Retiring with class A and D prsi

Discussion in 'Public sector pensions' started by martin ohanlon, Nov 17, 2016.

  1. martin ohanlon

    martin ohanlon New Member

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    I work in the public service and have paid both Class A and Class D PRSI and am therefore have a "Coordinated pension". A coordinated pension means that part of my pension comes from the Social Welfare ( state pension) and part from the occupational pension. I am eligible to retire at 60 and will not get the old age pension until 67. I should therefore be eligible for a supplemental pension to make up the shortfall until I am 67. I have been told if I retire at 60 I must apply for the Job Seekers allowance otherwise I may not be eligible for the supplemental pension.
    But when you apply for the job seekers allowance surely you have to be seeking work and if I have retired I'm not looking for a job. This seems crazy.
     
  2. jjm

    jjm Frequent Poster

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    (1)What Year did you start working ON D stamp how long were you on D stamp,When did it finish
    (2)When did the A stamp Employment start
    (3) what age are you now
    (4) did you pay an A stamp before you started on D stamp If so for how long
     
  3. Early Riser

    Early Riser Frequent Poster

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    Last edited: Nov 18, 2016
    Yes, you should be eligible for a supplementary pension, provided you meet the conditions - not be in receipt of, or entitled to receive, a relevant Social Welfare payment (such as jobseeker's benefit, illness benefit, invalidity pension) and not be employed in any capacity that involves the payment of a PRSI contribution.(If you subsequently engage in employment during payment of the Supplementary you are required to inform the office that is paying your Supplementary). You will be required to obtain confirmation from Social Welfare that you have no current entitlements when you are applying to your employer for your supplementary pension. (In the unlikely event that any Social Welfare payment that you may qualify for is less than the level of Supplementary that you would otherwise receive, the you are a entitled to apply for a reduced supplementary pension to make up the difference).

    I have been aware that some employers have been requiring that retirees at 60 apply for and exhaust their entitlement to Jobseeker's Benefit before paying the supplementary. However, in another thread a poster (Nordkapp) has indicated that this applies across all public sector employers and follows from a directive from the Department of Public Expenditure and Reform.

    In any event you have been told, presumably by your employer, that you must apply for Jobseeker's. You do not say, but on the assumption that your most recent position involves Class A contributions, you will probably be granted Jobseekers (You can check eligibility requirements on the websites of either Social Welfare or Citizens' Information). When this runs out you can apply for the Supplementary. You should note that when obtaining Jobseekers Benefit you will automatically be granted PRSI Credits and when the Jobseekers ends you can continue to sign (once a year) for credits up to age 66. This may well result in you obtaining a higher level of State Pension at 67 than you would otherwise have - and higher than the Supplementary that it then replaces. Also the Jobseeker's Benefit may be higher than the supplementary that you subsequently receive. I haven't heard of any retired Public Servants in these circumstances being required to engage in activation.

    Just to point out that if your most recent position involves Class D payments, then the situation is different. For one, you probably won't be eligible for any relevant Social Welfare payment and, if so, you can apply for the Supplementary straight away. In any event, the Supplementary is only relevant in relation to that portion of your service when you were Class A.
     
    Last edited: Nov 18, 2016
  4. martin ohanlon

    martin ohanlon New Member

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    I am presently (past 15 years) on an A stamp. Before that i was on a D stamp for 20 years. It was continuous service. I'm 59 now, My employer said I must apply for Job seeker's allowance.
     
  5. Early Riser

    Early Riser Frequent Poster

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    Last edited: Nov 18, 2016
    Apply for Jobseeker's Benefit (not Jobseeker's Allowance) as soon as you retire. Assuming that you will not be engaging in gainful employment after you retire, apply for the supplementary as the Jobseeker's is coming to an end - after 9 months. Check with your employer what documentation they require from you - some employer's have a Form that you must get completed by Social Welfare, or it may be just a letter from Social Welfare. Be sure to keep signing for Credits with Social Welfare after the Jobseeker's finishes. You will only have 16 years worth of Class A contributions at 60 - You can gain another 6 years worth by signing for Credits and this should improve the rate of Contributory Pension you qualify for it at 67.

