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

[jjm]

ppmeath Above example public or private service New here just interested

 

[ppmeath]

Having worked as a Pensions Manager for many years, I think I fully understand how integration works.

I'm sorry to say this Conan - but you don't understand how it 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.

"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."

It is "offset" for contribution and pension calculation purposes - it does not reduce your pensionable salary.

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.

Absolutely incorrect:

"(4) (a) “Pensionable Remuneration”, means the pensionable salary, pensionable
allowances and emoluments held from time to time, and
(b) “pensionable remuneration at the final day of service” means the
aggregate of retiring salary, pensionable allowances and emoluments
at retirement,

Now that is in this legislation (which refers to PS workers):

http://www.irishstatutebook.ie/eli/2014/si/582/made/en/pdf

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.

Absolutely not. There are others on this site who have contacted me and they have been advised that their pensions will not be (PS) 40/80ths. I myself was advised by a pension advisor that if I retired on a salary of 60k, that while my entitlement is 40/80ths or 30k, I will not receive 30k, I will receive 17,868.40 - the state pension will be deducted because I won't be 67 when I retire.

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.

Yes it did, if his final pensionable salary is 60k.

The State deferring the State Pension age to 66 is a separate issue, not under the control of the scheme.

You'd think wouldn't you. But trust me, this is what is happening.

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.

It makes no comment about it because the member is bound by the rules of his pension scheme, not the state pension one, because that is supposed to be integrated into his pension, the age at which the member is entitled to his full pension is set in the rules of his pension scheme - not the state one.

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.

If the scheme has a "minimum retirement age" of 65, then that is the age at which the members entitlement to his full pension kicks in - Joe is wrong, as are you.

 

[ppmeath]

ppmeath Above example public or private service New here just interested

Public Sector.

 

[jjm]

Hi not the same in Private sector, I think this will help other people that are in a position to help,I have nothing more to add,

 

[ppmeath]

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

Conan, this calculation came from the Pensions Ombudsman. My pension entitlement is 40/80ths. My final pensionable salary will be around 60k, I am entitled to a pension of 30k. Those figures referred to above are the occupational part of my pension, the part that I made direct contributions to and I made PRSI Class A contributions as I pointed out.

I have to retire at 60 after 30 years service (final 10 are doubled contribution wise).

I won't be entitled to a state pension until I am 67. That leaves me with 343 per week after 30 years service paying a personal pension contribution (PPC), and paying full rate PRSI for over 40 years.

In the PS it's not only the pension that is supposed to be integrated, it's all my social welfare benefits.

Take illness benefit as the best example.

When I joined I had to sign a form authorising the DSP to pay all my SW benefits to my employer.

If I am out sick for a week, the rules of my occupational scheme entitle me to paid sick leave. As you know there is no entitlement to payment for the first 6 days of absence - I still get my full pay.

If I am out for a second week and come into entitlement, I don't get my weeks pay - minus the illness benefit and then apply separately for illness benefit - it is integrated into my occupational scheme, I get my full pay and my employer gets the illness benefit.
That is exactly how the pension should work.

 

[ppmeath]

. The State deferring the State Pension age to 66 is a separate issue, not under the control of the scheme.

You would think so Conan - but not according to where I got my pension advice which I outlined above:

• The increase in the State Pension age to 67 in 2021 and 68 in 2028 (this affects anyone who joined the Public Sector after 1995 who is paying ‘A’ PRSI)"

I joined post 1995, my compulsory retirement age is 60 and according to these guys, the change affected me and they, as well as any other advisor that I spoke to all told me that my pension entitlement will be reduced by the state pension.

I have already brought this to the attention of DPER (Paschal Donoghue) and I have other people working with me on this.

I will leave it there with you because I have been down this particular path before, many times.

 

[ppmeath]

Hi not the same in Private sector, I think this will help other people that are in a position to help,I have nothing more to add,

They are usually very similar if they are DB schemes, read the terms of your pension scheme. Don't get caught short. The Pensions Ombudsman is fully aware of this issue and has received numerous complaints from people taking IHR or reaching compulsory retirement age who have been left short in their pension entitlements.

 

[Conan]

Ppmeath
Your examples are Public Sector. The Private Sector (such as B of I) operate "integration" differently by using the Pensionable Salary approach. The example I gave is typical of the private sector and is correct.
The change of State Retirement age to 66 (and in 2021 to 67) will affect all retirees from integrated schemes- public and private.

 

[japester]

They are usually very similar if they are DB schemes, read the terms of your pension scheme. Don't get caught short. The Pensions Ombudsman is fully aware of this issue and has received numerous complaints from people taking IHR or reaching compulsory retirement age who have been left short in their pension entitlements.

