Cost neutral early retirement questions?

S

sidzer

Registered User
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166
Hi.
I'm a 43 year old with 12/13 yrs full time teaching and paying into pension.


I'd like to retire from teaching age 50 as I would like to try other things out! This is my current understanding of cost neutral early retirement - can anyone tell me if I'm on the right tracks?

At age 50 I'll have 20 years serivce
At that stage I would be entitled to 20/80 or a quarter of my final salary X .62 (actuarial reduction rate)

Example.
In 2012 I earned 55k
If I retired in 2013 age 50 with 20 years service the figures would be:


55k X 25% = 13.700 (As I will only have have half of 40 years)

13.700 X .62 = €8,525 PA



Any opinions or info would be greatly appreciated ;)
 
It may take some time as they are usually busy, but contact Dept. and ask them to calculate your potential pension. Prior to choosing this same option I did so on a couple of occasions. They were accurate and helpful. Good luck!
 
Hi Sidzer,

If you have 12/13 years teaching it seems to be that you should be paying A1 PRSI. (You will be able to see from your payslip, it will either be A1 or D1). If it is D1 the figures you have done out are more or less correct, however if you are A1, your pension is co-ordinated with State benefits and therefore it is a different calculation. Based on the information you have given I would estimate a pension of around 4800 p/annum. The reason for this is that you will be entitled to a State Contributary Pension at 68 in addition to your Superannuation Pension.
Remember you will also have the option of deferring your superannuation benefits until your normal retirement age instead of taking the cost neutral pension if you decide to retire early.
You should be able to get figures from Dept Education or VEC (whoever your employer is). You should maybe also get impartial financial advice as to whether you should supplement through NSP/AVC/PRSA. Make sure your adviser understands implications of cost neutral retirement, Revenue rules etc; as goalposts seem to be changing quite a bit over the past few years!
Good luck with your decision, hope this helps.
 
Yeh its important to know if you are a class A or D.

A class A with 20 years at 55k would get a pension of €7,740 pa. then it would be reduced by CNER

But: while you arent receiving anything from SW you will get a supplementary pension that will bring you upto the pension value of a class D
 
Supplementary Pension would NOT be paid as you would be retiring on a Cost Neutral basis. Even if you wait until Normal Retirement Age, supplementary pension is not paid if you are earning income from another source other than pension and likely to be the case here.
Also worth remembering that Supplementary Pension is paid at the discretion of the employer. While the Dept of Education currently pay this, I know of various employers that don't (some never even heard of it) and given current economic climate, it may not be around in Education circles forever!!!
 
Sorry you're right, if you went on CNER you wouldnt get it until 60.

Ive never heard of someone being denied a sup. pension that had fulffiled the criteria. (in the health service)
 
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