    It seems that you will have 36 years of total service at 60. The supplementary should, when combined with your Occupational Pension, give the same total as if all of you service had been at the Class D rate. Your supplementary will cease at 67 (assuming that the State Pension rate you receive is either equal to or greater than the Supplementary pension)
     
    Last edited: Nov 18, 2016
  6. jjm

    jjm Frequent Poster

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    Mis-classification for PRSI. Maybe you should have being left on D Stamp.What were you working at between D and A1 Stamp. What year did you finish on D and start on A1 stamp.I have a friend who got put back on D stamp.What year did D Stamp finish .What year did A1 Stamp start.Was there a break in service.The job you are now doing was it a D stamp before 1995
     
  7. martin ohanlon

    martin ohanlon New Member

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    How I came to be on a class A was I moved to a temporary position in a different area and then got a Contract of Indefinite Duration in that position. There was no break of service.
     
  8. Gordon Gekko

    Gordon Gekko Frequent Poster

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    This seems incredible...respectable working people being forced to apply for the dole because of archaic pension payment methodology. Why doesn't the State just pay them their pension?!
     
  9. Early Riser

    Early Riser Frequent Poster

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    I have absolutely no idea about how possible, or difficult, it would be for you to get reclassified to a D Stamp. Certainly, if it were to be possible, it would be to your advantage if you envisage engaging in alternative work after retirement (paid employment or self employment). Even if you do not, it would also mean you avoid the inconvenience of "signing on" for Jobseeker's Benefit.

    On the other hand, The Jobseeker's Benefit payable for 9 months will possibly be higher than you would be receiving from the Supplementary and therefore more financially beneficial to you than the full Class D pension. Admittedly this only applies for 9 months. However, if you then continue to sign for Credits until you turn 66, these credits would be at Class A and would most likely put put you in line for a higher State Pension at 67 than you would be entitled to with your Class A record to date. This would again put you ahead of a Class D counterpart at that stage (You might want to calculate your projected pension rate from the info here: http://www.citizensinformation.ie/e...etired_people/state_pension_contributory.html ).

    If you succeeded in transferring your service to Class D you would not be able to sign for Class A credits after retirement. Forgoing the State Pension would also mean forgoing the possibility of availing of the extra benefits that can go along with it ( the Living Alone Allowance, the Adult Dependant Allowance), if these were to be relevant to you.

    In short you need to consider (a) whether it would be at all possible for you in your situation to have your last 15 years of service reclassified as Class D,and (b) which option seems more favourable to you in your own situation.

    Just as a by-the-way - Were you in the Pension Scheme during your period in the temporary position ? If not you should be able to buy this back now, if you have not already done so.
     
  10. Nordkapp

    Nordkapp Frequent Poster

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    Fully agree, my employer insists on seeking JSB upon retirement. While I have written to Minister Donoghue on the matter and Mr McGrath - TD I have had no response to my formal request for the matter to be reviewed.
    The JSB rule came from DPER, Dept of SP do not want retirees coming to the them seeking JSB. Too many players in the pension pot and this malarky distorts the stats when it comes to the number of people on JSB and JSA.
    While I am 15+ years off retirement these lingering issues are something I detest and want to see changed.
     
  11. POC

    POC Frequent Poster

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    I'm very interested in this! I'm in a similar position, although I'm not retiring so soon. 3 years ago I queried whether I'd been misclassified. Initially I was told yes by Scope, but the decision has since been reversed. There are lots of reasons why someone might not be eligible to stay on Class D, even if there is no break in service!
    If you do decide to query your classification, and are successful, it could take a long time to sort out your PRSI and pension. The pensions people in Manorhamilton seem to be swamped. It took a while to sort out the PRSI (refund) and even longer to sort out the pension (underpayment) when I was changed to D. And now it's taking ages to reverse these. I now have to pay underpaid PRSI, which I have a figure for (Or should I say 5 figures!). I've also overpaid Superannuation and Notional by a similar amount (which I got tax relief on) but haven't received information about that yet. My HR Dept don't expect me to get a refund, but it could probably be used for notional service. I just hope to maintain the value and the tax relief.
     
  12. Early Riser

    Early Riser Frequent Poster

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    In 15 years there may be many changes to the system, including this one. However, for people coming up to retirement imminently they really have to work the system as it is. Also, as Public Service retirees we do have the advantage at least of being able to access the supplementary pension. As far as I am aware, people in the private sector, in similar coordinated schemes with voluntary retirement at 60, have no such option - they must either wait until the State Pension kicks in or look for interim employment.

