Thoughts on the Single Public Service Pension Scheme (SPSPS)

Roro999 said:
Does this mean 8.2% for 2021 and 8.2% for 2022 ?
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No, it means 5.5% for 2021 and 8.2% for 2022. You can see it as listed in section 3 of Appendix 2 of the most recent Circular linked in the thread. Inflation was measured by the CSO for 2021 as 5.5% and 8.2% for 2022. That's what DPER base the figures on.
 
If a medical consultant works for 35 years on the new contract earning €250,000 on the SPSPS then am I correct in saying they are likely to exceed the €2million Higher Personal Fund threshold without any additional contributions or AVCs/PRSAs? Will they be taxed fully on the balance over the threshold? Also will they still have to pay the ASC even after reaching the Threshold?
 
noelÓm said:
No, it means 5.5% for 2021 and 8.2% for 2022. You can see it as listed in section 3 of Appendix 2 of the most recent Circular linked in the thread. Inflation was measured by the CSO for 2021 as 5.5% and 8.2% for 2022. That's what DPER base the figures on.
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Thanks. So soon enough a payment for Dec was €300 p.m will increase to €300 +5.5% +8.2% = €342.45 p.m plus back pay for 2021 and 2022. Is this about right ?
 
Roro999 said:
Thanks. So soon enough a payment for Dec was €300 p.m will increase to €300 +5.5% +8.2% = €342.45 p.m plus back pay for 2021 and 2022. Is this about right ?
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That doesn't sound right. I think you would be better served starting a new thread and giving people more detail on you or your wife's situation.
 
Thanks for this extremely insightful post Ent319. The information out there on the SPSPS is extremely limited, probably in time as the years go on this will change, but for now we're limited.

I think what you suggested regarding contributing the difference in ASC between pre and post to an AVC/PRSA is a really interesting concept. I joined the civil service 2 years ago as an AP at the age of 27. I'm lucky enough at this age to be a homeowner, with a manageable mortgage so this is something I'm really considering. I might not max might my contributions, but definitely happy to contribute something.

Ent319 said:
Cornmarket's default funds are crap - you can select the other Irish life funds.
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So based on the above, and I've heard similar elsewhere about Cornmarket. I think one of the better options is to setup an AVC PRSA through Davy Select and invest in something like a Vanguard Global Stock Fund. (0.75% AMC, 100% allocation, no fee).
 
smndly said:
If a medical consultant works for 35 years on the new contract earning €250,000 on the SPSPS then am I correct in saying they are likely to exceed the €2million Higher Personal Fund threshold without any additional contributions or AVCs/PRSAs? Will they be taxed fully on the balance over the threshold? Also will they still have to pay the ASC even after reaching the Threshold?
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Hi smndly - what you're saying is probably true and is an important caveat to some of the principles / conclusions in this thread. I can't really see why you would make AVCs If your pension on the Single Scheme risks exceeding the SFT threshold. Would probably start looking into this if you expect salary to be very high for a long time, but those of us who make that much are few and far between. An AVC pot could potentially be used at the end of your career to make up any shortfall on the tax free lump sum but I can't remember if the €200k cap on tax free lump sums applies to DB schemes? Pension rules may be so drastically different at that point.

You would continue to pay ASC on your salary irrespective of your ultimate pension benefits. As to how defined benefit pensions are taxed, I think I remember reading here that revenue charge a 40% excess on the pension that's paid to you that exceeds the threshold.

gort_gráinneog said:
Thanks for this extremely insightful post Ent319. The information out there on the SPSPS is extremely limited, probably in time as the years go on this will change, but for now we're limited.

I think what you suggested regarding contributing the difference in ASC between pre and post to an AVC/PRSA is a really interesting concept. I joined the civil service 2 years ago as an AP at the age of 27. I'm lucky enough at this age to be a homeowner, with a manageable mortgage so this is something I'm really considering. I might not max might my contributions, but definitely happy to contribute something.

So based on the above, and I've heard similar elsewhere about Cornmarket. I think one of the better options is to setup an AVC PRSA through Davy Select and invest in something like a Vanguard Global Stock Fund. (0.75% AMC, 100% allocation, no fee).
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Glad you found the thread helpful. If you're planning on having a very large AVC pot for a long time I'd imagine the Cornmarket tiered charging scheme wins out, providing you pick a good fund from the Irish Life selection like an equity index.
 
