Put on wrong class of PRSI for 20 years

[Cecelia]

Hi I'm 57 and have worked in the health service since 1983 full time. During that time, I have taken only one break from work - a few months before I started a new job in September 1995. I have always paid class D PRSI and have never had an occasion to query it . However I'm recently been informed that I am probably on the wrong class and should have been on class A since 1995. As I'm due to retire in 3 years - what are the implications of this issue and what should I do to sort it out?

 

[Early Riser]

Hi Cecelia, the amount of pension payable to you at 60 will not be any less because you are on a D rate.

If you had been on an A rate since 1995 then at 60 you would have been eligible for an Occupational Pension plus (on application and on meeting eligibility conditions) a Supplementary Pension. The combined Occupational Pension + Supplementary Pension should equal the D rate pension you are on course to receive. At 67 you will not be eligible for a State Pension as an A rate pensioner would be. But at 67 the A rater loses their Supplementary pension, so again their combined Occ. Pension and State Pension should be roughly equivalent to your total D rate pension.

In sum, and without getting further bogged down in details, you aren't disadvantaged pension-wise - unless there is something else you are concerned about ?

However I'm recently been informed that I am probably on the wrong class and should have been on class A since 1995.

Who informed you of this ? Was it HR? I don't know whether or not you should have been put on an A rate in 1995 but if I was in your shoes I wouldn't be making an issue of it now, unless it is you employers who are making it an issue. (It is more usually A raters who complain about being disadvantaged).

Hi I'm 57 and have worked in the health service since 1983 full time............... I'm due to retire in 3 years

On a separate matter, it sounds like you are a couple of years short of full service. You should consider getting a quote for notional service from your HR. Even though you are retiring at 60 I think you can purchase notional years -check it out with HR.

2 years extra of notional service would increase your annual pension by 1/40 of pensionable salary and your lump sum by 3/40 (eg, on a salary of €60000 this would equate to annual pension of €1500 and a lump sum of €4500). Notional service purchase ( if eligible) is not cheap but you can pay it from your retirement lump sum and claim tax relief for the amount involved. It is particularly attractive if you are on the higher tax rate now but will be on the basic rate in retirement.

 

[POC]

If you choose to purchase notional service, you will need to act quite quickly. As far as I’m aware, you would have to start it by your 58th birthday (2 years before retirement). Your HR dept would have to request costings, which might take a while. The costings will be different if you are Class A or D, so that might open a can of worms which will have to be clarified first.
(I had a similar can of worms, when I queried my PRSI Class. I was moved from A to D and back again. It involved lots of recalculations of PRSI payments and pension payments.)

 

[Early Riser]

Interesting POC - in these circumstances might the OP be better letting the dog lie? Or maybe a final year AVC instead?

 

[POC]

I really don't know enough Early Riser. I just know I was going around in circles for years. When I tried to sort out changes to Notional Service payments, a very thorough staff member in Manorhamilton managed to work through all the information and establish that I was correctly on A Class initially and ineligible for D. So I was moved back to A.

I wonder who advised the OP she was on the wrong class? And whether her employer, or anyone else is already looking into it.
Being on the wrong class has implications for PRSI contributions, for both the OP and her employer. It also affects superannuation payments. Even though it doesn't sound like it'd affect her final pension entitlement, it would involve a big piece of administration work to sort it out, if it is decided she should've been Class A.

I also wonder, would the issue come to light when it's time to start receiving the pension, if it's not resolved sooner. Do the Manorhamilton staff sift through records with a tooth comb before finalising entitlements?

 

[Early Riser]

Are there not slightly different pay scales for most grades depending on whether the person is at Class A or Class D
PRSI ?

The OP might check which scale she is on by comparing them both against her current salary. Perhaps her break in service in 1995 was of short enough duration for her to be re-engaged on the D rate scale (I don't know what rules applied.) If she has been paid on the D rate scale since 1995 I would not be inclined to go querying it now unless it is coming from her employer.

Some of the pre and post 1995 scales (ie A or D rate) are listed here :

https://www.forsa.ie/about-forsa/divisions/civil-service/civil-service-pay-scales/

 

[Cecelia]

Many thanks for all the responses - I very much appreciate you taking the time to respond. It is not my employer who is querying it but rather a friend who recently retired. She also started in 1995 (the same time as me) in a new department. I know they went back over her pension payments in detail and not being on the correct PRSI scale was mentioned. She didn't have an issue once paperwork was sorted but she didn't take a break between jobs.
So it appears from your advice that I might be better off not bringing the query to my employers attention now. My main concern is that the error is discovered at my retirement leaving me with a large bill to pay (Class D pay more superannuation and less PRSI than Class A). I appreciate that it won't make a difference for retirement age.

POC - I am buying back years - I'm a nurse and nearly finished buying student nurse years (started 1980) so will have 40 years by the time I plan to retire - provided this issue doesn't scupper this plan !!

 

[POC]

I had a quick look at a letter I received from Scope. To be eligible to stay on Class D, you must be moving from a permanent pensionable position, to another permanent pensionable position, without a break in service.

 

[POC]

Maybe your union have experience of this issue, and would know what happens if an error comes to light?

 

[Early Riser]

I had a quick look at a letter I received from Scope. To be eligible to stay on Class D, you must be moving from a permanent pensionable position, to another permanent pensionable position, without a break in service.

Interesting - there was no grace period allowed then, it seems. Currently a break of up to 26 is allowed before someone rejoining from an old scheme is obliged to join the Single Scheme.

My main concern is that the error is discovered at my retirement leaving me with a large bill to pay (Class D pay more superannuation and less PRSI than Class A)

But if it happened that you were obliged to pay back for Class A PRSI would you be eligible for a refund of excess Superann contributions ? Or have you been on the wrong scale all along?

This would seem to relate to which pay scale you were put on when you returned in 1995 - Schedule A or Schedule B. For the same position a Schedule B scale is for PRSI Class A staff and is slightly higher to reflect the higher PRSI. If you were put on a Schedule B scale but had PRSI deducted at Class D then there was a mistake made - you should have been on Schedule A for Class D PRSI (or Schedule B and on Class A PRSI !).

As POC has suggested, you might get on to your Union headquarters as they will probably have come across this before.

PS. Should you discover that you were put on the appropriate pay scale for Class D PRSI then, in your shoes, I wouldn't go querying it with HR now. You haven't financially benefited in this scenario.

 

[beautfan]

As you had a break after April 1995 you should have been placed on prsi A. One day is a break.

You have underpaid prsi but overpaid superannuation. I don't know if you have to pay all the PRSI back. I do know that they only refund 6 years PRSI if you have overpaid.

I am surprised the pensions department didn't pick this up when you paying back service.

There isn't 2 payscales in the HSE. Those scales are Civil Service ones, not HSE.

You need to contact HR and request a SCOPE decision.