Is pension lump sum reduced if on a 3 day week year before I retire?

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Cailte53

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If I were to go on a 3 day week for the year or couple of years, before I retire,do I still get my full pension lump sum? I am thinking of staying on after 60,for a few years,on a 3 day week,but I have heard(mistakenly or not) that pension lump sums are reduced accordingly.
 
Presuming you are in the PS, doing any sort of job-share / part-time / 3 day week, etc. obviously reduces your service, and so affects both the pension and the lump-sum.
 
Protocol said:
Presuming you are in the PS, doing any sort of job-share / part-time / 3 day week, etc. obviously reduces your service, and so affects both the pension and the lump-sum.
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Sorry,my question wasn't clear- what I was asking was,if final lump sum is based on being on a 3 day week,in year of retiring,instead of a 5 day week.

I ask this because there is some confusion among my colleagues on going on a shorter week prior to retiring,that final lump sum is affected adversely because of not being full time in year of retiring.
 
Assume that for the final two years you do 50% of the work.

So instead of 40 years service you have 38 + 0.5 + 0.5 = 39 years service.

The formula for the lump-sum is (years of service)(3/80)*final salary.

So the lump-sum is reduced, and the pension is reduced, due to less service.



You seem to be suggesting that id you do a 3 day week in the final year, you get 60% of the lump-sum that you would get from a 5-day week.

Obviously that could not happen, one year's difference in service patterns could not cause the lump-sum to drop by so much.
 
And of course, if you have the full 40 years already, then going on a three day week, or any other variation of less than full time, won't affect your pension or lump sum.
And by staying on, you benefit from pay rises in the meantime, so your final salary is higher and this increases your lump sum.

But you could also say you're working full time for half your salary! Which is taxed at your top marginal rate. For many people with full service, that's a good reason to go.
 
Your pension and lump sum are based on Final Salary, which is the Full Time salary for the position - even if you're not working full time hours.
 
When I retired I think I was able to show my last 3 years P.60's to average out my final salary. I can't remember the details but it might be worth investigating.
 
IsleOfMan said:
When I retired I think I was able to show my last 3 years P.60's to average out my final salary. I can't remember the details but it might be worth investigating.
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Thanks everyone,for the replies. Ill only have 33 years by age 60,just I either want to retire then or do a 3 day week for a few years.

Isle Of Man,thank you-this is what is causing confusion. I have heard of colleagues being on 3 or 4 day weeks for years and then they go back up to full week about a year or two before they retire and supposedly to do with making sure they get the lump sum on a five day week.Ill check it out further.
 
Calico51 said:
Thanks everyone,for the replies. Ill only have 33 years by age 60,just I either want to retire then or do a 3 day week for a few years.

Isle Of Man,thank you-this is what is causing confusion. I have heard of colleagues being on 3 or 4 day weeks for years and then they go back up to full week about a year or two before they retire and supposedly to do with making sure they get the lump sum on a five day week.Ill check it out further.
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This might be the lump sum available to you on your taxable income, rather than your pensionable income.
Your pensionable income is fixed, but your taxable income can vary.
For example
Pensionable HSE income is 60k.
Therefore , with 40 years service, tax free lump sum from HSE is 90k.

However, a lot of nurses work nights, weekends, Public Holidays and this produces premium payments which are not part of the HSE reckonable income for pension purposes. They are, though, allowable for a private AVC based lump sum. A lot of people work all the hours they can, to boost this sum..
So for example, if you work loads of nights, Sundays etc, you might increase that 60k to 80k.
That sum (80k) is then allowable as your tax free lump sum
80 x 1.5 is 120k. Your HSE lump sum is 90k, so you can get another 30k, tax free, by making contributions to a private AVC.
It only works if you go full time, because you have to push your taxable income above your reckonable income. You can pick the three years ( in the final 10) with the highest taxable income and take the average.
 
And I think this has been said already, but for clarity, if you go on a 2 1/2 day week, or 50%, your Salary for the year is still regarded as 100%, but you only earn a proportion of the pensionable years.

So if your (100%) salary is €50,000 and you are working 1/2 time (50%). You get paid €25,000 for the year.

For pension and tax free lump sum purposes, your salary is regarded as €50,000, but for the number of years worked, it is only 1/2 a year.
 
Calico51 said:
I have heard of colleagues being on 3 or 4 day weeks for years and then they go back up to full week about a year or two before they retire and supposedly to do with making sure they get the lump sum on a five day week.
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This may be to do with pensionable allowances that are only available to staff on full-time duties.

Pension and lump sum are based off salary plus pensionable allowances which are a thing in certain parts of the PS. See here:
What is pensionable remuneration? Generally, pensionable remuneration is final pay (i.e. salary payable on the last day of reckonable service), plus, effective from 1st April 2004 the average of the best of three consecutive years’ pensionable allowances in the final ten years of service.
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It depends on where you work if pensionable allowances are a thing or not.
 
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