    I hadn't been aware of the DPER directive to all employers until you referred to it. However, even leaving this aside, there is an incentive for at least some employers to insist on the Jobseeker's route. For those employers (Voluntary but still Public Service employers) who operate on a yearly block grant to provide services, I am told that they have to pay the supplementary out of their general yearly budget for services, ie, the money for the supplementary pension payments doesn't come separately from central government or in the form of an additional add-on in their annual grant for services. I also wonder (with nothing to support this) if the apparent hassle of the Jobseeker's route may put a few people off applying for the supplementary altogether - perhaps looking at some form of employment instead or else staying on in the Public Service until 65 ?
     
  13. allencat3

    allencat3 Registered User

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    FYI - in 2 weeks time, I'll be retiring on ill-health grounds, 18 months before the actual retirement age (65). My service is calculated 13 years 8 months, and as I'm post-1995 and Class A, the pension is 2,850 pa and lump sum 18K. The issue of supplementary pension had been raised many times and each time it had been avoided by the HR and Peoplepoint. So ..... after badgering the Employee Assistance Service, Citizens Information (two locations), etc. plus information from this invaluable discussion board - "Ask About Money", I'll be heading on my first day of retirement for the local Intreo Office and see what happens. I'm perfectly aware that it's important to sign on for credits if I need to be eligible for SCP when I reach the age of 66.
     
  14. japester

    japester Frequent Poster

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    My sympathies to you allencat. It's bad enough to be retiring on grounds of ill health but to find that your employer is not willing to pay supplementary pension beggars belief! It's truly a scandal - so much for the promise that, upon retirement, class A contributors will be no worse off than their class D counterparts. How is a person even supposed to be able to survive on such a miniscule pension? I'll be very interested to hear how you get on in the meantime with this issue, as I'll be in a similar boat a good few years from now when I hit 60. It almost appears as though some PS employers are willing to stump up the supplementary pension with no issues while others are almost pretending that no such thing actually exists!! The very best of luck to you in the meantime allencat and I hope it gets resolved for you asap.
     
  15. Early Riser

    Early Riser Frequent Poster

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    Hello Allencat - Good to hear that you got your ill-health retirement sorted at last and I hope it all works out well for you.

    As regards the issue of the Supplementary Pension - This may not be an issue for you at all, given the personal health circumstances which you have previously outlined. You should make an appointment to attend your Social Welfare Office on your first day of retirement with a view to applying for the appropriate benefit -Illness Benefit, presumably initially, or else Invalidity Pension. At 66 you should be eligible for the Contributory State Pension. As all of these payments amount to more than you would be eligible to receive from the Supplementary Pension, you, therefore, will not qualify for the Supplementary. It would only become an issue/option if for some reason you were denied one of these Welfare payments, which seems unlikely. The Supplementary is generally only payable to people who do not qualify for a Social Welfare payment.

    It is most unfortunate, to say the least, that that your HR department was not able to give you a steer on this.
     
  16. Early Riser

    Early Riser Frequent Poster

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    Last edited: Nov 22, 2016
    In this particular situation it seems it is not so much that the employer was not willing to pay the Supplementary as it was that they were not able to inform Allencat that, as he was retiring on ill-health grounds, he needed to apply for the appropriate Social Welfare payment. As this was going to cost the employer nothing, I would be inclined to attribute it to ignorance rather than meanness/frugality. In fairness, I suppose, some smaller employers may have built up little experience of Class A retirees in these circumstances. Not good though.

    Japester Said :
    so much for the promise that, upon retirement, class A contributors will be no worse off than their class D counterparts.


    But how does Allencats Occupational Pension (small as it is) when combined with his projected Social Welfare Payment, compare to what a corresponding Class D person would have received in these circumstances ? Class D does not count towards Illness benefit or Invalidity Pension as far as I am aware.
     
    Last edited: Nov 22, 2016
  17. jjm

    jjm Frequent Poster

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    If he is retiring on health grounds he will be getting his sickness benefit from his A1 stamps .Possibly working out better .
     
