Is it feasible to take a career break prior to CNER?

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noelÓm

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I am trying to better understand the rules around cost-neutral early retirement (CNER) in the public sector.

I believe that CNER is only an option if you have not already resigned or retired (and elected to preserve your pension).

Is it feasible to take a career break of up to five years prior to becoming eligible for CNER?

Take as an example someone in the post-2013 Single Scheme, eligible for CNER at 55, who takes 5 years of career leave at age 50, and then applies for CNER on their return.

Are there significant drawbacks to such a plan that I am not anticipating?

Are you aware of anyone taking a route like this?
 
I don't think there is anything precluding you from going about it this way - assuming you are granted the career break. You wouldn't even have to return - but you would have to apply for the CNER before your approved career break expires.

The significant drawback might be the size of your pension. Taking account of your break, your total pensionable service is probably quite short and then you get hit with an actuarial reduction to 69%.
 
Would you not just take CNER from 55 if you are definite about it?
If you are not sure, and may decide to go back until 65 then I understand your thinking though
 
I had considered this, I'm a teacher. I think if you are in receipt of any pensionable allowances they will only be part of your remuneration if you held them in the 3 years prior to retiring on CNER/resigning & preserving. (Or pro-rata if a portion). So I'm not sure they'd be "allowable" if your last 5 years were a CB.
 
furrym said:
I think if you are in receipt of any pensionable allowances they will only be part of your remuneration if you held them in the 3 years prior to retiring on CNER/resigning & preserving
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Is there something that you are basing that on? As I understand it, the best 3 consecutive years in the final 10 years before retirement count for pensionable allowances (whether normal retirement, preserved pension or CNER). What leads you to think that this may not apply in the case of a career break? Of course, after taking a 5 year career break, it would only be the last 5 years in actual work that would be relevant.
 
Does anyone know if you do take a career break can you continue to fund your PS pension? (the one related to work you are taking the career break from - if that makes sense)

ie: can you pay pension contributions out of your own pocket as if you had worked the 5 years in the base job? (so you arent down the 5 years service)
 
Saturn said:
I don't think there is anything precluding you from going about it this way - assuming you are granted the career break. You wouldn't even have to return - but you would have to apply for the CNER before your approved career break expires.
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This is how I am interpreting the rules. It does seem that you can apply for CNER while on a career break.
 
messyleo said:
Would you not just take CNER from 55 if you are definite about it?
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I cannot see where in the rules someone on the Single Scheme could retire at 50 and elect to drawdown a pension from 55. It seems that CNER payments need to start on retirement.
 
hadrian said:
Does anyone know if you do take a career break can you continue to fund your PS pension? (the one related to work you are taking the career break from - if that makes sense)

ie: can you pay pension contributions out of your own pocket as if you had worked the 5 years in the base job? (so you arent down the 5 years service)
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Which scheme are you in, ie, the Single Scheme or a pre-2013 scheme? If it is one of the earlier schemes the most straightforward way is probably to purchase Notional Service after your return. But there is a system to prefund the break years for pension purposes if you prefer. You must apply and pay before commencement of the career break. See this circular.

I don't know how this is applied in the Single Scheme but it would seem that it is an option (not sure). Or you could use the (cumbersome) Purchase of Additional Benefits facility in the Single Scheme after your return.
 
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hadrian said:
Does anyone know if you do take a career break can you continue to fund your PS pension? (the one related to work you are taking the career break from - if that makes sense)
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Do you intend to work on the career break? If not (I don't think you can in any case?), then I presume there would be no tax relief available on these contributions.
 
Itchy said:
I presume there would be no tax relief available on these contributions.
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From the Circular:
"Tax relief in respect of contributions under this faculty will not be allowed during the period of the career break itself. Upon expiry of the career break and resumption of employment in the civil service, tax relief may be allowed on a "spread-forward" basis. Officers should be advised to take up the question of tax relief with the appropriate Inspector of Taxes."