Hi ppmeath, you might recall that I had a discussion with you some time back about pensions and supplementary pension in particular. Wouldn't a person in your own circumstances who retires at 60 be entitled to a supplementary pension to ensure that 50% of final salary is indeed received as a pension from that age. The pensions ombudsman's website even states this as far as I recall.

 

[Deiseblue]

Ppmeath
Your examples are Public Sector. The Private Sector (such as B of I) operate "integration" differently by using the Pensionable Salary approach. The example I gave is typical of the private sector and is correct.
The change of State Retirement age to 66 (and in 2021 to 67) will affect all retirees from integrated schemes- public and private.

I'm totally confused , as a BOI pensioner I believe the DB scheme under which I retired included no element of " integration ".
I simply received an occupational pension commensurate with years served & in due course am entitled to the State pension.

 

[ppmeath]

Hi ppmeath, you might recall that I had a discussion with you some time back about pensions and supplementary pension in particular. Wouldn't a person in your own circumstances who retires at 60 be entitled to a supplementary pension to ensure that 50% of final salary is indeed received as a pension from that age. The pensions ombudsman's website even states this as far as I recall.

Hi Japster, I have been working on this since that time and let me tell you this - the nonsense I have been fed is astonishing and again, it is down to a profound lack of understanding as to what integration means.

When I retire at 60 I am entitled to a pension as set out here in the rule book:

"8.5 Members of the Prison Service, who are subject to the 1919 Superannuation Act,
have enhanced superannuation terms, under which actual service in excess of 20
years is doubled for superannuation purposes, subject to a maximum of 40 years’
reckonable service - thus, for example, a Prison Officer with 30 years' actual service
would secure maximum benefits."

"11.9 Unlike the officers recruited prior to 6 April 1995 (see paragraph 11.9), officers recruited on or after 6 tApril 1995 are insured for the full range of social insurance benefits payable by the Department of Social and Family Affairs, including Contributory State Pension and State Pension (Transition). Thus, in the case of an officer with maximum service (40 years) who retires at age 65 and has no dependants, his/her total pension benefit (i.e. social insurance pension plus civil service pension) would amount to 50% of pensionable remuneration (the same total award as is payable to a pre-6 April 1995 appointee)."

As my retirement age, as set out in this rule book is 60, then I am entitled to 50% of my pensionable salary - the same as the pre 1995 employee.
The handbook states:

"7.1 As indicated at paragraph 5.1, an integration method is used in calculating the
pension (but not the lump sum) benefits of officers appointed on or after 6 April 1995.
Integration takes into account the value of the Contributory State Pension (CSP) in
calculating the pension payable from the Superannuation Scheme."

The scheme takes into account the "value" of the CSP - not the payment of it.

Pensions for pre 1995 members were calculated this way:

"11.7 Pension Calculation for staff recruited before 6 April 1995:
The method of calculation of pension for pre-6 April 95 staff (who pay the modified
rate of PRSI) is 1/80th of pensionable remuneration per year of reckonable service,
subject to a maximum of 40 years."

For a member on 60k it looks like this:

Final pensionable salary 60,000

60,000/80 = 750 x 40 = 30,000

After integration was introduced the entitlement never changed - as Anne Vaughan explained:

"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. "

What I and others have been advised is that our pensions will be calculated using the formula in the rule book and here it is on a retiring salary of 60k with the same 50% entitlement which is 30k, payable to us after 30 years service and on reaching what is our compulsory retirement age.
This is the formula:

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

17,168.40 is not half of 60k.

If I pay PRSI for over 40 years (which if I work until I am 60, will be the case) and pay my pension contributions for 40 years (30 with the last 10 doubled), then I will be entitled to SW benefits.

The supplementary pension should only apply if you have a PRSI shortfall:

"11.10 Supplementary Pension:
In calculating pension at paragraph 11.7 above, it is assumed (a) that the officer
concerned is always entitled to social insurance benefits and (b) that he/she is eligible
for the maximum personal rate of such benefits."

"However, depending on a particular
individual's PRSI contribution record, it may transpire that - through no fault of the
officer concerned - he/she either has no entitlement to the specified social insurance
benefits, or even if so entitled, is eligible for less than the maximum personal rate of the
Contributory State Pension payable to a single person without dependants."

If you do not have an entitlement to the rate of the CSP, or if you have an entitlement to the rate of another SW payment, such as JSB then:

"In such cases, the supplementary pension payable comprises the difference (if any)
between
(a) the amount of the actual pension awarded to the officer plus the amount (if
any) of the personal rate of social insurance benefit or pension payable to
him/her; and
(b) the amount of the pension which would have been awarded to the officer
if that pension had been calculated by reference to the calculation method
for pre-6 April 1995 officers set out at paragraph"

After the SW benefit and the Occupational part of the pension are added and if they do not make 50%, then and only then is the Supplementary pension applicable, it is not supposed to be applicable if you have full entitlement to the rate of the state pension - which it is assumed you will have after paying over 40 years PRSI contributions.

