Cinnamonjam
Registered User
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Your old age pension is also taken into account, so you can deduct the OAP from the pension payable from the PS.
The retirement age is also linked to that of the OAP payment
The pension is split into 2: 0.58% of pensionable remuneration up to a ceiling of 3.74 x OAP (currently €45,000) PLUS 1.25% of pensionable remuneration above that level
I've just read the booklet on the Single PS pension scheme for work I am doing with a client. It certainly isn't straight forward and I have no idea how I am going to calculate the benefits payable at retirement!
Aren't the "benefits" defined? Aren't they still 50%, not of final salary, but of their salary averaged over their entire career? So it will be impossible to figure this out, because you (or they) won't know what they will end up at when they reach retirement.
Example A
In Year 1 a new recruit earns €25,000. This yields a
referable amount (a sum-towards-pension) of €145
using a 0.58% accrual rate (up to €45,000)2.
Thereafter that €145 is indexed to the CPI (All Items).
Assuming 2% inflation annually and 40 years to
pension age, the €145 will grow to about €320 at
retirement
This is €12,800 after 40 years - plus whatever the State pension is because the 0.58% rate is allowing for the PRSI contribution, which will ultimately take care of the other part of the pension.
Does that seem too simple?
I think your calculations are correct in that example but I'm not sure where the 50% comes in.
My calculation of a Clerical Officer entering at age 20 and working unbroken service until aged 70 starting on €31k and increasing by the scale, no promotion, arrives at a pension at 70 of €16.5k, not allowing for inflation or CPI at all. To this would be added approx €12k in today's terms as SCP.
Hi Slim,
The calculation in Example A is from the booklet, the 50% is the Defined Benefit that the PS employee is entitled to on retirement.
Previously this was based on final salary to a max of 40 years.
Now it has changed to "career" averaged salary - with no cap on years service (Compulsory retirement at 70).
That isn't the pension - that is amounts towards the pension - that being 50% of the salary:
http://www.per.gov.ie/en/minister-h...ons-single-scheme-and-remuneration-bill-2011/
"This is a significant change from the current position where the pension is based on ‘final salary’ at retirement. The Minister said that “this is a fairer approach to pensions; your pension reflects your career average earnings as opposed to your final salary.”"
How did you arrive at the €16.5k? If you used the 0.58% contribution, then on top of the €16.5k is the State Contributory Pension.
You don't seem to have allowed for any pay increases in 50 years!!
Hi PP. One of us is misunderstanding the SPSPS. According to page 3, para 1,A
"Upon retirement, the total value of pension and lump sum referable amounts previously earned and adjusted for applicable CPI increases are payable to the retiring Single Scheme member."
I'm not sure what you are demonstrating there. Perhaps we are at cross purposes. Under the Single scheme, there is no 50% of final salary, just accumulated 'referable amounts' which added together make up the pension. No limit bar service to age 70.
My interpretation of this is that each year's referable amount is added to preceding years and amounts to the pension payable on retirement. In my calculations, I ignored pay rises and inflation to keep it simple and give an idea of the value in today's terms. Max salary of the CO is €37,341. I see no 50% of salary mentioned anywhere in the guide. Edit: my calculations end up with pension after 50 yrs of €10,090 not €16.5k as stated above. To this is added the SCP. Am I wrong?
Hi PP. I don't agree. My calculations were always based only on Strand IV members. The 'referable amount' is the amount of pension to be paid to the member on retirement, for each year of service having been updated by CPI, with no maximum. Therefore, after 40 years on CO scale, no CPI or pay rises, this equates to €7.9k, to which the retiree may add the SPC, €12k in today's terms. Admittedly, this equates to €19.9k which is more like 54% of Final Salary.
No. The contribution by the member is 3.5% of Net Pensionable Remuneration and 3% of Pensionable Remuneration. The referable amount is the amount of pension payable to that officer on retirement in respect of that year's earnings(indexed by CPI of course). The sum of all referable amounts equals the pension payable on retirement, nothing to do with what was contributed.You are not disagreeing with me Slim, you are disagreeing with how the scheme operates.
"Purpose of circular
3. This circular has two related purposes:
i. It sets out, based on the 2012 Act, how the future-payable money amounts of pension
and retirement lump sum (“referable amounts”) accrued by Single Scheme members
should be calculated by Relevant Authorities. This calculation process is ongoing
throughout a member’s career; it is not a one-time exercise at retirement. Calculation
of the contributions payable by members is also covered (as is refund of those
contributions, which may arise on occasion)."
10. While contributions are compulsory for all members, these contributions play no part in
the calculation of Single Scheme benefits (pension and retirement lump sum).
You are saying that these referable amounts - or the contributions are the amount of the pension that is paid, while the scheme is telling you that they play no part in calculating the benefits?
No. The contribution by the member is 3.5% of Net Pensionable Remuneration and 3% of Pensionable Remuneration.
The sum of all referable amounts equals the pension payable on retirement, nothing to do with what was contributed.
Yes, that's my understanding of it. It ain't easy!Ah, so if we go back to my post here:
"Example A
In Year 1 a new recruit earns €25,000. This yields a
referable amount (a sum-towards-pension) of €145
using a 0.58% accrual rate (up to €45,000)2.
Thereafter that €145 is indexed to the CPI (All Items).
Assuming 2% inflation annually and 40 years to
pension age, the €145 will grow to about €320 at
retirement"
Do you add each year individually from €145?
I think I am with you - thanks so much.
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