My occupational pension is reduced by the amount of the State Pension.

[ppmeath]

I started in PS post 95, but pre 2004.

If I retire at 62, I will not be entitled to any SW benefit.

I should receive my work pension + a supp pension until age 67.

The supp pension will be the difference between what a class A and a class D worker would get with my service.

You are entitled to 50% of your final salary to a max of 40/80ths on the day you retire.

Your SW entitlements are "integrated" into your pension.

The State pension age is not applicable to you because you are not in that pension scheme.

You are in a pension scheme that promised you a specific pension when you retired - don't get sucked into the misinformation out there. Read my posts and here is some light reading for you.


http://circulars.gov.ie/pdf/general-council/finance/1995/1281.pdf

http://circulars.gov.ie/pdf/circular/finance/1995/06.pdf

http://www.per.gov.ie/wp-content/uploads/Pension-Reform-Revised-method-of-calculation.pdf

http://www.cspensions.gov.ie/SuperannuationHandbookandGuidanceDec20061.pdf

http://www.irishstatutebook.ie/eli/2006/act/5/section/4/enacted/en/html#sec4

http://www.irishstatutebook.ie/eli/2014/si/582/made/en/pdf


By the way these are the relevant documents, the rules of your pension scheme, legislation.

 

[ppmeath]

I do voluntary work in my spare time ,I remember one of my colleagues telling me she was returning to work once she reached pension age ,She joined the PS around 1998 under the full prsi a stamp,she left when she was 64/65 and was doing voluntary work, Her PS pension was small ,From what I remember she was getting the state pension early provided she did not take up paid employment until she reached pension age

If she left at 65 then she should have claimed the State pension - both added together would have amounted to her total pension - of course it's supposed to be paid from her employer and the state pension paid directly to the employer - but that's another story.

 

[jjm]

thinking back I suspect Protocol Is correct provided she did not take up paid employment,In which case she did not get full state pension until she was 66, only enough to make up the difference for years worked ,Thinking back she did say she was only getting part of the state pension ,She worked in the private sector for as long as i can remember before PS

 

[ppmeath]

thinking back I suspect Protocol Is correct provided she did not take up paid employment,In which case she did not get full state pension until she was 66, only enough to make up the difference ,Thinking back she did say she was only getting part of the state pension ,

It sounds like she got the supplementary pension and again, when added to the occupational part - this would have provided the full benefit she was entitled to on the day she retired.

But this is where the problem is, there is a misconception that PS pensions are "linked" to the state pension up until 2013 they were not.

Those charged with calculating and paying these pensions are doing it wrong, because they don't understand "integration". It's only happened to a small number of people, but when the state pension age was 65 - it was the same as the retirement age for most Civil Servants so the problem went unnoticed.

Those people received "small" occupational pensions and then applied separately for the state pension - they're not supposed to have to do this, because these pensions are supposed to be "integrated" - they're not separate entitlements because when you joined you would have signed a form authorising payment of ALL your SW benefits to your department.
I have posted a lot of information, I haven't cherry picked parts and misrepresented them - it's all there, the rules and the legislation.

 

[Early Riser]

I started in PS post 95, but pre 2004.

If I retire at 62, I will not be entitled to any SW benefit.

I should receive my work pension + a supp pension until age 67.

The supp pension will be the difference between what a class A and a class D worker would get with my service.

Correct - provided you meet the other conditions - no paid employment nor self-employment involving a PRSI payment. You must have a retirement age of 60. You employer may expect you to claim Unemployment Benefit for the first 9 months - I have heard this reported but can't verify.

 

[Laramie]

Example
A final salary DB scheme might provide at retirement a pension of 1/60th of final earnings for each year an employee was in the scheme. If an employee retires after 40 years, that employee would receive a pension of 40/60ths (2/3rds) of their final earnings before retirement."

I dug out the pension booklet given to me in 1983. They only refer to my "pensionable salary" they never refer to my final salary in it. Deductions were made from my salary at the rate of 5% of my "pensionable" salary.

It appears to me that my employers are only responsible for the "pensionable" element of my salary when I retire.