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I was not aware of the tiered charging scheme with Cornmarket. Thanks for bringing it to my attention! From Cornmarket themselves:
Tiered AMC applies which reduces the AMC by 0.25% on any amount in the AVC between €40,000 and €140,000 and by a further 0.25% on any amount greater than €140,000.
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AMC starts out at 1% on each of their funds. So
€0-40k - 1%, €40k-140k - 0.75%, and €140k+ - 0.5%.

To maximise efficiency, I might consider starting out with Davy to utilise their 0.75% AMC, and as the pot grows over 40k and towards 140k, consider moving it to Cornmarket for their 0.5% AMC. The opposite move is discussed in this thread. I would need to explore any potential charges for switching providers..
 
That might be excessive? One of the advantages that Cornmarket has is that they allow deductions at source so you don't really need to think much at all about it once it's set up. Although I think I similar result can be achieved with other providers by coding in tax credits on revenue myaccount but don't ask me how.
 
When I looked at Cornmarket for AVCs their fees/the chunk they take of your contributions on the way in were ridiculous, I wouldn't go near them, it's very easy to set up AVC's yourself through a low cost broker with e.g. Zurich at much lower fees.
If you do the math on even a small difference in fees it makes a huge difference over a long period, definitely worth it for a small inconvenience IMO, learning how to get the tax side sorted out is a one off.

Edit: as a toy example if you put 10k a year into a pension fund returning 6% a year minus 1% fund management fee after 35 years you have roughly 900k in the fund.

If an AVC provider used for convenience takes 1% of your contributions on the way in, on top of the fund management fee, you end up with roughly 736k, around 20% less on your final pension. The result will vary on a number of assumptions, but that's a very rough calculation just to highlight how much it is worth thinking about before you go for any one provider.
 
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RonnieShinbal88 said:
When I looked at Cornmarket for AVCs their fees/the chunk they take of your contributions on the way in were ridiculous,
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I fully agree. Cornmarket are tight with the PS unions but don't deliver good value.

@Ent319 - is there any online calculator that generates gross to net pay for a post-2013 PS entrant? I'm struggling a bit to replicate it in Excel.

If I understand correctly:
  • PRSI and USC levied on gross wages
  • Income tax levied on gross wages less single scheme contributions less ASC
 
@RonnieShinbal88 On the forsa trade union scheme with cornmarket there's no % contribution on the way in with regular contributions. See here for the charging structure for the various schemes. It's just the tiered AMC rate: 1% on value up to €40,000, 0.75% on value up to €40,000 and 0.5% on everything after €140,000. There's larger charges on single / premium contributions. I've had some very poor customer service experiences with Cornmarket in the past (investing in wrong funds etc.) but I think this is about as good as it gets on fees for a public servant. If anyone knows any better let me know.

Edit: Another option could be better with higher fees if the index funds you were investing in had better performance than the equivalent Irish Life funds.

@NoRegretsCoyote Yes that's correct as far as I know. Sorry - I haven't seen any online calculator.
 
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@Ent319 the Policy Fees and Charges document for the Forsa scheme on the link you provided includes the following:

Contribution Charge
(as a % of each single premium contribution): 4%

Edit: OK I see it's zero for regular contributions, I guess I misinterpreted that in the past and just avoided them on that.

I guess that is not ridiculous at all as there are overheads with irregular contributions.

Thanks for the information, definitely useful to clear up, I might need to re-evaluate using them.
 
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RonnieShinbal88 said:
@Ent319 the Policy Fees and Charges document for the Forsa scheme on the link you provided includes the following:

Contribution Charge
(as a % of each single premium contribution): 4%
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Yes - but that's for one-off contributions only (not the deductions that'd be going out of your salary each fortnight where there's 0% contribution fee).

That may certainly be an issue for you if you did plan to make a large premium contribution I guess. I don't know how it compares to charges for similar products.
 
Hi all,

Thank you to everyone in this thread - as a new public sector entrant and someone who is a bit clueless about pensions, this is invaluable info!

I have 3 questions that I'm hoping the experts in this thread can help me with :)

Contribution % calculation: As I'm under 30 years old I can contribute 15% of gross salary tax-free to an AVC PRSA. But how do I calculate this amount? SPSS takes 3% of gross and 3.5% of net (I think?), does that mean I have 12% of gross salary left that's eligible for PRSA tax relief? Or 8.5%? Need to figure this out myself as I plan to set up my own AVC PRSA rather than the one offered by my employer (Cornmarket).