Itchy said:
Do you intend to work on the career break? If not (I don't think you can in any case?),
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Other employment can be permitted but there are some rules around it. I don't know how strictly these rules are enforced and it may depend on which sector you are in. See this circular.
 
furrym said:
I think if you are in receipt of any pensionable allowances they will only be part of your remuneration if you held them in the 3 years prior to retiring on CNER/resigning & preserving
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Is there something that you are basing that on? As I understand it, the best 3 consecutive years in the final 10 years before retirement count for pensionable allowances (whether normal retirement, preserved pension or CNER). What leads you to think that this may not apply in the case of a career break? Of course, after taking a 5 year career break, it would only be the last 5 years in actual work that would be relevant.
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Sorry Saturn, I was adding "legs" to it ...I was coming at it from a "new entrant" teacher (pre 2013 - not the single scheme) and I was imagining the poster was going to sub during the CB so the pensionable remuneration would be based on that....which might preclude them from adding in any allowances.
 
furrym said:
I was adding "legs" to it ...I was coming at it from a "new entrant" teacher (pre 2013 - not the single scheme) and I was imagining the poster was going to sub during the CB so the pensionable remuneration would be based on that....which might preclude them from adding in any allowances.
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That would certainly add complexity to it, although it may or may not preclude them from the pension benefits of the allowances. I don't know how it impacts on the pension calculation.

Of, course, in the Single Scheme it is different. The allowances only count for the years that they were in payment - as the pension doesn't depend on final salary.
 
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I did a quick calculation on buying back career break for pension per that Circular above and it seems v expensive versus the rate you pay per your normal payslip.

Currently between Survivor's, Lump Sum and Personal deducations on my payslip I paid 5.4% of Gross Salary before tax back.
That Circular says you must pay 18 1/6% to buy back career break serivce for pension.

That's over 3 times the normal cost if I'm reading this correctly. Why so high?
 
noelÓm said:
I cannot see where in the rules someone on the Single Scheme could retire at 50 and elect to drawdown a pension from 55. It seems that CNER payments need to start on retirement.
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Sorry I misread OP and thought they wanted to work will 55 - take career break and then CNER @ 60, and so didn't really see an advantage
It seems the career break @ 50 to cover period until earliest you can take CNER is a good loop hole to "retire" at 50.

I suppose downside is with taking a career break you can't claim jobseekers for 9 months
 
TheJackal said:
I did a quick calculation on buying back career break for pension per that Circular above and it seems v expensive versus the rate you pay per your normal payslip.

Currently between Survivor's, Lump Sum and Personal deducations on my payslip I paid 5.4% of Gross Salary before tax back.
That Circular says you must pay 18 1/6% to buy back career break serivce for pension.
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I does look a lot but it is lower than the percentages quoted for the standard scheme for purchasing notional service. Have you had a look at those tables for comparison?

One thing I noticed is that there is only one rate quoted whereas in the standard scheme there are different rates depending on whether the person is in a Class A or Class D PRSI scheme. I suppose the circular is from 1990 and the assumption was that everyone was Class D.
 
TheJackal said:
Currently between Survivor's, Lump Sum and Personal deducations on my payslip I paid 5.4% of Gross Salary before tax back.
That Circular says you must pay 18 1/6% to buy back career break serivce for pension.

That's over 3 times the normal cost if I'm reading this correctly. Why so high?
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The circular quoted by @Saturn indicated that the rates have been revised by this circular.

Reckoning of Career Break service
The special arrangements for the reckoning of a career break period while on that career break will continue to apply. The current contribution rates of 18 1/6% and 151/6% of salary will be replaced by the normal lump-sum purchase rate applicable to the officer’s age next birthday. This change will not affect any purchase arrangement already in place.
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Cheers Itchy, I hadn't spotted that.

So the career break buy back of pension now uses the same rates as 'normal' unpaid leave buy back of pension. Depends on your age.

So the only advantage of the career break buy back method seems to be you don't have to pay the money back via lump sum within 6 months of return. No details really of when it must be paid back by, just payment every quarter. For how long? When is deadline to apply? Poorly written
 
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