Thoughts on the Single Public Service Pension Scheme (SPSPS)

Thank you to all three of you for the feedback - this is all super helpful!

I will do a Money Makeover after I receive my first payslip so that I can provide the most accurate information. I enjoy reading the case studies over there, just didn't think I had enough assets for it to be "worth" a post. But I suppose the best time to get advice is actually when getting started with pension (if relevant) and savings to get good systems and habits in place!! ;)

PS: Sorry I can't figure out to "thank" your posts... still new to this forum
 
NoRegretsCoyote said:
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 may have misinterpreted what you meant but just to clarify (for posterity's sake) there isn't really such a thing as a "full pension" on the Single Scheme because it's career average. You bank benefits as you go based on your salary when contributions are made.

If you spent 30 years on the Single Scheme making €40,000 and ten years making €65,000 your pension (excluding lump sum, and assuming a state pension of €14,000) would be (€40,000 / 2 - €14,000 * 0.75) + (€65,000 / 2 - €14,000 * 0.25) = €4,500 + €4,625 = €9125 PA.

The same person on a pre-2013 scheme would have a pension of (€65,000 / 2 - €14,000) = €18500 but would have paid more ASC for their troubles (not factoring in weird prsi stuff).

The above figures aren't exact but illustrate the point. Assuming you don't have other financial priorities (buy a house so you're not renting!, pay a bit off your mortgage early) AVCs would generally always be worth a shout on the Single Scheme if you're in a higher tax bracket.
 
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Ent319 said:
I may have misinterpreted what you meant but just to clarify (for posterity's sake) there isn't really such a thing as a "full pension" on the Single Scheme because it's career average.
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Thanks. I had mistakenly thought there was a forty-year cap on contributions.

Ent319 said:
AVCs would generally always be worth a shout on the Single Scheme if you're in a higher tax bracket.
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That makes sense, indeed.
 
Ent319 said:
That might be excessive?
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It might well be. While I agree the simplicity of having the tax credits adjusted at source via Cornmarket is a benefit, I don't mind having to manually claim them from Revenue myself as it is a relatively simple process.
Ent319 said:
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.
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This is the crux of it though really. Do I hope that a general Vanguard fund through Davy will outperform the default standard Cornmarket Irish Life funds? Or do I think it will be much of a muchness and just opt for for the simpler salary deduction via Cornmarket? As established above the tiered AMC via Cornmarket would apply to regular contributions for me as I am a union member. My income continuance is also with Cornmarket through my union at discounted rates.

NoRegretsCoyote said:
I'm struggling a bit to replicate it in Excel.
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@NoRegretsCoyote I created a spreadsheet with a standard gross pay to net pay calculation in it for SPSPS members (I believe it calculates correctly as it gives the same net pay and deductions for me as payroll does! Give or take a cent or two :)). It is up to date for 2023. Let me know if you're interested and I can upload it for you.
 
Calculator as promised. Might not get you the exact result, but close enough for estimates. Apologies if it's not prettiest! Enter your details at the top. Pay to bank account takes voluntary deductions into account
 

Attachments

  • SPSPS Net Pay Calculator.xlsx
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Hi all, I started just over a year ago as a CO in the public service and I'm 36 so will not meet the 40 year service. I've no previous pension. From my understanding, it's better to try get promotions as early as possible in career but I'm not sure I'd really want to go above EO grade so not sure yet.

I used the online calculator below to try get an idea of what my pension would be. I understand it's a career average salary, so should I putting in the salary averaged over my career in this calculator?

I do have savings and could possibly look into putting more into AVCs later in my career I guess. Will probably need to try get more advice on this. Purchased additional years of service probably going to be too costly for me unless it has large benefits.