 

[ppmeath]

Go to the superannuation handbook, chapter 11 is retirement benefits:

11. RETIREMENT BENEFITS Return
11.1 Benefits: An officer who retires
(a) having reached the minimum pension age; or
(b) due to incapacity to discharge his/her duties on grounds of mental or
physical infirmity not brought about by the officer’s negligence and likely
to be permanent (and having completed 5 years actual service); or
(c) due to the abolition of his/her office or the reorganisation of his/her
Department/Office in order to achieve efficiency or economy (such cases
must be referred to the Department of Finance), may be paid an immediate retirement pension and lump sum. These immediate
benefits are only awarded in the circumstances outlined above.

11.2 is retirement conditions:

11.2 Retirement conditions:
The ages at which an officer may retire are shown on the following table:
Category Minimum Pension Age Maximum Retirement
Age
‘New Entrant’2 Prisons 55 60
‘New Entrant’ other 65 None
Prisons (other than ‘New
Entrants’)
55 (50 with 30 yrs service
in Prison Service)
60
Other Officers 60 65"

If you're minimum retirement age is 60, then that is when you are entitled to your FULL pension, not part of it and then another part in 6 or 7 years time.

The pension is calculated as follows, and this is in the legislation I posted earlier:

"11.7 Pension Calculation for staff recruited before 6 April 1995:
The method of calculation of pension for pre-6 April 95 staff (who pay the modified
rate of PRSI) is 1/80th of pensionable remuneration per year of reckonable service,
subject to a maximum of 40 years.

This was the calculation for non integrated members, the entitlement for integrated members is exactly the same, it is just calculated differently:

11.8 Pension Calculation for staff recruited after 5 April 1995:
The method of calculating Main Scheme pension for officers recruited on or after 6
April 1995 who qualify for benefits on or after 1 January 2004 is:
(a) For that part of the officer’s pensionable remuneration which is less than or
equal to 31/3 times the current rate of CSP, 1/200th of pensionable
remuneration multiplied by the number of years of reckonable service
plus
(b) For any part of the officer’s Pensionable Remuneration which exceeds 31/3
times CSP, 1/80th of pensionable remuneration multiplied by the number of
years of reckonable service
A multiplier of 3.333333 (i.e. 6 decimal places) is used to calculate 31/3 times CSP.
The maximum number of years of reckonable service is 40.
The CSP rate is the maximum Contributory State Pension payable by the Department
of Social and Family Affairs to a single person without dependants on the last day of
the officer's pensionable service."

It is the rate of the State pension that is taken into account - not the payment of it.

11.9:

11.9 Unlike the officers recruited prior to 6 April 1995 (see paragraph 11.9), officers
recruited on or after 6tApril 1995 are insured for the full range of social insurance
benefits payable by the Department of Social and Family Affairs, including
Contributory State Pension and State Pension (Transition). Thus, in the case of an
officer with maximum service (40 years) who retires at age 65 and has no dependants,
his/her total pension benefit (i.e. social insurance pension plus civil service pension)
would amount to 50% of pensionable remuneration (the same total award as is payable
to a pre-6 April 1995 appointee).

When both the SW pension and the civil service pension are added - then they have to come to the same award that the pre 1995 member received, only after adding them and if there is a PRSI issue - can you then apply for the supplementary pension:

"11.10 Supplementary Pension:
In calculating pension at paragraph 11.7 above, it is assumed (a) that the officer
concerned is always entitled to social insurance benefits and (b) that he/she is eligible
for the maximum personal rate of such benefits."

However, depending on a particular
individual's PRSI contribution record, it may transpire that - through no fault of the
officer concerned - he/she either has no entitlement to the specified social insurance
benefits, or even if so entitled, is eligible for less than the maximum personal rate of the
Contributory State Pension payable to a single person without dependants

It is a blatant misrepresentation to allege that this pension is to bridge a gap from your minimum retirement age to the state pension age, when the RULES clearly state that it is to deal with your PRSI record.

"In such cases, the officer may be paid a supplementary pension, to take account of the
difference between their personal circumstances and the general assumptions on which
standard pension calculations are based."

