Planning for retirement in 20ish years

Discussion in 'Public sector pensions' started by The Oggster, 3 Dec 2018.

  1. The Oggster

    The Oggster Frequent Poster

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    Sorry if this has been asked numerous times.

    I'm in the CS. Joined in 2006 so paying full PRSI. I was 25 when I joined, nearly 26.

    By the time I retire, the State Pension won't be issued until I'm 68 (pending no more changes to this). I really don't want to work until then.

    I would like to retire by 60. Obviously I won't have the full 40 years done by then and if I'm correct cannot buy back years as I could work the full 40 years?

    If I was to go at 60, I'd only have 34 years worked.

    Working on a sample salary of €50,000 I think this would give me a lump sum of €65,000 (104/80) and pension of €21,250 (34/80).

    Then I think I need to apply actuarially reduced benefits calculation to that.
    Lumpsum: 90.7% of €65,000 = €58,955
    Pension: 74.8% of €21,250 = €15,895

    I think the state pension of €12,000 has to be taken away from the pension figure? So that would leave me with approximately €3,895 a year? So around €75 a week?

    Am I entitled to the supplementary pension at 60 or would I be expected to work?

    I used this for the above calculations http://www.cspensions.gov.ie/faq2.pdf

    Is the above correct?

    Finally, my question is how do I improve the above benefits considering it's 20+ years away? AVC?
     
  2. The Oggster

    The Oggster Frequent Poster

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    Last edited: 3 Dec 2018
    I see there is a thread from September which I'm going to have a read through now. If you have anything else to add here or correct my calculations, I'd appreciate it.

    I also now realise, I asked this question in that thread but again, any more info/corrections would be appreciated.
     
    Last edited: 3 Dec 2018
  3. Early Riser

    Early Riser Frequent Poster

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    Hello Mr/Ms Oggster,

    Your pension offers a coordinated scheme and at normal retirement gives a total pension that is made up of a combination of the State Pension (or other Social Welfare payment) and an Occupational Pension. You cannot apply an actuarial reduction on the total, as you do above. The actuarial reduction applies to the Occupational element - which is calculated on net pensionable remuneration, not pensionable remuneration.

    These are my figures (approximations) for you retiring at 60 on a salary of €50,000 (net pensionable remuneration approx €24,800). I am assuming your normal retirement age is 65 (post 2004 and not in any category entitled to retire earlier, eg, Garda, Prison Officer?)

    Occupational Pension €7883 (€10540 * 74.8)

    I didn't calculate your lump sum, but the modeller gives it at €58,000, which sounds about right.

    The Survivors pension entitlement would be about €8000 (assuming you are a member).

    As your normal retirement age is 65 you would not be entitled to a Supplementary pension until 65 (and provided you meet the conditions then). If eligible, I reckon it would amount to about €10,700 - until State Pension age. You would need to keep an eye on the conditions for a full State Pension when you retire, eg, signing for credits. This is too far away to anticipate now.

    These are the conditions for a Supplementary Pension from the Dept of Ed website - they are pretty standard:

    https://www.education.ie/en/Educati...ns/Supplementary-Pension-Explanatory-Note.pdf

    Yes, AVCs would be the way to boost your retirement pension benefits.
     
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  4. michaelm

    michaelm Frequent Poster

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    Save the 1.5 x salary lump in AVCs.
     
  5. shelley levine

    shelley levine Registered User

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    You cannot have 1.5 times salary as a tax free lump sum if retiring under cost neutral scheme. Certain reductions apply
     
  6. michaelm

    michaelm Frequent Poster

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    Last edited: 4 Dec 2018
    I appreciate that reductions apply to tax free lump on early retirement if the lump is taken out of the main pension (seems one can still get around 90% of final salary tax free at 60). In my case, and I'll have to check now, I thought I could take the full 1.5x from my AVCs at 60 (NRA 65).
     
    Last edited: 4 Dec 2018
  7. Early Riser

    Early Riser Frequent Poster

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    Not certain but I think that the reduction on the tax free lump sum applies to the combined AVC and Occupational Pension. It is 90.7% at 60, which would allow a maximum of about €68,000 in the example above. Of course the balance could go towards an annuity or an AMRF/ARF.