  18. japester

    japester Frequent Poster

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    Early Riser/jjm2016, my apologies as I had completely forgotten that Allencat will surely be in a position to receive illness/invalidity payments along with the occupational pension. Thank goodness for that. For those class A folk, however, who retire in advance of 60 (say on a cost neutral retirement basis) there remains a major issue in that supplementary pension is not payable until age 60 so class A retirees taking cost neutral early retirement (from age 50 onwards) would only receive the occupational part of their pension, making them significantly less well off than their class D couterparts.

    For example, imagine a class D employee taking cost neutral early retirement at age 50 (with a preserved pension age of 60), having worked for 30 years in total. Imagine the retirement salary is €40,000. In this case a class D employee would receive. In this case the reduction factor would be 62.4% for the pension part. This means that the class D employee would receive a pension of (30/80)*(40000)*(0.624) or €9360 from age 50. So the penalty for taking pension early is quite severe, but then the employee will be getting €93600 over the course of the 10 years between 50 and 60 that they wouldn't have received otherwise.

    In the case of a class A employee though, the situation is quite different because of the integration that exists. Here, the occupational part of the pension under normal circumstances (no early retirement) would be (30/200)*( lower of final salary and 3.333333*12131.60) + (30/80)*(anything over 3.333333*12131.60). For someone retiring on €40,000 and 30 years service this would mean (30/200)(40000) +(30/80)(0) = €6000. The State Contributory Pension part of this integrated pension i.e. 12131.60 won't get paid until 66/67/68 though so the supplementary pension will (might!) fill the gap between 60 and this stage.

    The supplementary pension, payable from age 60, would be the difference between what the class D employee would get at 60 (assuming no early retirement now so no reduction factor) minus what the class A employee gets at 60 i.e. 15000-6000 = €9000.

    However, the issue lies in the fact that the supplementary pension is not payable before age 60! So it means that a class A employee only receives the occupational part of the pension, actuarially reduced, up to age 60. So in the case here of a class A employee retiring at 50 on €40,000 , their total pension appears to be just 6000*0.624 = €3744 between age 50 and 60!! I wonder does anyone have any information to the contrary on this? It seems absolutely bonkers that 2 similar employees, both taking early reirement at 50 and both having the same final salary, could end up with drastically different pensions. This is surely discrimination against class A employees and means that very few (if any) could realistically afford to retire at age 50 (or even anytime before 55).
     
  19. Early Riser

    Early Riser Frequent Poster

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    Last edited: Nov 23, 2016
    Hi Japester - I go along with your figures above. In the scenario you present the Class A person is significantly worse off before age 60. And I am afraid that there is no good news on this one, ie. the Supplementary is not available before age 60. Early retirement would not be a realistic option without an additional source of income.(In the case of ill-health retirement different calculations would apply). The Class A retiree in your scenario would be in a position to apply for Jobseeker's Benefit at 50 but this would be exhausted after 9 months. They might be able,depending on circumstances, to continue to sign for credits afterwards though, to preserve full entitlement to COAP/State Pension.

    Just for the sake of further comparison I had a look at what the total payments would amount to in your two hypothetical scenarios over a longer period of time (up to age 75 - much less than average life expectancy) :

    Class A
    To age 60 : 3744 *10 = 37440 + 7332 = 44772 (this includes Jobseeker's)
    Age 60 - 67 : (3744+9000)*7 = 89208 (Assuming 67 remains COAP age)
    Age 67 -75 : (3744+ 12131)* 8= 127000

    TOTAL to Age 75 for A = 260980

    Class D

    Age 50 - 75 : 9360 * 25 = 234000

    So it would seem that the Class A person would do considerably worse up to age 60 but would then gradually catch up with, and then pass out, the Class D. If they both survived a further 10 years (age 85) the difference would be considerably greater.

    In the shorter term though it is tougher on A Class person in these circumstances hoping to retire on a pension alone at 50.
     
    Last edited: Nov 23, 2016
  20. japester

    japester Frequent Poster

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    Thanks a million for your analysis there Early Riser, it is very interesting to see that the Class A person definitely does better in the long run on average. It's very difficult to complain when you see the figures laid out like that! In fairness, even for a class D person retiring at 50 on a pension of €9360 would still be a serious stretch unless they had some decent savings built up that they could draw on in retirement.

    I guess what we're saying really is that, in the absence of savings, cost neutral early retirement (especially before 55) is not really a runner for the vast majority of public servants. Only those on a reasonably high final salary might be able to take advantage of it.