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

[Deiseblue]

Always a concern Steven but life is too short which is why I availed of the opportunity to take the maximum cash lump sum which added to the statutory redundancy payment came to quite a tidy sum .

And of course the State pension is a bulwark against absolute poverty if the worst happens

 

[SlugBreath]

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.

Thank you for your interesting replies. I will certainly be asking the administrators of my scheme and the trustees if they made changes to the trust deed. If they did, would the members of the pension scheme have had a say?

I don't believe that I should have to look to unemployment benefit to top up the one year shortfall in social welfare payments. I believe that my pension scheme should bridge that gap. I am in a DB scheme, promised 40/60 on retirement on full service. Because I joined the scheme late I also made additional payments to bring me up to the 40/60.

I did leave the scheme early and as a deferred member I would not have been entitled to the full 40/60 but I would be interested to know if a deferred member is treated differently in any way. All the calculations for my pension are based on the time I left my employment. If the changes to the trust deed were made after I left my employment am I not protected in any way?

 

[SlugBreath]

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 .

Not in my case. I worked for the Bank of Ireland for 15 years and left before 1991. There is "nil" pension for me from them.

The BOI was setting aside a sum of money for my pension. It was a non contributory pension so I got nothing when I left.

I often wonder where this money went to. I guess that it went toward your sojourn in Southern Spain, Deise?

 

[ppmeath]

Not in my case. I worked for the Bank of Ireland for 15 years and left before 1991. There is "nil" pension for me from them.

Were you in a DB scheme with them?

I am in a DB scheme, promised 40/60 on retirement on full service. Because I joined the scheme late I also made additional payments to bring me up to the 40/60.

Correct. This is the entire purpose of a DB scheme. The benefits are defined and this is what you should receive. Make the complaint but do not mention the state pension because the Ombudsman doesn't deal with SW pensions and your issue relates to your DB pension, your entitlements to the benefits as provided in your scheme.

 

[Deiseblue]

SlugBreath , 31 degree high here in Seville with nary a cloud in the sky but I like to think that I'm enjoying the fruits of both my own hard work , the benefits of being a member of a DB scheme set up by a good Employer ( until their ethics , morality & decision making shifted ) & the undoubted benefits of Union membership rather than benefiting from any monies that may have been appropriated from you in what frankly seem to be dubious circumstances.

Just lucky I guess

 

[ppmeath]

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

I meant to add to this - the state pension is 233.30 (to increase in June), JSB is 188 - it wasn't designed to fill a gap, even if it was - it's not filling the gap because there is still a shortfall.

 

[SlugBreath]

Yes. I was in a DB plan with the Bank of Ireland.

I asked for a pension from the Bank and I was given two fingers. I contacted a minister who also gave me a standard waffle reply that basically referred me back to the bank.

As a group of similar ex BOI people, we sought legal advice and were told that because it was a non contributory pension and because the terms of our employment were, that we lost the benefits if we resigned, then we were entitled to nothing.

I still believe that there is a large "pot of set aside pension money" (similar to their Dormant Accounts & Petty Balances accounts) belonging to people who left the bank pre 1991 being used for other purposes.

 

[SlugBreath]

SlugBreath , 31 degree high here in Seville with nary a cloud in the sky but I like to think that I'm enjoying the fruits of both my own hard work , the benefits of being a member of a DB scheme set up by a good Employer ( until their ethics , morality & decision making shifted ) & the undoubted benefits of Union membership rather than benefiting from any monies that may have been appropriated from you in what frankly seem to be dubious circumstances.

Just lucky I guess

I should add that the IBOA did not want to get involved either. Enjoy the sun, sangria & tapas.

 

[ppmeath]

As a group of similar ex BOI people, we sought legal advice and were told that because it was a non contributory pension and because the terms of our employment were, that we lost the benefits if we resigned, then we were entitled to nothing.

Funny how they quote the terms of the scheme when it suits them and yet when your other pension scheme promises two thirds - you are being told that it is minus the rate of the state pension.

