

See Para 9 here: http://www.cspensions.gov.ie/faq2.pdf.

For full service at normal retirement age the annual Occ Pension is (40/80 * pensionable remuneration) - State Pension.

Pro-rata after that. For 30 years service it would be (30/80 * pensionable remuneration) - (30/40 * State Pension)

 

[Camino]

You PS pension scheme provides two benefits:
- a pension of 1/80th of Salary for each year of service. So 40 years service gets you the max pension of 40/80ths (50% of pensionable salary - ie Salary less 2xState Pension)
Plus
- a lump sum of 3/80ths of Salary for each year of service (max 150% after 40 years).

The logic for the 2xOAP deduction, is that since your max pension will be 50% of salary, the State Pension (no longer referred to as the OAP) of c€13k represents 50% of c€26k of salary. So your PS pension then provides 50% of salary in excess of c€26k. When to two pensions are added together, your total pension would be 50% or Salary (assuming 40 years service).

Thanks so much for that. Much appreciated.

 

[Slim]

Hi. Can I ask a question on behalf of my friend who is approaching 65 and has been retired from the Civil Service for 8 years now and is receiving a supplementary pension from the CS until he reaches 65. He started in the CS in 1983 and worked for 2 years paying B1 prsi. After a lengthy break he rejoined in 1996 and paid A class prsi until retiring, early, in 2013. He has 52 reckonable contributions per annum for 14 of those years. For 13 of those years he was employed part time by his family firm, paying class S prsi. Subsequently, he is recorded as accruing 52M contributions which it seems are not reckonable.

Question: Assuming he is on integrated calculation for pension at 65/66, do the class S contributions entitle him to any additional State Pension or is it capped at one full State Pension in all circumstances? I hope this makes sense. Thanks in advance. Sim

 

[Early Riser]

Question: Assuming he is on integrated calculation for pension at 65/66, do the class S contributions entitle him to any additional State Pension or is it capped at one full State Pension in all circumstances? I hope this makes sense. Thanks in advance. Sim

I don't fully understand the question. But just to say that when he applies for the State Pension the DEASP will calculate his pension solely on his total PRSI record. It is totally irrelevant to them whether his Class As (or another contribution class) were accumulated in the PS or in the private sector. It is also irrelevant to them whether he is getting a Supplementary PS pension, or at what level it might be at. At the moment the DEASP use both the "Averaging Approach" and the "Total Contribution" approach to calculate State Pension eligibility rate based on his total record and award whichever is the most favourable.

If the State Pension allocated by the DEASP is equal to, or greater than, the level of Supplementary Pension he is currently receiving then the Supplementary will cease. If the State Pension allocation should be less than the current Supplementary then he can apply for a reduced Supplementary to make up the difference. However, the latter scenario is very unlikely.

Just to add. Your friend's Supplementary does not necessarily cease at 65. It ceases when he becomes eligible for a Social Welfare payment which is equal to or greater than his current Supplementary pension. If he does not qualify for the new interim pension at 65 then that may well be at the State Pension age of 66.

 

[Marsupial]

He started in the CS in 1983 and worked for 2 years paying B1 prsi.

Class B contributions are not reckonable for State Contributory purposes.

After a lengthy break he rejoined in 1996 and paid A class prsi until retiring, early, in 2013. He has 52 reckonable contributions per annum for 14 of those years. For 13 of those years he was employed part time by his family firm, paying class S prsi.

The maximum number of reckonable contributions for any year is 52, so even though he paid two reckonable Classes of PRSI in 13 of those 14 years, only 52 * 14 contributions will be included in the pension contribution.

Subsequently, he is recorded as accruing 52M contributions which it seems are not reckonable.

That's correct.

do the class S contributions entitle him to any additional State Pension

Not in the circumstances that you have outlined above.

But if he had paid Class S contributions in a year when he hadn't also paid Class A contributions then these could be used to increase the total number of his reckonable contributions.

Note that, as mentioned above, State Pensions are paid from age 66 - this may be increased to 67 in this year's budget (although I doubt it!)

 

[Conan]

Slim, if your friend has c14 years of A contributions, then his State Pension entitlement - using the Total Contribution Approach- would be c14/40ths of the full State Pension. But did he/she sign on for Credits after retiring early? This would add a few years to his 14 years of paid contributions.

 

[Slim]

Thanks for all the responses. I think it is clear that paying class S alongside class A will not entitle him to any additional state pension. Thanks again. Slim