Your pension is calculated on the assumption that you are fully insured and entitled to the max SW benefit.

If you are not entitled to any SW payment or a reduced payment:

"In such cases, the supplementary pension payable comprises the difference (if any)
between

"(a) the amount of the actual pension awarded to the officer plus the amount (if
any) of the personal rate of social insurance benefit or pension payable to
him/her; and
(b) the amount of the pension which would have been awarded to the officer
if that pension had been calculated by reference to the calculation method
for pre-6 April 1995 officers set out at paragraph 11.8. (That should read 11.7).

The pre 1995 pension was calculated like this:

"11.7 Pension Calculation for staff recruited before 6 April 1995:
The method of calculation of pension for pre-6 April 95 staff (who pay the modified
rate of PRSI) is 1/80th of pensionable remuneration per year of reckonable service,
subject to a maximum of 40 years."


When your SW benefit and your civil service pension are added together they should be the same as if it was calculated the same way as the pre 1995 pension. If they are not and it is a PRSI shortfall then the supplementary pension deals with that. These are the facts.

 

[ppmeath]

I dug out the pension booklet given to me in 1983. They only refer to my "pensionable salary" they never refer to my final salary in it. Deductions were made from my salary at the rate of 5% of my "pensionable" salary.

It appears to me that my employers are only responsible for the "pensionable" element of my salary when I retire.

Did you pay a Class A PRSI stamp? Is your pension integrated with the SW system?

 

[jjm]

The only thing I have to add is In the private sector Pension or no pension changing the state pension is causing problems,Take my own company old contract says nothing about retirement age, in came the union new contract stating retirement age of 65 ,It is not an issue where I work a new manager could change that ruling,

 

[ppmeath]

Protocol, you are being given false information. This is from the original agreement, it is repeated in legislation and in the rules of your scheme. You are being told that the supplementary pension is to bridge a gap from 62 - 66 when all the documents provided state otherwise, there is no link between your minimum retirement age and the state pension age - I provided the relevant link for that too.

You are then being told that you might have to claim a SW benefit (Job Seekers Benefit is a SW payment) - yet the official documentation states:

"The supplementary pension will be equal to the difference between (i) the
occupational pension which would have been payable had it not been
coordinated and (ii) the aggregate of the actual occupational pension payable
and actual rate of social insurance benefit."

If you have an entitlement to Job seekers, then that is an actual social insurance benefit.

When this is added to the actual occupational pension payable, and if - when both are added - it does not amount to the same 50% of your salary as your pre 1995 counterpart then the supplementary pension is "equal to the difference" of the pre 1995 pension and the combined total of your occupational and social insurance benefit.

What you are being told is that your entitlement to the rate of the state pension, which is supposed to be integrated into you entitlement - is being deducted.

 

[ppmeath]

The only thing I have to add is In the private sector Pension or no pension changing the state pension is causing problems,Take my own company old contract says nothing about retirement age, in came the union new contract stating retirement age of 65 ,It is not an issue where I work a new manager could change that ruling,

Spot on Jim. The change exposed a problem that existed, but it didn't go unnoticed because a lot of people in both the private and public sector have made numerous complaints about the "integration" pension.

They have complained that their occupational pensions are tiny, before the change in the age, they applied separately for their state pensions.

They believed that they would received half their final salary and the state pension on top of that.

You have to remember that most people retire on very modest salaries. Take someone retiring on 45k after 40 years for example (this formula is for the PS, it may be the same or similar for a private DB scheme):


45k:
Weekly SCP: €233.30
Annual SCP: €12,131.60
3.333 times annual SCP: €40,438.66
1/200th of salary below 3.333 SCP for 40 years: 40438.66/200*40 = €8,087.73
1/80 of salary above 3.333 SCP for 40 years: (45000 40438.66) / 80 * 40 = €2,280.67
Total = 10,368.40


Now the entitlement is 50% of the final salary - 22,500 and clearly 10,368.40 us way short, this is what the member contributed 5% to for 40 years and it equates to 199 a week.