    Michaelm - Was your retirement at 60 on a Cost Neutral Early Retirement basis or Normal Retirement (allowable any time between 60 - 65)? That is, did you join the scheme before or after 2004?
     
  8. michaelm

    michaelm Frequent Poster

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    I've a way to go till retirement but am looking at what's possible, eyeing retirement at 60/61.

    I joined my DB scheme before 2004, NRA is 65 but I thing one can retire as early as 50 and "If you retire early, the immediate pension you will receive is the Deferred Pension available on leaving service reduced according to your age at retirement by reference to approved actuarial tables to allow for early payment."

    The AVC Plan is totally separate from the main scheme. It is designed as an “exempt approved scheme”. Whatever leaving service option I choose under the main scheme will be the option that applies under the AVC Plan . . no mention of a reduction but I guess the actuarial tables may apply here too.
     
  9. Early Riser

    Early Riser Frequent Poster

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    Your scheme has a normal retirement age of 60 - 65, ie, there is no actuarial reduction (CNER) if you retire any time after 60 (to either your annual pension or lump sum). Therefore, there is no impediment to you using your AVC to top up your tax-free lump to 1.5 times salary (unless you take early retirement between 50 -60).

    It is different for post-2004 people, as in The Oggester's situation. Retirement before 65 is on a Cost Neutral Early Retirement basis (with an actuarial reduction). The tax free lump sum, even with an AVC, also has a restriction, as I understand it.
     
  10. michaelm

    michaelm Frequent Poster

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    My DB scheme surrendered the 60 - 65 option in the mid 2000's with the intention of addressing a funding shortfall. A cost neutral early retirement and an actuarial reduction to the lump (from AVCs) is probably what I'm looking at.
     
  11. Early Riser

    Early Riser Frequent Poster

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    Hi michaelm, That doesn't sound like a standard public service scheme. Maybe in your circumstances the rules are different.
     
  12. LS400

    LS400 Frequent Poster

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    And the private sector will work till they are 68 so as to pay for this early retirement for the rest of your natural life. Absolutely crazy.
     
  13. Early Riser

    Early Riser Frequent Poster

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    Should Oggster opt for retirement at 60 it will be on an actuarially reduced basis. He could work until 65 (or longer) and get a substantially higher pension. The cost to the exchequer is similar.
     
  14. Threadser

    Threadser Frequent Poster

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    Untrue. The OP will more than likely have paid more into his pension in contributions over 34 years that he is likely to claim given average life expectancy. He will also have paid a Pension related deduction on top of his pension contribution. (ie extra tax for PS/CS workers)
     
  15. Threadser

    Threadser Frequent Poster

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    What is crazy is people who make no provision for their retirement by not working or paying minimal PRSI to fund their state pension.
     
  16. shelley levine

    shelley levine Registered User

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    MichaelM

    Your posts are contradictory. In your original post you say you joined CS in 2006.
    In a later post you say you joined your dB scheme before 2004. Which is it? In the public sector April 2004 is a critical date that determines the rules around your retirement and the advice on how to fund for early retirement
     
  17. Threadser

    Threadser Frequent Poster

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    The OP is not Michael M.
     
  18. shelley levine

    shelley levine Registered User

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    My bad!
     
  19. LDFerguson

    LDFerguson Frequent Poster

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    So are you saying that the personal contribution to the superannuation scheme plus the Pension-Related Deduction, paid over 34 years, would be more than the gratuity and pension paid to a PS/CS worker over an average lifetime post-retirement? Have you any figures to back up this claim?
     
  20. Conan

    Conan Frequent Poster

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    Average life expectancy for a male retiring at 65 is now about 20 years (3 to 4 years longer for females).
    Also remember that final benefits (pension per annum and lump sum) are based on salary close to retirement whereas contributions were based on salaries over a long period of time. And when you allow for the fact that Pensions are indexed in line with salary level for the position from time to time, I think most Public and Civil servants get a fantastic deal.
     
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