This applies to all PS staff retiring at 65 and I believe that it also applies to private DB pension schemes. But you see the "experts" maintain that because they increased the state pension age, that this changed the entitlements as set out in "defined benefit" schemes

According to the DSP:

" Defined benefit schemes
A defined benefit scheme is one where the benefit entitlement is defined in some way by reference to your earnings, your length of service, an index or a fixed amount. So, you know in advance that your pension will be, for example, half of your final salary if you have 40 years service or that it will be a certain amount each week. In defined benefit schemes, the contributions may have to be varied from time to time in order to make sure that the fund can meet the level of benefits. Some schemes have provisions for the employer to top up the fund if necessary."

Occupational pensions and social welfare pensions
Occupational and personal pensions operate independently of the social welfare pension system (Social welfare pensions include contributory and non-contributorypensions) and there is no statutory link between the two. However, it is common for occupational pensions to take into account the level of social welfare pension received in calculating the level of benefit. For example, some schemes provide for a benefit, which, together with the social welfare pension, will give you a half or two-thirds of your final salary. This may be done when you start to receive your pension but your occupational pension may not be subsequently reduced because your social welfare pension is increased.

Now, as I previously stated most schemes provide a "minimum retirement age" of 65:

"Minimum Retirement The earliest age at which pension scheme rules would allow a
Age member to retire with an immediate pension."

If the rules of the scheme state that your pension is based on your years service, your final salary an it is payable at 65 - then this is what it is.

But of course when they increased the state pension age to 66 (which is in no way linked to the occupational scheme which states that your benefits are payable from 65), the error being implemented by both private and public pension schemes was exposed and that error was the mistake that the employer wasn't responsible for providing the DB pension of two thirds or 50%.

They are reducing the pension entitlement by the rate of the state pension - leaving people short in their pensions.

I'm totally confused , as a BOI pensioner I believe the DB scheme under which I retired included no element of " integration ".
I simply received an occupational pension commensurate with years served & in due course am entitled to the State pension.

Deise are you fully retired?

 

[Deiseblue]

ppmeath , yes I availed of the early retirement package in 2007 but have some years to go before qualifying for the State pension .

 

[ppmeath]

Ppmeath
Your examples are Public Sector. The Private Sector (such as B of I) operate "integration" differently by using the Pensionable Salary approach. The example I gave is typical of the private sector and is correct.
The change of State Retirement age to 66 (and in 2021 to 67) will affect all retirees from integrated schemes- public and private.

Absolutely incorrect:

"There are two other major cost reducing changes from existing terms. The first is the increase in pension age to 66 years and its linking with the State pension age which will increase to 67 in 2021 and 68 in 2028. As new public servants pay full PRSI and their State pension forms part of their final pension entitlement, it is important that the State pension...."

"One question that may be posed is why not simply apply the scheme to serving public servants also. Some outside the public service have asked this question. I see a distinction between offering someone a public service position with single scheme membership and changing the pension terms for someone who took up their public service employment under clearly defined and understood terms and conditions. A new entrant can decide whether to take the job on the terms offered, a serving person does not have that option. Many of us will know public servants who stayed in the public service because of the pension provision. It may not be unlawful, but it would be unfair and unjust to people who have worked for many decades on the basis of an agreed outcome in pension terms to then expect that we could arbitrarily change this at the end, or near the end, of their career."

Previously, PS pensions were not linked with the state pension age - that happened when the new pension scheme was introduced, it only affects new members.

It is legislated for here:

http://www.irishstatutebook.ie/eli/2014/si/582/made/en/pdf

"RULES FOR PRE-EXISTING PUBLIC SERVICE PENSION SCHEME
MEMBERS REGULATIONS 2014"


New members joining the Public Sector have a minimum retirement age that is linked to the state pension age, in other words, they can no longer retire at 65. Their retirement age which is the age at which their benefits become payable is now, for the first time, linked to the State pension age.

It did not affect pre-existing members whose minimum retirement age was 65 (or 60).

 

[ppmeath]

ppmeath , yes I availed of the early retirement package in 2007 but have some years to go before qualifying for the State pension .

Have you worked and paid PRSI Deise? Because if you haven't then you may not be eligible for the state pension because you will have a gap in PRSI contributions if you haven't paid any since 2007.

 

[Deiseblue]

No problem there - I paid PRSI throughout my working life & signed on for credits thereafter.
Both the BOI & the Social Welfare office both confirm that , if spared , I will receive the State pension.