 

[Steven Barrett]

Always a concern Steven but life is too short which is why I availed of the opportunity to take the maximum cash lump sum which added to the statutory redundancy payment came to quite a tidy sum .

And of course the State pension is a bulwark against absolute poverty if the worst happens

I wasn't aware you were already enjoying the benefits of the scheme. It's those who are still a decade or two out who I would be concerned for.

Steven
www.bluewaterfp.ie

 

[JoeRoberts]

Thank you for your interesting replies. I will certainly be asking the administrators of my scheme and the trustees if they made changes to the trust deed. If they did, would the members of the pension scheme have had a say?

It depends on the wording within your scheme if a change would be needed. Members would not have a say, again depending on the terms of the trust deed, it is usually by agreement of the trustees and the employer. Any change would have been noted in your Trustee Annual Report ( which most members never look for). Ask for a copy of the trust deed and any amendments.

I don't believe that I should have to look to unemployment benefit to top up the one year shortfall in social welfare payments. I believe that my pension scheme should bridge that gap. I am in a DB scheme, promised 40/60 on retirement on full service. Because I joined the scheme late I also made additional payments to bring me up to the 40/60.

You are still getting 40/60 of your pensionable salary. What you are not getting is the state pension at 65. The Govt decided this. It is outside the schemes control.

I did leave the scheme early and as a deferred member I would not have been entitled to the full 40/60 but I would be interested to know if a deferred member is treated differently in any way. All the calculations for my pension are based on the time I left my employment. If the changes to the trust deed were made after I left my employment am I not protected in any way?

Deferred members and active members are treated the same by the scheme. Everything else being equal, you are still getting the deferred pension payment mentioned in your leaving statement. It has now been revalued up by inflation. The scheme did not give you a guarantee that the state would pay a pension at 65. For all the scheme knows, you may not even have enough entitlement to a full state pension. They don't consider your contributions.
And the state pension now is probably higher than the offset applied when you left. But the scheme does not go back and recalculate your pension based on the now higher state pension. This difference can be a significant gain for members with a long deferment.

So, it is not a perfect mathematical integration, for many reasons.

However, the company ( as opposed to the scheme) may do some deal for active members approaching retirement as they would have more negotiating power then someone who has left. For example, an upcoming retiree may say to the company that I don't want to retire at 65. What does the company do then ? This is a whole other can of worms and the company may do a deal to satisfy them off by giving them the equivalent of the state pension. But this is nothing to do with then pension scheme. It is an IR issue.

Allowing the collection of JS is a bit of an Irish (part) solution but the whole pension age change was a badly thought-out process. I dealt with SW on behalf of members at the time and there was nothing illegal about it. SW even issued a statement that they would not means-test the last 3 mths after the 9 were up. My understanding is this has stopped but it seems from other posters that it continues.

It is a terrible scenario but even worse for the many people who had no private pension.

 

[ppmeath]

You are still getting 40/60 of your pensionable salary. What you are not getting is the state pension at 65. The Govt decided this. It is outside the schemes control.

According to the title of the thread - he will not receive his 40/60ths - because it will be reduced by the rate of the state pension.

The scheme did not give you a guarantee that the state would pay a pension at 65.

No, it gave him a guarantee that he would receive 40/60ths of his final pensionable salary.

For all the scheme knows, you may not even have enough entitlement to a full state pension. They don't consider your contributions.

If his occupational pension scheme is "integrated" with the state pension then the assumption is that he will qualify for this pension after paying PRSI for years.

And the state pension now is probably higher than the offset applied when you left

That isn't how it works. The offset is always adjusted upwards if that pension is increased.

But the scheme does not go back and recalculate your pension based on the now higher state pension.

Of course it doesn't because the scheme promised him 40/60ths of his final pensionable salary.

Allowing the collection of JS is a bit of an Irish (part) solution but the whole pension age change was a badly thought-out process.