The shortfall is 12,131.60, and this is the rate of the pension that the member contributed 1.5% of the gross income towards for 40 years.

The employer is obligated to pay the total of these two combined ( the two amounts above and the state pension rate) when the member meets the retirement criteria as set out in their scheme - not the SW one.

As far as I am concerned, this applies to private DB schemes.

 

[JoeRoberts]

There is a reason why public and private sector pensions have separate section on AAM - it's because they are different.
A moderator needs to close and move this thread before more private sector DB scheme members are misled.

PPmeath has no knowledge or experience of private sector DB schemes yet despite being told by people with extensive experience in the area, he continues to think it works the same as the public service. No amount of copying and pasting from the PA website can make it the same.

One of his basic misunderstandings is that generally in the private sector, integrated pensions are based on a % of final pensionable salary, not a % of final salary. The examples from the PA website explain how integration works in general terms. It does not bind any scheme nor is it a statement of fact/law.

The detailed rules of every private sector pension lies within the trust deed of that scheme. This is the only reference point for a query.
Readers of this thread with a private sector scheme should IGNORE anything he says.

 

[ppmeath]

Well I clearly upset you Joe. But the issue raised by the OP is affecting both schemes, public and private. Both members are seeing a shortfall in their pension entitlements and they are left with a significant shortfall and in a lot of cases they have no choice but to retire at 65.

Personally I think this is a major issue and I don't see why any pension scheme member should be left in this way - because of a change in the state pension?

If anyone needs anymore information then feel free to message me, I will be happy to help with queries.

 

[Laramie]

Did you pay a Class A PRSI stamp? Is your pension integrated with the SW system?

This thread has become so complicated. It is a mix of public service pensions and private pensions advice.

My pension is a private pension. Defined Benefit. It is integrated with the state pension. I assume I paid the normal PRSI contributions for a private person. I am a deferred pensioner.

My pension booklet only refers to my "pensionable" salary and not my final salary throughout the booklet.

I assume my employer only has to deal with the "pensionable" calculation of my gross salary when my pension is to be paid shortly. I assume that my 5% contributions made to my pension scheme during the time I worked there were made from the "pensionable" portion of my salary.

I will now have to find an old pay slip to see if these 5% deductions were made from my gross salary or the pensionable portion of my gross salary. (I guess that means my gross salary, less 75% of the single persons state pension at the time) I certainly hope that they were deducted from the pensionable portion of my salary and not my gross salary at the time otherwise my pension plan will have to take in to consideration the state pension?.

If they were only deducted from the pensionable portion of my salary then I believe that my old employer only has to deal with the pensionable salary calculations, when payment comes due. They can ignore the gross salary calculations.

In that case the state pension looks after itself?

 

[Protocol]

This is what how I think the supp pension works, confirmed to me by Financial Controller in a PS organisation.

Example: retiring at 62 with 35 years service, 50k final salary

Class D would get (35/80)(50k) = 21,875 pension

Class A gets (35/80)(50k - 2(52.18)(233.30)) = 11,223 pension

So the supp pension is 10,652 pa, as long as you fulfill the conditions.

 

[Nordkapp]

This is what how I think the supp pension works, confirmed to me by Financial Controller in a PS organisation.

Example: retiring at 62 with 35 years service, 50k final salary

Class D would get (35/80)(50k) = 21,875 pension

Class A gets (35/80)(50k - 2(52.18)(233.30)) = 11,223 pension

So the supp pension is 10,652 pa, as long as you fulfill the conditions.

However, PS sector organisations insist because of a DPER Rule that you seek JSB (payable for 9 months @ rate €188) and then jot back to the now former employer for the Supplementary Pension ("SP") to make up the shortfall between what you should be receiving (in the example above €10,652) and the JSB already received. The reality is on retirement PS employers will not pay the SP until you have exhausted the JSB, pure madness.

The issue is the SP should along with the occupational pension be payable from retirement date. The fact is that it is not. There is clear inequality between a Class D and a Class A when they retire. I have had this checked out to the nigh this year with my own PS employer who confirmed that along with fellow PS employers their dis-satisfaction to DPER in having to apply this rule.
I now have written to the Minister about this issue as the Rule should be scrapped and the SP paid on retirement by the employer to ensure there is no inequality between both classes.

