Pre 95 (modified class PRSI) Public Service Pension and spouse. State Pension Issues.

[Sandpiper]

My brother-in-law is planning on retiring from the Public Service in January of 2013 – he is 61 and will have completed 40 years of service by then. His health has been dis-improving over the last few years and he really feels unable to continue. My sister (his wife) has been a homemaker for most of her married life – she never signed on the dole or for credits. While she worked herself occasionally, she has very few stamps over a long period, so I believe that’s a non-runner for anything.

I know that she’s very concerned about the lifelong pension income they will have (approximately 19/20k) but she maintains that that is all they will have, apart from the lump sum.

I thought that he would also be getting a state pension at 66, or whenever that usually kicks in, but she says not? Something about the wrong type of stamp?

Is this it for them or would she be entitled to anything in her own right to supplement their income?

 

[Berni]

She is correct, public servants don't receive separate state pensions.

Anything she applies for would be means tested, see here for rules on non contributory pensions
http://www.welfare.ie/EN/Schemes/Pension/SPNonContributory/Pages/oancp.aspx

 

[Sandpiper]

Thank you for the reply and the link - this was a revelation to me. I now see what my brother in law has been saying about his PS pension and his feelings of anger at the media. After working and paying into this pension, including the recent levies, for 40 years he and his wife will get almost exactly the same as a couple on a non-contributory pension who never worked at all! Not exactly gold plated ...

 

[Protocol]

Many PS hired pre April 1995 did not, and do not, pay PRSI at class A.

They pay less PRSI.

They get less benefits.

However, he should get 50% of his final salary as a pension.

 

[Protocol]

Example: teacher hired in 1970

Retires aged 62 in 2010 on 70k.

No State Pension.

Gets a PS pension of 35k.

 

[Sandpiper]

Yes, he will get 50% of his current salary, which, after the cuts, amounts to 39k - about 19.5k. This results in his getting approximately the same pension for himself and his wife as a similar couple on a non-contributory pension who paid nothing. I'm sure he's not alone, as many of the lower grades in the PS (not teachers or high earners) are in the same boat.

 

[ashambles]

This results in his getting approximately the same pension for himself and his wife as a similar couple on a non-contributory pension who paid nothing.

The non-contributory pension doesn't begin until 66. Thats 97,500 euro in difference for the example given.

There's no lump sum - that's another 58,500 euro.

Most people consider 156,000 euro a significant amount of money - certainly people on non-contributory pensions would not regard this money as inconsequential.

When either spouse dies both the contrib and non-contrib pension are reduced.
It's also not means tested unlike the non-contrib.

Approximately the same?

 

[Sandpiper]

The point I made was that he will (as of age 66) be getting almost the same in pension as if he'd never worked nor made any contributions to state coffers via pension contributions or PRSI.
Also, if my brother in law dies, the pension will be halved again.

 

[gipimann]

Yes, the PS pension will be reduced if your brother in law dies, but his wife can apply for the contributory widow's pension as that is one of the benefits covered by the modified class of PRSI.

 

[shigllgetcha]

PS pesnions average out around €17/18k (I have no access to CS pension figures)

There is a big deal is made in the media about PS pensions, using the higher paid to attack everyone in the PS. PS pensions do cost the state but most DB pension schemes cost the employer something.

Can the lady apply for a non contributory pension or will the spouse's income make the exceed the threshold?

Here is some info on means testing a couple
http://www.citizensinformation.ie/e...payments/assessing_the_means_of_a_couple.html

I would definitely advise the lady to speak to SW just incase she can get a non contrib.

 

[Guns N Roses]

Can the lady apply for a non contributory pension or will the spouse's income make the exceed the threshold?

Here is some info on means testing a couple
http://www.citizensinformation.ie/e...payments/assessing_the_means_of_a_couple.html

I would definitely advise the lady to speak to SW just incase she can get a non contrib.

As Non Contributory Pensions are means tested, I believe that it's unlike that she will get one. As far as I remember her husband's pension & lump sum will be considered as income if she applies. There is of course no harm trying.

 

[ashambles]

The point I made was that he will (as of age 66) be getting almost the same in pension as if he'd never worked nor made any contributions to state coffers via pension contributions or PRSI.

If you exclude all the differences then yes it is similar.

PS pesnions average out around €17/18k (I have no access to CS pension figures)

This figure is surprising low. The average salary at retirement is closer to 60k so the average full pension would be around 30k, plus 90k lump sum. If we're talking about partial pensions, then the comparisons with non-contrib pensions start to become even more confused.

 

[rayn]

I am surprised that nobody has mentioned that all public sector pensions over €12,000 are now subjected to a "Public Service Pension Reduction" This varies up to 12%. So a PS pension is now no longer 50% of salary.

 

[ajapale]

.. that all public sector pensions over €12,000 are now subjected to a "Public Service Pension Reduction"

This should read "all public service pensions" as this measure does not apply to public sector schemes outside the public service (ESB, Bord Gais etc)

 

[Slim]

I am surprised that nobody has mentioned that all public sector pensions over €12,000 are now subjected to a "Public Service Pension Reduction" This varies up to 12%. So a PS pension is now no longer 50% of salary.

That only applies to pensions taken up before 29th February, 2012. That would not apply to OP's BIL. OP's BIL pension will be based on pay reduced from 2010 and further reduced by the 'pension levy'.

 

[ashambles]

OP's BIL pension will be based on pay reduced from 2010 and further reduced by the 'pension levy'.

No it won't as the pension levy does not apply to pension income.

all public sector pensions over €12,000 are now subjected to a "Public Service Pension Reduction" This varies up to 12%.

Just to give full details and prevent anyone from thinking pensions were cut by 12%, it's a graduated scheme
0-12k = 0% 12k-24k=6% 24k-60k=9% and 12% above 60k.
An existing pension holder on 20k would have seen a 2.4% drop.
http://www.finance.gov.ie/documents/publications/guidelines/faqpubsecpensreducmar11.pdf

 

[shigllgetcha]

This figure is surprising low. The average salary at retirement is closer to 60k so the average full pension would be around 30k, plus 90k lump sum. If we're talking about partial pensions, then the comparisons with non-contrib pensions start to become even more confused.

The number of people with 40 years service is very low. Im only going on the figures I have available, other parts of the PS might be different. You are right though that would be a mix of D's and A's.

 

[Slim]

No it won't as the pension levy does not apply to pension income.

My fault for not punctuating properly! I meant that OP's BIL's salary has been further reduced by the pension levy. However, final salary will be determined ignoring the pension levy. It is highly unlikely that Op's BIL will have enough average full stamps or opportunity to get them at this stage, to qualify for contributory or old age pension.

 

[Sandpiper]

A belated thanks to everyone for the info provided here - very much appreciated. My brother in law is still at work and sticking it out for now due to financial worries and fears. I have one other query that I hope someone can help with.
Although he has already completed 40 years of permanent and pensionable service, he had a period of temporary service immediately prior to appointment (less than a year AFAIK) and has been told by the finance department that he must also purchase/make pension contributions for this time period. I know he's confused by this as he assumed that his 40 years of fully paid pensionable service could be calculated from the time of his permanent appointment? He thought that as he is still under 65 this temporary service was irrelevant, unless it was necessary to achieving the full 40 years.
I really know little or nothing about this situation and can't find anything that answers this via Google, so apologies if I'm asking something that should be obvious.

 

[becky]

He will have to pay for the year or else it will come out of the lumpsum. Poor form he is only being told this now. I paid for my year after being made permanent. I will have 43 years at 65 but my pension will be based on 40 years.