According to my correspondence from the Pensions Ombudsman regarding this issue:

"However, this Office takes the view that a retired public servant who is not available for or seeking employment and who claims Jobseekers Benefit is committing welfare fraud, because it is a condition of payment of Jobseekers Benefit that the person is available for and genuinely seeking employment. "

I keep saying this and people posting on this site, who should understand how integrated pensions work - do not understand them at all

The state pension age change did not - let me repeat myself here - it did not change the pension entitlements of those on DB schemes with a minimum retirement age of 65.

It changed the age at which private sector workers with no other pension provisions could claim this pension.

Again - any person in a defined benefit pension scheme that is integrated with the state pension and allows payment of their pension at 65, should receive that pension - in full - when they attain that age.

 

[JoeRoberts]

Not sure if you are talking about a public or private scheme . If it's a private scheme as I am talking about then you're talking nonsense and there is no point going any further .

 

[Conan]

Ppmeath,
Sorry, but you are totally wrong.
What an "integrated" scheme promises is a fraction of Pensionable Salary. And Pensionable Salary is generally defined as "Basic Salary less 150% of the State Pension". That's what the scheme promises. And in the case of SlugBreath that is what he gets.
The fact that the State changed their rules does not mean that the scheme must change theirs. JoeRoberts is correct in his comments.
And in relation to the Pensions Ombudsmans comments the fact (repeat fact) is that if the claimant is over age 62, the Dept of SP do not expect the claimant to be actively seeking work.
Finally, most civil servants retiring today (class B or D) are not entitled to a State Pension. They are mostly members of a non-integrated scheme. It is private sector employees who are mostly members of "integrated schemes".

 

[ppmeath]

Not sure if you are talking about a public or private scheme . If it's a private scheme as I am talking about then you're talking nonsense and there is no point going any further .

It doesn't matter whether it's public or private, what matters is the terms of the pension scheme. If it is a "defined benefit" scheme and that benefit is x - then that is the benefit that the member is entitled to. I will post the information again from the pension authority:

"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.

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.

Typically this is achieved by using an offset from salary in respect of the State pension and calculating pension benefits and contributions based on this lower 'pensionable salary'."

Which is precisely what I posted, now if you want to say that they are talking nonsense then fire away.

 

[ppmeath]

What an "integrated" scheme promises is a fraction of Pensionable Salary.

Yes it does Conan, but the poster stated that his pension has been reduced by the rate of the state pension which means that his 40/60ths is not 40/60ths - for example if he retired on 60k pensionable salary, then his two third entitlement is a pension of 40k.

The poster stated:

"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."

This is incorrect. His pensionable salary is his pensionable salary, the offset of the state pension is because he is paying a PRSI contribution and it is assumed that this takes care of that part of his pension.

This is what "integration" is.

What an "integrated" scheme promises is a fraction of Pensionable Salary. And Pensionable Salary is generally defined as "Basic Salary less 150% of the State Pension". That's what the scheme promises. And in the case of SlugBreath that is what he gets.

And the poster has said that his pension has been reduced by the rate of the state pension, so he will not receive what his pension scheme promised.

Then he said:

"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"

The rate of the state pension is supposed to be included into the "total pension package".

The fact that the State changed their rules does not mean that the scheme must change theirs.

Of course it doesn't - and this is where the major problem is, because any PS worker (or Private sector worked on a DB scheme) retiring with an entitlement of 2/3rd of half salary at 65, will see these pensions reduced by the rate of the State pension because of the misunderstanding regarding entitlement to it.

And in relation to the Pensions Ombudsmans comments the fact (repeat fact) is that if the claimant is over age 62, the Dept of SP do not expect the claimant to be actively seeking work.

But it is supposed to be "integrated" into his occupational pension. It isn't and it is being treated like a completely separate part of his "total" pension package.

This is the posters complaint. If the poster retires on a final pensionable salary of 60k and is entitled to a pension of 40k (for example) then he has been advised that he won't get that, he will get 40k minus 12,139.60, or 27,608.40.

Now if the pension scheme promised 2/3rds of 60k then this isn't what the scheme promised.

Finally, most civil servants retiring today (class B or D) are not entitled to a State Pension. They are mostly members of a non-integrated scheme. It is private sector employees who are mostly members of "integrated schemes".