 

[Early Riser]

This is what how I think the supp pension works, confirmed to me by Financial Controller in a PS organisation.

Example: retiring at 62 with 35 years service, 50k final salary

Class D would get (35/80)(50k) = 21,875 pension

Class A gets (35/80)(50k - 2(52.18)(233.30)) = 11,223 pension

So the supp pension is 10,652 pa, as long as you fulfill the conditions.

Thank you, Protocol, for getting back with this. Your Class A occupational pension is estimate is practically the same as that provided by the Public Service Pension Modeller ( http://www.cspensions.gov.ie/Post95EstablishedCalculator.asp ) The modeller does not provide an estimate for the Supplementary but yours seems exactly right.

Just to note that if you can qualify for the full State Pension at 66 (67 for you?) you will then be doing better than your Class D counterpart. Hence the importance (depending on your PRSI record to date) of continuing to sign for credits after you retire.

The issue is the SP should along with the occupational pension be payable from retirement date. The fact is that it is not.

I agree that it is a pain to have to apply for the Supplementary Pension separately but there do seem to be some advantages for the Class A person to help counterbalance this. For example, the Class A person retiring with less than full service (such as Protocol) has the potential to continue to build up PRSI credits and may well qualify for a higher level of State Pension than the Supplementary (and, therefore, a higher pension overall than the Class D counterpart). As a State Pensioner the Class a person has the availability of the extra benefits which go with it (eg, where applicable ,the Living Alone Allowance, the Adult Dependant Allowance). The optimistic retiree can even look forward to an extra €10 per week at 80 !

Also the Class A person in employment has a safety net of Social Welfare benefits which I think (?)
are not available to the Class D :

Illness Benefit
Maternity Benefit
Adoptive Benefit
Health and Safety Benefit
Invalidity Pension
Treatment Benefit
Jobseeker's Benefit

 

[ppmeath]

This thread has become so complicated. It is a mix of public service pensions and private pensions advice.

Laramie, the thread is complicated because of conflicting advice, the issue is the "integrated" pension scheme. Across both the Private and Public Sector schemes this had the one aim, the principle underpinning both schemes, was that the combination of your occupational pension (that you paid your 5% towards) and your state pension (that you paid PRSI towards) would provide the total benefit of the pension scheme.

When the state pension age was increased to 66, then this created a gap for both PS and private workers, the majority of whom have a compulsory retirement age of 65, the pension schemes were designed on the assumption that the workers would be paid the state pension on the day they retired.

If you are not entitled to the state pension at 65 - then that offset has to be zero. You can't integrate something that does not exist.

Class A gets (35/80)(50k - 2(52.18)(233.30)) = 11,223 pension

I have provided the pension rules, circulars and legislation to provide you with the formula for PS pension calculations, for a 50k salary on 40 years service (as opposed to 35 years):

50k:
Weekly SCP: €233.30
Annual SCP: €12,131.60
3.333 times annual SCP: €40,438.66
1/200th of salary below 3.333 SCP for 40 years: (40438.66/200*40 = €8,087.73
1/80 of salary above 3.333 SCP for 40 years: (50,000 - 40438.66) / 80 * 40 = €4,780.67
Total = 12,868.40
40/80th entitlement 25,000
Shortfall = 12,131.60

I have provided the same information relating to the supplementary pension scheme and yet you ignore it.

According to the Pensions Ombudsman this is how that pension will be calculated:

Weekly SCP: €233.30
Annual SCP: €12,131.60
3.333 times annual SCP: €40,438.66
1/200th of salary below 3.333 SCP for 40 years: (40438.66/200*40 = €8,087.73
1/80 of salary above 3.333 SCP for 40 years: (50,000 - 40438.66) / 80 * 40 = €4,780.67
Total = 12,868.40

He believes that both the totals above equal the "integrated" pension.