 

[ppmeath]

Have a look at this exchange between Brendan Howlin and Clare Daly last September:

https://www.kildarestreet.com/wrans/?id=2015-09-22a.884

"To ask the Minister for Public Expenditure and Reform his plans to allow civil servants who are presently required to retire at 65 years of age but who are not eligible for the State pension, the option of remaining in employment until they reach the age at which they are eligible for the State pension; and if he will make a statement on the matter. "

Remember he is the one who introduced the change to the state pension age, he states:

"The amount of pension to which a civil servant may be entitled and both the compulsory retirement age and minimum pension age provisions to which a civil servant may be subject, depend on the pension conditions applicable at the date of original recruitment."

On knowing that he changed the state pension age to 66 and on knowing that the question refers to a Civil Servant who has to retire at 65, he states:

"The pensions (and contributions) of the majority of civil servants who are fully insured and are in defined benefit pension schemes are, like many occupational pension schemes, integrated (or co-ordinated) with social welfare benefits. This means the occupational pension is paid on the assumption that the pensioner also receives the State Pension."

How can the Civil Servant with a compulsory retirement age of 65 receive the state pension - when he increased the age to 66?

And then:

" In instances when the State Pension is not payable, a supplementary pension may be payable under the relevant public service pension scheme to bring the pension up to the same amount as would be paid to a public servant whose pension is not integrated. "

He doesn't understand that the Civil Servant has been refused the state pension because of age - not because of a shortfall in PRSI payments, which is the purpose of the supplementary pension.

When I say that those who should understand integration don't - this is what I mean.

 

[ppmeath]

No problem there - I paid PRSI throughout my working life & signed on for credits thereafter.
Both the BOI & the Social Welfare office both confirm that , if spared , I will receive the State pension.

Deise, I would urge you to check this out again. If you haven't made any PRSI contributions for 10 years then you won't meet the yearly average rule because you have a 10 year gap in payments - your contributions are calculated from the time you entered into insurance until you reach state pension age.

"If you retire early, you should ensure that you continue to pay PRSI contributions or get credited contributions (if eligible) to maintain your entitlement to a pension. If you are getting Jobseeker's Benefit (JB) and are aged between 65 and 66 when your JB would normally end, you may continue to receive it until the age of 66, provided you meet the PRSI requirements."

Normal average rule
The normal average rule states that you must have a yearly average of at least 10 appropriate contributions paid or credited from the year you first entered insurance or from 1953, whichever is later to the end of the tax year before you reach pension age (66). An average of 10 entitles you to a minimum pension; you need an average of 48 to get the maximum pension.

http://www.citizensinformation.ie/e...etired_people/state_pension_contributory.html

Edit - sorry Deise -I see you are signing for credits, but many people don't do this.

 

[Deiseblue]

Will do & thanks for your help.

 

[Bronco Lane]

Do credits have the same value/standing as paid contributions?

My wife has a number of paid contributions but her contributions are mostly "credits".

Does this matter?

 

[Protocol]

The supplementary pension should only apply if you have a PRSI shortfall:

"11.10 Supplementary Pension:
In calculating pension at paragraph 11.7 above, it is assumed (a) that the officer
concerned is always entitled to social insurance benefits and (b) that he/she is eligible
for the maximum personal rate of such benefits."

"However, depending on a particular
individual's PRSI contribution record, it may transpire that - through no fault of the
officer concerned - he/she either has no entitlement to the specified social insurance
benefits, or even if so entitled, is eligible for less than the maximum personal rate of the
Contributory State Pension payable to a single person without dependants."

If you do not have an entitlement to the rate of the CSP, or if you have an entitlement to the rate of another SW payment, such as JSB then:

"In such cases, the supplementary pension payable comprises the difference (if any)
between
(a) the amount of the actual pension awarded to the officer plus the amount (if
any) of the personal rate of social insurance benefit or pension payable to
him/her; and
(b) the amount of the pension which would have been awarded to the officer
if that pension had been calculated by reference to the calculation method
for pre-6 April 1995 officers set out at paragraph"

After the SW benefit and the Occupational part of the pension are added and if they do not make 50%, then and only then is the Supplementary pension applicable, it is not supposed to be applicable if you have full entitlement to the rate of the state pension - which it is assumed you will have after paying over 40 years PRSI contributions.

The aim of the supp pension is to treat post 95 staff who pay full-rate PRSI similar to pre95 staff who pay low-rate PRSI.

If a pre95 worker retires from the PS at, say, 62, before the State Pension age, 66 at the moment, they receive full pension from age 62.

If a post-95 worker retires at age 62, they get the work pension element only.

The supp pension brings their pension up to what they would have got if they had been class D pre95 worker.