 
Hi @chaton20. Few issues raised by your post:
  • The single scheme doesn't have a forty years service limit / cut-off. See the posts above.
  • If you click on "assumptions" when the calculation's done you'll see the calculator makes assumptions about wage growth etc. based on the figure you enter. It's never really going to be exact though.
  • You're only paying 20% tax on your income and none at the 40% rate if you're on a CO's starting salary at the moment. This means the benefits of making AVCs at your current salary level are more limited. For AVCs to be worthwhile you generally either want to be paying less tax on what you've contributed when you retire or roughly an equivalent amount (to mainly benefit from tax free growth over a long period of time). You certainly don't want to be paying a lot more tax on what you contribute which is a potential risk if you make contributions at the 20% rate and you invest big and / or get promoted a lot later in your career.
  • Although - if you don't expect too much career advancement your final pension income on retirement coulld be below the €18,000 P/A threshold, in which case you pay no tax, and in which case you're still getting decent bang for your buck. But if you have a decently long career I don't think this is likely and avcs could send you over the edge of the threshold with your state pension on top.
  • There's probably better uses for your money at the moment than making AVCs. If you don't own a gaff you could think about saving for a deposit (avoiding renting) or investing in your education to get better jobs, salary etc. but that's beyond the scope of this thread.
 
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gort_gráinneog said:
Calculator as promised. Might not get you the exact result, but close enough for estimates.
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Many thanks - I had a look and it helped me find errors in my own calculations!

I think I found something that needs fixing in yours - the coefficient in Cell D2 should be 2 rather than 4 I think. You want the fortnightly equivalent of the weekly state pension so the simplest thing is so multiply by 2. This increases a bit your net pensionable remuneration and therefore pushes down your net.
 
Thanks for this @NoRegretsCoyote - always useful to have someone double check your work!

I believe 4 is the correct coefficient though. According to the Single Scheme Member Booklet, on page 11 it advices how to calculate the CSP offset. "Two times the value of the CSP is taken into account in calculating some of your Scheme contributions."
It's two times the value for each week, therefore for fortnightly pay that is 2x2 = 4 being the coefficient. The example on page 11 says the offset for fortnightly pay is €1,013.20 per fortnight, bear in mind that is the 2022 rate. It has increased to €1,061.20 in 2023 I believe.
 
gort_gráinneog said:
Calculator as promised. Might not get you the exact result, but close enough for estimates. Apologies if it's not prettiest! Enter your details at the top. Pay to bank account takes voluntary deductions into account
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Thank you so much for sharing this spreadsheet!! I feel like after months of googling around, now I finally understand how my taxes, pension, etc. works by playing around with the spreadsheet. Really appreciate it!
 
gort_gráinneog said:
Calculator as promised. Might not get you the exact result, but close enough for estimates. Apologies if it's not prettiest! Enter your details at the top. Pay to bank account takes voluntary deductions into account
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This is excellent work thank you! am I required to get a password to access the document?
 
Thanks for this extremely helpful thread. I understand that purchasing pension annuities under the scheme does not look like good value. But what about the lump sum component? At my age (early 40s) according to the booklet €1 of lump sum will cost me 0.94 cent right now. Taking into account tax relief at 40% and that the lump sum is also updated with CPI and the fact that this is as safe an investment as it gets, is this not a good move? Or am I missing something?
 
Can I ask a quick one on this. Looking at a PO role recently, there are two salary scales...one for Personal Pension Contribution and one for Non Personal Pension Contribution. Is this related to the SPSS in any way?
 
Early Riser said:
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.
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AFAIK ASC will not be included for the purpose of calculating Age-related tax relief thresholds.
 
I used the estimator tool but felt it gave conservative unrealistic figures compared to using known future salary increments based on current grade.

Based on my own calculations over 31 years of service I will have contributed approx €135k between the lump sum, personal pension and ASC deductions. For this I will receive a lump sum of approx €75k and a yearly pension of approx €15k. So roughly getting back what I put in after 4 years.
 
My wife is a SPSPS Member. Many of my friends in the private sector speak of their own pension, and how they contribute x% and employer contributes x% also or y%

What would the equivalent % contributions be for the SPSPS? Does the state match our contributions with an equivalent percentage contribution? If anyone could illustrate this taking a rough salary of 60k I would be most obliged?
 
Tadhg22 said:
Does the state match our contributions with an equivalent percentage contribution?
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There is no fund so no. It’s funded from future taxes.

I have seen calculations that if there was a fund the state would have to pay in about 15% on top of your salary in addition to the compulsory contributions.
 
Dr Strangelove said:
There is no fund so no. It’s funded from future taxes.

I have seen calculations that if there was a fund the state would have to pay in about 15% on top of your salary in addition to the compulsory contributions.
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Thank you. That's a very interesting figure. I was thinking it must be something higher than the % contribution public sector employees themselves pay in themselves.

Any idea where you might have seen the 15% figure? Would love to dig into analysis of this!
 
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