A "supplementary" pension was designed to supplement the pensions of those integrated schemes where, when both the occupational and SW benefits combined - did not equal the benefit (in PS that is 50% of final salary on retirement) provided for in the scheme.

And here is the formula by a pension administrator in the PS and this formula was done in August this year:

"€56,442.54 - €40,578.63 = €15,863.91
€40,578.63/200 = €202.89*18.633424 = €3,780.59
€15,863.91/80 = €198.29*18.633424 = €3,694.99
€3,780.59 + €3,694.99 = €7,475.58"

There are many people working on this issue, for both Private and Public DB integrated schemes and they have all identified that "integration" is the problem.

@Nordkap -

The issue is the SP should along with the occupational pension be payable from retirement date. The fact is that it is not. There is clear inequality between a Class D and a Class A when they retire.

Not quite, here is the relevant part of the legislation regarding the supplementary pension:

"(3) The amount of supplementary pension payable shall be the amount, if
any, arrived at by the formula:"

The formula is above and the formula for payment of the supplementary pension is below:

"A — (B + C) where"

"A is the amount of pension or preserved pension which would have been
payable to the former member if he or she had not been fully insured;

Using the 60k final pension again as an example, so a 30k pension - "A" means that if the pension payable to a person on an "integrated" pension is not the same as a person on a non integrated pension (not fully insured refers to Class D members) if their pension entitlement would have been calculated as follows (Again this is in legislation):

11. Pension Calculation on Retirement
(1) A member who is not fully insured who retires having attained the minimum
pension age shall be eligible to receive a pension of an amount per annum
calculated at the rate of 1/80th of his or her pensionable remuneration at retirement
for each year of pensionable service.

1/80th of 60k = 750 multiplied by 40 years service = 30,000.


"B is the amount of pension actually payable to the former member,"

This refers to the occupational part or this part as calculated by the formula above:

Weekly SCP: €233.30
Annual SCP: €12,131.60
3.333 times annual SCP: €40,438.66
1/200th of salary below 3.333 SCP for 40 years: (40438.66/200*40 = €8,087.73
1/80 of salary above 3.333 SCP for 40 years: (50,000 - 40438.66) / 80 * 40 = €4,780.67
Total = 12,868.40


and

C is the amount of personal Social Welfare Benefit payable to the former
member."

If you are not entitled to the max state pension but you are entitled to the Job seekers rate - then this is supposed to be added to the 12,868.40, the JSB is 9776 and when added they total 22,644.40. The supplementary pension is the difference between the 30,000 entitlement and the 22,644.40.

The pension assumed however, that the member would be fully insured on retirement after working for 40 years and paying the PRSI contribution for 40 years, any PS worker would be entitled to some SW benefit.

The entitlement is 50% final pensionable salary on retirement after both the occupational and SW pension are combined.

Now, there are people who clearly do not agree with what I am saying, that is fine, but my position is backed by official documentation and legislation. It is being interpreted incorrectly.

 

[Protocol]

ppmeath,

I apologise, I used the older pension integration formula, sorry.

http://circulars.gov.ie/pdf/circular/finance/2005/19.pdf

Calculation

9. The revised method of calculation of pension for public servants who fall within the scope of this Circular is as follows: ·

1 /200th of pensionable remuneration below 3 1/3 times OACP [1] · multiplied by the total number of years reckonable service

plus (where applicable)

1 /80th of pensionable remuneration in excess of 3 1/3 times OACP · multiplied by the total number of years reckonable service.

Notes: The same total number of years is used in both the above calculations. It has been agreed that a multiplier of 3.333333 (i.e. to 6 decimal places) will be used to calculate 3 1/3 times OACP


So here I go again, just to assure my self that I'm doing it correctly.

3.333333 CSP = 40,578.64 pa

(3.3333333)(233.30x52.18)(1/200)(35yrs) = 7101.26 pa

(50k - 40,578.64)(35/80) = 4121.85

Work pension payable at age 62 = 11,223.11


35/80 class D would get 50k*35/80 = 21,875

So shortfall of 10,651.89 to be covered by supp pension.

 

[Nordkapp]

@Protocol

I think 40,578.64 should be 40,434.62?