Contributory State Pension

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Bradbury1

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I am 50 and have worked in the private sector since I was 18 with probably about 2 years of career breaks in that time. The remainder of the time, I have paid tax and prsi.
I have built up a private pension and savings of 800k +.
I now have an option to enter the Public Service and join the Single Public Service Pension.

I will retire at age 67 in 17 years time.

My question is, do I have enough stamps from my private sector work so that on retirement age at say 67, I will receive the Contributory State Pension (which I understand is not means tested?)
OR
Will I only be entitled to the Non Contributory State Pension and therefore be means tested and miss out on a State pension because of my savings and private pension?.

Finally, if I qualify for the Contributory State Pension, will I get it in addition to any Single Public Service Pension I receive.

It is proving very difficult to figure this out searching online and any help would be great as this is feeding into my decision on whether to take the Public Service job.
 
It is my understanding that public servants hired post 1996 get a coordinated pension on retirement. It is made up of the contributory pension + public service pension.
So the answer is, if you take the job in the public sector you will continue to accumulate stamps and will receive the contributory pension which is not (currently) means tested.
To receive the maximum contributory pension under the proposed Total Contributions Approach you will need 2080 reckonable stamps(40 years contributions), which you should have if you intend to work until you are 67.

You would qualify for both public service pension + contributory pension + any private pension you paid into.
 
Bradbury1,
Your private sector period will have been Class A PRSI .
If you now join the Public Service, you will also be paying Class A.
So assuming a retirement age of 67 you will be entitled to a full State Pension with over 40 years of Class A contributions (based on the current rules). Such Contributory State Pension is NOT means tested. And any State Pension will be in addition to any pension benefits you have accumulated in the private sector and and Pension benefits you will accumulate in the new Single Scheme.
 
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Hi, I don't know if it makes any difference to you or not, but in my case, my private Defined benefit pension reduces by the amount of the contributory state pension once the state pension becomes payable.
 
phoenix53 said:
Hi, I don't know if it makes any difference to you or not, but in my case, my private Defined benefit pension reduces by the amount of the contributory state pension once the state pension becomes payable.
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That’s presumably because your DB scheme is “integrated” with the State Pension. Both you and your Employer pay PRSI and thus “contribute” to providing the State Pension. So your DB scheme takes that into account in calculating your Occupational Pension.
For example in many “integrated “ DB schemes, a member with say 40 years service might have a total pension entitlement of 40/60ths, but inclusive of the State Pension.
 
Yes, that sounds right Conan.

I don't want to takeover Bradbury's question, so I hope it is ok to ask this here, if you have a DB and it is integrated with the State Pension, what happens where you do not have the full amount of Class A contributions for a full contributory state pensiion? I presume the DB scheme assumes you will have and reduces it by the state pension amount regardless?
 
phoenix53 said:
Yes, that sounds right Conan.

I don't want to takeover Bradbury's question, so I hope it is ok to ask this here, if you have a DB and it is integrated with the State Pension, what happens where you do not have the full amount of Class A contributions for a full contributory state pensiion? I presume the DB scheme assumes you will have and reduces it by the state pension amount regardless?
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Simple answer is YES. Most integrated DB schemes manage this by reducing Salary to “Pensionable Salary” and basing the Occupational Pension on this lower figure.
So for example, if the DB scheme accrual is 1/60 for each year of service (40 years service being the maximum), and say Salary was €60,000, then Pensionable Salary would be defined as “Salary less 150% of the full State Pension”. The current State Pension is €248.30 (so €12,911 pa). So Pensionable Salary here would be 60,000 - (12,911 x 150%) = €40,632. If you have 40 years service in this example, the Occupational Pension will be 40/60 x €40,632 = €27,088. When the full State Pension is added, the total pension income will be €27,088 + €12,911= €40,000 (thus 40/60ths of full Salary).
 
Oh that's brilliant Conan, thanks. Took me a few reads and a calculator to get my head around it, but that is good to know.

Would the same calc apply if the pension was deferred, so if for eg, you had 30 years service, salary of 60,000 when you left the scheme, would it be 60000 - (12911x 150%) = 40632? Based on 30 years service the occ pension would be 30/60 x 40632 = 20316. Adding full State pension 20316+12911 = 33227. Or is that even close to what might happen?
 
phoenix53 said:
Oh that's brilliant Conan, thanks. Took me a few reads and a calculator to get my head around it, but that is good to know.

Would the same calc apply if the pension was deferred, so if for eg, you had 30 years service, salary of 60,000 when you left the scheme, would it be 60000 - (12911x 150%) = 40632? Based on 30 years service the occ pension would be 30/60 x 40632 = 20316. Adding full State pension 20316+12911 = 33227. Or is that even close to what might happen?
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If you have less than “full service” then obviously your Occupational Pension will be less, but your State Pension might be the same if you have at least 40 years of A Class PRSI. So your calculation is correct.
 
Conan said:
Simple answer is YES. Most integrated DB schemes manage this by reducing Salary to “Pensionable Salary” and basing the Occupational Pension on this lower figure.
So for example, if the DB scheme accrual is 1/60 for each year of service (40 years service being the maximum), and say Salary was €60,000, then Pensionable Salary would be defined as “Salary less 150% of the full State Pension”. The current State Pension is €248.30 (so €12,911 pa). So Pensionable Salary here would be 60,000 - (12,911 x 150%) = €40,632. If you have 40 years service in this example, the Occupational Pension will be 40/60 x €40,632 = €27,088. When the full State Pension is added, the total pension income will be €27,088 + €12,911= €40,000 (thus 40/60ths of full Salary).
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Hi Conan, Where does the 150% value come from? Why is it 150% of the full state pension.
Thanks
 
Interest% said:
Hi Conan, Where does the 150% value come from? Why is it 150% of the full state pension.
Thanks
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If the overall objective is to provide a maximum pension of 40/60 (2/3rds after 40 years service), then the State Pension of €12,911 represents 2/3rds of €19,366. So in other words, the State are looking after the first €19,366 of Salary, with the Occupational Pension scheme looking after the excess. And €19,366 is 150% of €12,911 ( 2/3rds inverted).
Equally, if the scheme objective was to provide a maximum pension of 50%( say 40/80ths as in most Public Service schemes), then the deduction from Salary to arrive at Pensionable Salary would be 2x State Pension.
I hope that answers your questio.
 
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