My occupational pension is reduced by the amount of the State Pension.

S

SlugBreath

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My occupational pension also takes in to consideration the state pension.

My pensionable salary on leaving employment is different to the actual salary that I was on because there is an offset made for the state pension.

I left my employment 10 years ago on a deferred pension. Will my pension plan calculations take in to account the state pension amount as it is now or as it was when I left 10 years ago?

I cannot get a state pension until I am 66. My occupational pension will be paid as and from next year when I am 65.

Should I get a higher occupational pension for the one year that I am not in receipt of the state pension? It seems unfair to offset a state pension that I will not be able to claim.

If I cannot for any reason claim the state pension will my occupational pension make up the shortfall?
 
It is quite common in defined benefit schemes for the scheme to take the state pension into consideration. It is purely to reduce the cost of providing the pension benefit (the OAP would cost you over €300,000 if it was bought from an insurance company) and almost all defined benefit schemes have this in their rules.

I doubt the scheme rules have provision of making up the OAP if you are unable to receive but you need to have a look at what the scheme rules say. As a deferred member, you are entitled to ask for a copy.

Steven
www.bluewaterfp.ie
 
SlugBreath said:
My occupational pension also takes in to consideration the state pension.

My pensionable salary on leaving employment is different to the actual salary that I was on because there is an offset made for the state pension.

I left my employment 10 years ago on a deferred pension. Will my pension plan calculations take in to account the state pension amount as it is now or as it was when I left 10 years ago?

I cannot get a state pension until I am 66. My occupational pension will be paid as and from next year when I am 65.

Should I get a higher occupational pension for the one year that I am not in receipt of the state pension? It seems unfair to offset a state pension that I will not be able to claim.

If I cannot for any reason claim the state pension will my occupational pension make up the shortfall?
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Can you give more details regarding your employment. Are you a PS worker?

Are your Social Welfare entitlements integrated into your Occupational Pension Scheme?

What is your pension benefit? E.G - 40/80ths.

Can you check the terms of your pension scheme, check what your "minimum retirement age" is - this is the age at which your "full" pension entitlements are payable to you.

Your pensionable salary that you retired on - is the salary that your pension entitlements should be based on.
 
Quite a few DB schemes deduct 150% of the state pension.

its only at times like this, one is envious of the Public Sector pensions!
 
Regarding the loss of pension, your issue is with the government, not the pensions scheme. The warning time for pension date changes was far too short and was not properly challenged. Think about the opposition to a few hundred euro water charges, but the more significant pension changes got no protest.

Your pension is set at your time of leaving based on your salary and state pension at that time. It gets a small annual revaluation for inflation.

The wording on most scheme was poor and to avoid a challenge most were advised to change the trust deed to make it clear that they did not have the liability for the lost state pension. I don't know of any challenges but it would have been interesting to see how they would have panned out.

For the lost year, you will be able to claim the smaller unemployment benefit for the first 9 months after which it will be means tested. I don't believe they look for proof that you are looking for work in this period.

It's not correct to think of schemes deducting the state pension as if they are taking something off you.. the level of benefits is set out in an integrated way to provide for 2/3 ( or whatever ) your final salary including state pension. Employee contributions are also reduced by this integration.
 
JoeRoberts said:
Think about the opposition to a few hundred euro water charges, but the more significant pension changes got no protest.
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Interesting observation!

JoeRoberts said:
The wording on most scheme was poor and to avoid a challenge most were advised to change the trust deed to make it clear that they did not have the liability for the lost state pension.
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Are you familiar with the detail here? I'd be interested in understanding what terms in such plans' documentation were deemed dodgy and how the "fix" was made. (I know this is really getting under the bonnet!)
 
For those who retire at age 65, Jobseekers benefit is payable until 66th birthday. It's the stop gap arrangement at present. Who knows what will happen when pension age rises to 67!
 
There was a fear that the wording could be interpreted as meaning a deduction of the actual pension payable at age 65 would be claimed i.e. no pension payable at 65 so no deduction. And since pensions once in payment cannot be easily reduced, this " no deduction" would have to continue even after 66 etc.. The funding implications were very significant.

To change the deed, both trustees and employer would generally have to agree.
 
JoeRoberts said:
Regarding the loss of pension, your issue is with the government, not the pensions scheme. The warning time for pension date changes was far too short and was not properly challenged. Think about the opposition to a few hundred euro water charges, but the more significant pension changes got no protest.
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The issue lies with the pension scheme, not the Government.

There is such a profound lack of understanding about this issue.

Please see this explanation from the Pensions Authority:

http://www.pensionsauthority.ie/en/LifeCycle/Private_pensions/Integration_coordination/

"Private pensions
Integration / coordination

A significant number of pension schemes make an allowance for the State pension when providing a pension from the scheme. This is known as "integration" in the private sector and "coordination" in the public sector. An integrated scheme looks at the State pension as part of the total pension package promised to employees on retirement. One reason for this is that both employers and employees make PRSI contributions and these, in turn, entitle scheme members to Social Welfare benefits, including State pension."