And these are not the people I am referring to, because their pensions are not integrated because they receive their full pension entitlements when they retire.

Joe is wrong, but he isn't alone.

 

[ppmeath]

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.

SlugBreath, your pensionable salary is what it is. The reason for the offset is because your PRSI contributions are going towards the part of your pension that is supposed to be taken care of by the State pension.

The rest of the salary is the "occupational" part.

Integration doesn't start when you retire, it starts when you began in your employment.

The offset identifies the contribution (if any) you made to the pension scheme.

Here it is explained in the Superannuation handbook for Civil Servants:

"10.1 Officers appointed prior to 6 April 1995 do not pay explicit employee
contributions in respect of their main scheme benefits. Officers appointed on or after
that date pay the following contributions
(a) 1.5% of gross remuneration (i.e. basic salary plus any pensionable
allowances)
(b) 3.5% of net remuneration (i.e. gross remuneration - as indicated at (a)
above – less twice the annual rate of the maximum Contributory State
Pension (CSP) currently payable by the Department of Social and Family
Affairs to a single person without dependants)."

This is the offset.

When it comes to calculating the final pension and again using the "integrated" method a formula was devised to "offset" the part of the pension that is to be taken care of by the State Pension:

On a 60k pensionable salary with an entitlement to 40/80ths (half pay) 30k this is what the calculation should look like:

Weekly SCP: €233.30
Annual SCP: €12,131.60
3.33333 times annual SCP: €40,438.66
1/200th of salary below 3.333 SCP for 40 years: 40438.66/200*40 = €8,087.73
1/80 of salary above 3.333 SCP for 40 years: (60,000 - 40438.66) / 80 * 40 = €9,780.67

The rate of the State pension is multiplied by 3.333333 to identify the "occupational" part of the pension that is covered by personal pension contributions. Both these figures above are added together and this is the "occupational" part that the employer is responsible for - they total 17,868.40.

If the pension scheme promised 40/80ths of 60k, then this is clearly not 40/80ths - the difference is 12,131.60.

You can do that calculation on any salary, here are some examples:

50k:
Weekly SCP: €233.30
Annual SCP: €12,131.60
3.333 times annual SCP: €40,438.66
1/200th of salary below 3.333 SCP for 40 years: (40438.66/200*40 = €8,087.73
1/80 of salary above 3.333 SCP for 40 years: (50,000 - 40438.66) / 80 * 40 = €4,780.67
Total = 12,868.40
40/80th entitlement 25,000
Shortfall = 12,131.60

45k:
Weekly SCP: €233.30
Annual SCP: €12,131.60
3.333 times annual SCP: €40,438.66
1/200th of salary below 3.333 SCP for 40 years: 40438.66/200*40 = €8,087.73
1/80 of salary above 3.333 SCP for 40 years: (45000 40438.66) / 80 * 40 = €2,280.67
Total = 10,368.40
40/80th entitlement 22,500
Shortfall = 12,131.60

70k
Weekly SCP: €233.30
Annual SCP: €12,131.60
3.333 times annual SCP: €40,438.66
1/200th of salary below 3.333 SCP for 40 years: 40438.66/200*40 = €8,087.73
1/80 of salary above 3.333 SCP for 40 years: (70000 - 40438.66) / 80 * 40 = €14,780.67
Total = 22,868.40
40/80th entitlement 35,000
Shortfall = 12,131.60

80k
Weekly SCP: €233.30
Annual SCP: €12,131.60
3.333 times annual SCP: €40,438.66
1/200th of salary below 3.333 SCP for 40 years: 40438.66/200*40 = €8,087.73
1/80 of salary above 3.333 SCP for 40 years: (80000 - 40438.66) / 80 * 40 = €19,780.67
Total = 27,868.40
40/80th entitlement 40,000
Shortfall = 12,131.60

When they changed the age of the state pension it exposed a major problem because of the profound lack of understanding into how "integration" is supposed to work. The rate of the state pension is being deducted - not "integrated" leaving people who must retire at 65 with a massive shortfall.

