sector_001
Registered User
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- 13
Hiya!
I am wondering whether she should (if it is allowed) explore dropping out of this pension scheme and setting up a private PRSA DC-type plan.....
So why not exit the golden public sector pension??
In addition it is likely that the so called Public Sector pension levy will be reduced (or possibly eliminated) in the near future.
Indeed and bear in mind that the Pension Levy would continue to be deducted from Mrs. Sector's pay even if she could opt out!
....
Also, she could consider buying back Notional Service from employer though this can be expensive. Check it with employer.
Obviously (?) if Mrs Sector is only going to have 10 years service then her pension benefits will be small.
In general, a Public Servant retiring after 40 years will receive:
- a lump sum of 150% of Salary, plus
- a pension (indexed in line with any future salary increases for the grade) of 50% of Salary
The accrual rate under the PS scheme is:
Lump Sum - 3/80ths of Salary for each year of service (so 120/80ths after 40 years)
Pension - 1/80th of Salary for each year of service (so 40/80ths after 40 years)
It gets a bit more complicated depending on when they joined the PS. Older Public Servants pay a reduced rate of PRSI and therefore do not get the State Social Welfare Pension. Public Servants who joined after 1995 pay the full rate PRSI and therefore get the State Pension at age 66 (and also pay a lower rate Pension Contribution since their "occupational pension" takes into account the State Pension).
I fail to see what point you are making.
Question: If the PS pension is so great then why is it compulsory?
One in, all in. It's so everyone pays for the rest.Question: If the PS pension is so great then why is it compulsory?
OP, I think we need to simplify the case and look at that:
1. Your wife can only 'opt out' if she leaves within 2 years of joining the employer. Superannuation contributions will be returned less 25% tax. PRD will not be returned.
2. If she remains in and works for 10 years, I assume she is Class A prsi, her pension contributions will be:
€43k x 3% plus (43k-24k) x 3.5% (assuming 2xOAP rate = €24k), i.e total pa = €1,955. After 10 yrs, she resigns and preserves her entitlements. At 65 she would be entitled to a lump sum of (€43k/80)x3x10 yrs = €16,125. Her PRD (pension levy) of €1,652 currently(although this is reducing next year by c. €1k,) is not counted for refund and is only relevant if she leaves and doesn't have to pay it anymore.
Total pension contribution = €11,730 net of 40% tax relief plus PRD of €11k (est. after Landsdowne Road reductions).
3. Pension payable at 65 = 1/200 of Pensionable remuneration less/= to COAP x 3.333333 x service, i.e €40,056/200x10 = €2,002.80pa plus 1/80 of excess over €40,056 x service, ie. €2,944/80x10 = €368 pa. Total occupational pension pa = €2,370pa plus OAP of(12 x €230.30) €12,017, ignoring any Christmas bonus.
4. After receiving lump sum of €16,125, she needs to live for less than 1 year to get her contributions back taking OAP into account.
5. I would stick with Public Sector pension and take out PRSA/AVC to maximise tax relief and have a little more comfort at 65.
Hi, You will get a superannuation allowance(occupational pension) regardless of how few years you work, albeit it may be really small. The calculation of your entitlement to OAP rate of pension is based on years also but I am less sure about that. BTW, there is no getting 2 x OAP, just a max of 1 x OAP plus superannuation allowance.ANY idea what happens to your superannuation pension if you don't have enough contributions to be eligible for a full OAP or 2 x OAP
Hi, You will get a superannuation allowance(occupational pension) regardless of how few years you work, albeit it may be really small. The calculation of your entitlement to OAP rate of pension is based on years also but I am less sure about that. BTW, there is no getting 2 x OAP, just a max of 1 x OAP plus superannuation allowance.
If a class A public servant doesn't have enough contributions for a full OAP, is this where the "supplementary pension" comes in?
Let's say John is a pre 1995 public servant who doesn't pay PRSI and has a final salary of 50,000
Let's say Mary is a post 1995 public servant with an integrated pension and a final salary of 50,000 and let's say the OAP is 12,000
After 40 years, John gets an occupational pension of 40/80ths of 50,000 = 25,000
After 40 years, Mary gets an occupational pension of 40/80ths of (50,000-24,000) = 13,000 plus the OAP of 12,000. If Mary is too young to get the OAP when she retires, my understanding is that she gets a supplementary pension of 12,000 to make up for it?
Now if Mary doesn't have enough PRSI contributions for a full OAP does the supplementary pension also make up for that?
Let's say both John and Mary work for 20 years in the public service.
John gets pension of 20/80ths of 50,000 = 12,500.
Does Mary gets 20/80ths of (50,000-24,000) = 6500 and then a supplementary pension of 6000 to bring her up to the same overall pension as John.
This is important to me as like Mary I am a class A public servant and I have some plans in my head to retire very early from paid employment (so no more PRSI contributions) and get my preserved benefit pension at age 60.
Thanks Slim. However when they are calculating your superannuation pension i understand they work it out based on your salary minus 2xOAP. However if you are not entitled to the full contributory OAP as you have not enough contributions do they have a different method of working it out. For instance I am almost 58 and
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