Contributing above tax-free limit: What if I go above the 15% limit - am I not allowed to contribute above this? Or is it allowed, and I just won't be able to claim all of it for tax relief at the end of the year? Reason I'm asking is that my salary will change after a couple months + I may go part-time for a secondment so it'd be a pain so adjust payments each time and I don't mind having some extra (not eligible for tax relief) contributions in there assuming they are also allowed to grow tax-free and the only difference is they don't count for my tax return.

Side gig and pension: I have a side gig (consulting) that I declare to Revenue using form 11 each year, am I correct that I can't count that in the tax relief / I would need a whole separate PRSA for that? (If so I probably won't bother as it's not that much money - less than 10k/year gross).
 
qwerty-2023 said:
As I'm under 30 years old I can contribute 15% of gross salary tax-free to an AVC PRSA.
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Do you really need to? You’re on track for close to a full pension by 67 at your age. It depends on other circumstances but at your age and career status I would focus on buying a house.

I was in a DB pension scheme from my mid-20s and I didn't dream of making AVCs. In hindsight I've no regrets either.
 
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I'm only starting my career now at 27 after finishing my PhD, so I've missed out on a lot of years contributing to a pension (so far I barely have 1 year of PRSI contributions and about €6k in a PRSA from an old job in-between degrees). I also keep reading online that "in Ireland, you should invest in your pension above all" since it's the only investment not taxed to death so I'm trying to follow that advice!

I also have quite low fixed expenses as I live with my long-term boyfriend in his flat that he owns / pays the mortgage on, it's a studio apartment so very affordable for him (and for me to contribute - cheaper than any room I could rent). So I was thinking of sorting out my pension first, and then saving a good chunk every month towards long-term goals - including buying a bigger place together once I have my own savings.
 
qwerty-2023 said:
I'm only starting my career now at 27 after finishing my PhD, so I've missed out on a lot of years contributing to a pension (so far I barely have 1 year of PRSI contributions and about €6k in a PRSA from an old job in-between degrees). I also keep reading online that "in Ireland, you should invest in your pension above all" since it's the only investment not taxed to death so I'm trying to follow that advice!

I also have quite low fixed expenses as I live with my long-term boyfriend in his flat that he owns / pays the mortgage on, it's a studio apartment so very affordable for him (and for me to contribute - cheaper than any room I could rent). So I was thinking of sorting out my pension first, and then saving a good chunk every month towards long-term goals - including buying a bigger place together once I have my own savings.
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The best thing for you to do would be to start your own Money Makeover thread and provide the information set out in this template. That way, people will be able to give more informed feedback. Everyone's situation is different, so it helps to get more tailored advice for your circumstances.

My first impression is that you are more worried than you need to be. You have a public sector job, a PhD, and some private consulting income. You are probably going to earn a respectable salary over the course of your career and you are already building up public sector pension benefits. Under the current rules, you will need 40 years of PRSI contributions to qualify for a full state contributory pension. So, starting your first non-PhD job at 27 is also not a big problem. My guess is that people will think you should prioritise your housing situation, but do start the Money Makeover thread and get proper feedback that way.
 
qwerty-2023 said:
Contribution % calculation: As I'm under 30 years old I can contribute 15% of gross salary tax-free to an AVC PRSA. But how do I calculate this amount? SPSS takes 3% of gross and 3.5% of net (I think?), does that mean I have 12% of gross salary left that's eligible for PRSA tax relief? Or 8.5%? Need to figure this out myself as I plan to set up my own AVC PRSA rather than the one offered by my employer (Cornmarket).
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I am also very interested in learning about how SPSPS contributions interact with age-related tax relief limits.
 
noelÓm said:
I am also very interested in learning about how SPSPS contributions interact with age-related tax relief limits.
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Using the information from your pay slip, calculate what percentage of your gross pay is being deducted for the pension (including ASC). Then just subtract this from your age-related pension contribution limit percentage.

Or you can work it out "longhand":

Add 3% of gross pensionable pay/salary to 3.5% percent of net pay/salary. Then calculate what percentage this is of your gross pay/salary. Subtract this from your age related pension contribution limit percentage.
(Net pay is gross pay minus twice the current max contributory pension. The CP currently stands at about €13,800. So subtract €27,600 from annual gross pay/salary to get net pay/salary and calculate 3.5% of this.)

Example.
Take a salary of €57,600.
3% of gross is €1728.
3.5% of net pay is €1050.
So the total deduction comes to €2778. Add in the ASC to this.
Calculate what percentage of gross pensionable (€57,600) pay this amounts to.
Subtract this percentage from the percentage for your age related contribution limit.
 
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