In this particular situation it seems it is not so much that the employer was not willing to pay the Supplementary as it was that they were not able to inform Allencat that, as he was retiring on ill-health grounds, he needed to apply for the appropriate Social Welfare payment. As this was going to cost the employer nothing, I would be inclined to attribute it to ignorance rather than meanness/frugality. In fairness, I suppose, some smaller employers may have built up little experience of Class A retirees in these circumstances. Not good though.
Japester Said :
so much for the promise that, upon retirement, class A contributors will be no worse off than their class D counterparts.
But how does Allencats Occupational Pension (small as it is) when combined with his projected Social Welfare Payment, compare to what a corresponding Class D person would have received in these circumstances ? Class D does not count towards Illness benefit or Invalidity Pension as far as I am aware.
Early Riser/jjm2016, my apologies as I had completely forgotten that Allencat will surely be in a position to receive illness/invalidity payments along with the occupational pension. Thank goodness for that. For those class A folk, however, who retire in advance of 60 (say on a cost neutral retirement basis) there remains a major issue in that supplementary pension is not payable until age 60 so class A retirees taking cost neutral early retirement (from age 50 onwards) would only receive the occupational part of their pension, making them significantly less well off than their class D couterparts.
For example, imagine a class D employee taking cost neutral early retirement at age 50 (with a preserved pension age of 60), having worked for 30 years in total. Imagine the retirement salary is €40,000. In this case a class D employee would receive. In this case the reduction factor would be 62.4% for the pension part. This means that the class D employee would receive a pension of (30/80)*(40000)*(0.624) or €9360 from age 50. So the penalty for taking pension early is quite severe, but then the employee will be getting €93600 over the course of the 10 years between 50 and 60 that they wouldn't have received otherwise.
In the case of a class A employee though, the situation is quite different because of the integration that exists. Here, the occupational part of the pension under normal circumstances (no early retirement) would be (30/200)*( lower of final salary and 3.333333*12131.60) + (30/80)*(anything over 3.333333*12131.60). For someone retiring on €40,000 and 30 years service this would mean (30/200)(40000) +(30/80)(0) = €6000. The State Contributory Pension part of this integrated pension i.e. 12131.60 won't get paid until 66/67/68 though so the supplementary pension will (might!) fill the gap between 60 and this stage.
The supplementary pension, payable from age 60, would be the difference between what the class D employee would get at 60 (assuming no early retirement now so no reduction factor) minus what the class A employee gets at 60 i.e. 15000-6000 = €9000.
However, the issue lies in the fact that the supplementary pension is not payable before age 60! So it means that a class A employee only receives the occupational part of the pension, actuarially reduced, up to age 60. So in the case here of a class A employee retiring at 50 on €40,000 , their total pension appears to be just 6000*0.624 = €3744 between age 50 and 60!! I wonder does anyone have any information to the contrary on this? It seems absolutely bonkers that 2 similar employees, both taking early reirement at 50 and both having the same final salary, could end up with drastically different pensions. This is surely discrimination against class A employees and means that very few (if any) could realistically afford to retire at age 50 (or even anytime before 55).