If the employee is promised, for example, 2/3rds of his final salary based on years service and on attaining "minimum retirement age" - or - the age at which this pension is payable, then that is what must be delivered.

"Integration is used as a means of taking into account the benefits payable under the Social Welfare system to calculate:

  • the amount of pension payable from a pension scheme, so that the combined pension from both sources (State pension and occupational pension) is at the level being aimed for in the scheme's design; and
  • the level of contributions payable by the employee towards the cost of their occupational pension, so that the contributions payable to an occupational pension scheme reflect the offset from scheme benefits to allow for the State pension."
Any person receiving other advice should immediately lodge a formal complaint to the Pensions Ombudsman.

Black Sheep said:
For those who retire at age 65, Jobseekers benefit is payable until 66th birthday. It's the stop gap arrangement at present. Who knows what will happen when pension age rises to 67!
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Job Seekers benefit is for those seeking work or those who lost their jobs, it is not for those in such pension schemes as outlined above, because these people are "retiring" as in "ceasing to work".
 
Your pension is based on the terms of the deed .Pensions authority has no role in interpretation of the deed . That is for the trustees or the courts if you want to go there .

As regards job seekers you may be right but in reality it is used to keep this issue under the radar
 
JoeRoberts said:
Your pension is based on the terms of the deed .Pensions authority has no role in interpretation of the deed . That is for the trustees or the courts if you want to go there .

As regards job seekers you may be right but in reality it is used to keep this issue under the radar
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Your pension is based on the terms of your pension scheme, if your pension scheme is not delivering the "Defined Benefit" that it promised - then the problem is with the Pension Scheme.

If you claim Job Seekers, with no intention of seeking work - then you are committing welfare fraud. Job seekers is not intended to be a stop gap for the full payment of a defined benefit pension.

SBarrett said:
Most public sector pensions also take the state pension into consideration. Only the older ones don't
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The older ones don't because those workers did not pay a Class A PRSI contribution, so they have no entitlement to any State Pension.

The "newer" ones, (and I have covered this before), do take the rate (note, not payment) of the state pension into consideration, because the member is paying a Class A PRSI stamp.

The issue went unnoticed because both the state pension and the "normal" retirement age was previously 65, when the Government changed that, many people incorrectly assumed that this affected PS workers pension entitlements - it did not, or it should not have.

Both PS workers have the very same defined benefit pension entitlement.

My advice to any person who is being wrongly advised that their pension will be short of the rate of the state pension because of the lack of understanding as to how "integration" works, should immediately lodge a formal complaint in writing to the ombudsman and tell them that your pension scheme is not being administered correctly.

This matter is sitting on Paschal Donoghues desk as we speak.

Those experts who should understand this scheme, sadly do not.
 
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SBarrett said:
Most public sector pensions also take the state pension into consideration. Only the older ones don't


Steven
www.bluewaterfp.ie
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Steven , it's my understanding that the older scheme - pre 95 Pensioners have no entitlement to a state pension as they do not pay the appropriate classs A PRSI contribution.
Schemes such as those in the Bank of Ireland however enable pensioners to not only avail of an occupational pension but to avail of the state pension as well - thankfully !
 
SBarrett said:
I doubt the scheme rules have provision of making up the OAP if you are unable to receive but you need to have a look at what the scheme rules say. As a deferred member, you are entitled to ask for a copy.
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If the scheme is a "defined benefit" scheme, then this is what is relevant. If the scheme promised a "defined benefit" based on years service, salary and has a "minimum retirement age", the age at which the pension is payable, then they have to have a provision.

That is the point of a "defined benefit" pension. You won't know the "amount" of the pension, but you know that it is a % of your final salary.

Here it is again explained in the Pension Authority's handbook:

"the amount of pension payable from a pension scheme, so that the combined pension from both sources (State pension and occupational pension) is at the level being aimed for in the scheme's design;"

If the design of the scheme is half salary or two thirds, and the amount payable is x amount, then as it clearly states both the occupational and tate pension are combined to make up that pension.

As I said, this wasn't an issue when the state pension age was 65, when it changed to 66 people incorrectly assumed that this changed the pension entitlements of PS workers, for example.

It did not. If your "minimum retirement age" was 65, then that is still your minimum retirement age - or the age at which your full pension entitlement kicks in.
 
Deiseblue said:
Schemes such as those in the Bank of Ireland however enable pensioners to not only avail of an occupational pension but to avail of the state pension as well - thankfully !
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But both pensions combined will equal the "defined benefit" as set out in the pension scheme.

Pre 1995 PS workers who have and entitlement to 40/80ths of their final salary on retirement receive that pension from one source.