 

[ppmeath]

Please refer to this link and a presentation from Anne Vaughan the Deputy Secretary of the Department of Social Protection:

http://oireachtasdebates.oireachtas.ie/Debates Authoring/DebatesWebPack.nsf/committeetakes/FAJ2006021400003


"At the end of 2003 there were approximately 133,000 persons insured at modified rates, including almost 99,000 paying class D contributions. While public sector employees recruited after 1995 are now subject to full class A insurance, modified insurance rates are still an important part of the social insurance system. The pension entitlements of those recruited after 1995 are integrated with the social welfare pension, a common practice in most defined benefit pension schemes in both the public and private sectors. This means the occupational pension and the social welfare pension are combined to give, for example, a civil servant with 40 years’ service a total pension of 50% of salary plus a lump sum."

Further down:


"Ms Vaughan: Like any other occupational pension, it would depend on the level. I understand that up to the mid-1980s, it was a defined benefit arrangement. Under this arrangement, a person is promised 50% of his or her salary. I expect that this would be the typical pension.

It is stated in the note that, since 1995, while new entrants pay full social insurance and receive full pensions, the latter are integrated with their occupational pensions, so the promise is the same but the make-up of the promise is different. "

The problem was exposed when they changed the state pension age from 65 to 66.

Most PS workers (and private sector workers) retire at 65.

What was happening is that when they retired (Post 1995 I am referring to), the employer was doing the calculation as outlined above and only paying the pensioner their part, the employee then applied separately for the state pension and because 65 was the age, they were able to claim it and when added together it gave them their total pension.

Then when they changed the age the pensioners only received the occupational part and are being told that they are not entitled to the state pension - because they aren't 66.

The issue is one that is going to explode as more and more post 1995 workers retire at 65 (or those who take Ill Health retirement), these people must retire at 65 (this has changed for entrants after 2004 and for those joining now it's 70).

 

[Conan]

Ppmeath,
Having worked as a Pensions Manager for many years, I think I fully understand how integration works. If the poster said "my pensionable salary on leaving employment is different to my actual salary" that is the definition used by the scheme. So for example if the actual salary was €60,000 but pensionable salary was say €42,000 (because the offset was say €18,000- say 150% of €12,000) then the scheme will provide a pension of 2/3rds of €42,000 - €28,000. Then the member gets the State Pension of (say) €12,000 in addition, giving a total of €40,000.
The fact that the State will only pay the €12,000 from age 66 does not impact the promise made by the scheme. It's not a case that his pension has been reduced by the State Pension but rather his pensionable salary is defined as actual salary less the offset.
The maths is based on the view that the State are looking after the first €18,000 of salary by paying a pension of €12,000 (2/3rds of €18,000) - numbers rounded for the purpose of this example.
The point is that the posters scheme did not promise 2/3rds of €60,000 (actual salary). It promised 2/3rds of Pensionable Salary and that is what he gets. The State deferring the State Pension age to 66 is a separate issue, not under the control of the scheme.
The quote from the Pensions Authority is simply a general outline of how integration works. It makes no comment about the fact that the State Pension age may differ from the retirement age adopted by the scheme.
Joe is not wrong. It is your interpretation that is missing the point.

 

[ppmeath]

A colleague of mine had to take ill health retirement recently. Here is how they did her pension calculation:

€56,442.54 - €40,578.63 = €15,863.91
€40,578.63/200 = €202.89*18.633424 = €3,780.59
€15,863.91/80 = €198.29*18.633424 = €3,694.99
€3,780.59 + €3,694.99 = €7,475.58

Her final pensionable salary was €56,442.54 with over 18 years service. €7,475.58 is the occupational part, but they didn't "integrate" the rate of the state pension and her weekly pension is €143 per week.

She has no SW entitlements because she exhausted them - because she was sick.

She is 55 and has worked and paid PRSI since she was 16 - almost 40 years.

She moved out of the country thinking that her pension would be almost a half pension.

She would have been better of on the dole for all her life.

They are supposed to add the rate to her occupational part to give her a total pension of 18/80ths. She is in talks with a solicitor and she isn't the only one.