Post 1995 PS workers have the very same entitlement - payable from two sources.

It is not only the State pension that is "integrated" into the pension scheme - it is all SW entitlements.

The best example I can use is illness benefit.

When a PS worker joined after 1995 they signed a form entitling the SW to pay any of their entitlements directly to your employer.

If they are out sick then they fill out an MC1 form. They are asked on that form if there is a paid sick leave scheme, they answer yes.

Their SW entitlements are paid directly to their employer - because they have paid sick leave for a specific period of time.

Private sector workers have no entitlement to illness benefit for the first 6 days, neither do PS workers, however, the PS workers are paid their full pay by their employer - because that is the terms of their occupational scheme.

When they come into entitlement after 6 days, the SW pay the relevant department, while the employee receives his full pay.

This is exactly how it should work when the person retires.

Sadly, as I said, those who should understand "integration" do not understand it.
 
These are the rules of the CS superannuation scheme, this is the basis for the majority of PS pensions.
http://www.cspensions.gov.ie/SuperannuationHandbookandGuidanceDec20061.pdf


"(u) if the scheme provides an integrated pension (within the meaning of section
59C of the Act) the inclusion of a statement describing integration in the form
set out below or in such other form as the trustees deem appropriate:
“This scheme is an integrated scheme meaning it is one that
takes account of Old Age (Contributory) Pension (or other
similar contributory benefits payable under social insurance) in
designing the overall pension package.

An integrated scheme looks at the Old Age (Contributory) Pension as part of the total
pension package. Both employers and employees make payrelated
social insurance (PRSI) contributions and these in turn
entitle scheme members to Social Welfare benefits.
Integration is used as a means of taking into account the
benefits payable under the Social Welfare system to calculate –
· the amount of occupational pension required so that the
combined pension from both sources is at the level being
aimed for in designing the scheme;
· the level of contributions payable by the employee towards
the cost of his or her occupational pension.”"

The pension scheme is designed to take the rate of the state pension into account, not the payment. It was assumed that the PRSI part of the pension would take care of that part of the pension, that is why it is "offset". It is to calculate the "occupational" part of the pension that the members personal pension contribution (PPC). See the examples in that Circular.

This was fine when the state pension age was 65, although the pension scheme was still administered incorrectly because the relevant department only paid the "occupational" part of the pension, people had to apply directly to the SW for the state pension.

They received their total benefit - in the wrong way.

The problem exposed itself when the age was raised to 66.

"Integration" means exactly that - the mistake that is being repeated is that it is being "deducted" - not integrated.

"P18/075/05
20 July 2005
Circular 19/2005: Public Service Pension Reform: Revised method of calculation
of pension entitlement for public servants whose pensions are integrated with
social welfare benefits
A Dhuine Uasail,
1. I am directed by the Minister for Finance to announce the introduction of a
revised method of calculation of pension entitlement for public servants whose
pensions are integrated with social welfare (i.e. where the occupational pension is
integrated with the Old Age Contributory Pension (OACP) to provide a combined
pension)."

Here is an example from the Pensions Authority handbook:

Integration example
Member's salary €60,000
State pension offset (1.5 times State pension of €12,000) €18,000
Pensionable salary (€60,000 less €18,000) €42,000
Scheme pension (2/3rds of €42,000) €28,000
State pension €12,000
Total pension (€28,000 + €12,000) €40,000
Assumes a member with salary of €60,000 and an entitlement of 40/60ths

As I said, my advice is to lodge a formal complaint, write to Paschal Donoghue.

If your pension scheme is a defined benefit scheme and the benefit you receive is not what the scheme was designed to provide, then your pension scheme is not being administered correctly.

This is not a Government issue, nor is it a Social Welfare issue. It is a Pension Scheme issue.
 
ppmeath , no in my case as a BOI pensioner I receive the occupational pension applicable to the years served PLUS the State Pension in due course , if spared - still some years off as I availed of an incentivised early retirement package .

In other words the scheme is not integrated .
 
Deiseblue said:
ppmeath , no in my case as a BOI pensioner I receive the occupational pension applicable to the years served PLUS the State Pension in due course , if spared - still some years off as I availed of an incentivised early retirement package .

In other words the scheme is not integrated .
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Deise - sorry my duplicate post disappeared! Yes, the BOI DB scheme is not integrated, this issue relates to integrated pensions only. As far as I understand, your pension promise is two thirds final salary and if eligible, you can apply for the state pension.
 
Deiseblue said:
Schemes such as those in the Bank of Ireland however enable pensioners to not only avail of an occupational pension but to avail of the state pension as well - thankfully !
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That being the scheme that is €1.2bn in deficit? Maybe being overly generous is a big part of the reason why it has such a big deficit. Members should be worried that they'll get the basic benefits, never mind the enhanced ones...


Steven
www.bluewaterfp.ie
 
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