# Value of public sector pension



## GetMoving (31 Jul 2017)

Hi,

I'm considering a job offer in the public sector. There are a lot of things to consider and one of them is the civil service pension that comes with the job.

At the moment I'm earning €70,000, I've a €144,000 pension pot and pay in €1,175 each month. This is projected to give me a pension, inclusive of the old age pension, of 50% of my salary (based on the Pension Authority calculator). 

If I take the civil service job, on a similar salary, I understand that I will be entitled to a pension of 66% of my final salary, plus a tax free lump sum:

Is this the case? 
How many years of service does this require (I've around 26 years to go until retirement)?
Based on the Pension Authority website, to I'd have to pay an extra €950 a month (gross) on top of what I'm currently paying if my defined contribution pension was to come up to the 66% level. 

Any other perspectives on it? 

Thanks, GM


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## Protocol (31 Jul 2017)

No.

The PS pension is 50% of final salary + lump-sum.

That requires 40 years paying into the scheme.


The formula is (1/80) (years service) (final salary).


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## Protocol (31 Jul 2017)

Also, note that since 2013, the new Single PS scheme is less generous, as it is based on average earnings in the PS, not final salary.


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## Early Riser (31 Jul 2017)

As Protocol notes, the new Single Scheme is less generous. The 1/80 formula is no longer applicable. Final pension is based on yearly accrual of benefits during your working life. Follow the links for FACS and Information Booklet from this link:

http://www.per.gov.ie/en/single-scheme/


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## GetMoving (31 Jul 2017)

Thanks a lot for the comments. A couple of points:

I understood that since 2013 the new Single Scheme means that pensions are based on the average salary rather than the final salary. 

I found the FAQ and information booklet on the Single Scheme to be hard to follow. But the main points of it seem to be:
You qualify for the pension scheme once you're in the position two years
You put in - 6.5% of your salary each year to pay for the pension
You get out:
An annual pension worth - the number of years you work x 0.58% of your salary (up to a limit of €45k) plus the number of years you work x 1.25% of your salary over €45k.
A lump sum worth - the number of years you work x 3.75% x your salary. 


This would mean that after working for 26 years on a salary of €70k, the public sector pension would pay a pension of (0.58% x 26 years x €70k) €10,556 and a lump sum of €68,250. Is this correct?


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## Protocol (31 Jul 2017)

Sorry, I'm not familiar with the benefit formula under the new scheme.

But note that as well as the standard regular 6.5% contribution, you also pay the PRD.

The PRD is 10% / 10.5% of wages at the moment.


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## Early Riser (31 Jul 2017)

Get moving. Unfortunately your calculations are off although your conclusions are probably in the correct ballpark for the pension amount.

If, earning €70000 you put in 3% of pensionable remuneration (€2100) plus 3.5% on net pensionable remuneration (€1582) to give a total of €3682. (See definitions in the document).

You have calculated "what you get out" on the basis of final salary (€70000) but no one retiring on a final salary of €70000 will have been earning this much throughout their 26 year career. With increments, promotions, etc., their starting salary 26 years ago may have been more like €35000. The final pension is the based on the sum of accruals of each year in the interim. Therefore, it is impossible to calculate pension on the basis of final salary. Even if it could be done on the basis of €70000 I make it as about €14670 (based on current state pension of about €12400). The State pension would be payable on top of this . But this is not correct or accurate.

Someone retiring on a final salary of €70000 would get considerably less than the above as their working life accrual would be less than this. As a guess/estimate I  would thing it more likely to be in the range of €10000- €10500 (plus State Pension), but it is impossible to project accurately.


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## GetMoving (31 Jul 2017)

Thanks for that Early Riser. 

The grade I'd be going in on would be €65,000, rising to €79,000. So, while I take your point about increments, promotions etc, that's why I'm using €70,000 and 26 years of contributions as the figures for this example. I make the total contributions as €95k, based on 26 years of contributions for a €70k salary.

I'm still not clear on how the final pension is calculated... Even if I'm making contributions of €3,682 each year.

I thought that, even with the changes to public sector pensions, they were based on your average salary, rather than the amount of your contributions...

Thanks again


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## Early Riser (31 Jul 2017)

GetMoving said:


> I thought that, even with the changes to public sector pensions, they were based on your average salary, rather than the amount of your contributions...



No, not on my reading of it. Your pension is based on the sum of your yearly accrual rate (as distinct from yearly contribution rate). Imagine each year's accrual building up in your own (imaginary) personal bank account. This gives you final annual pension at normal retirement age. An average of your salary over your career would probably give a roughly approximate estimate. So if your salary was to average €70000 over a 26 year career, my rough estimate is a pension of €14670 at normal retirement age (plus state pension, presuming you have the PRSI record for a full one - I assume you already have a contribution record to bring with you). This assumes a fairly smooth incremental salary progression. Someone spending most of their career at the lower end of the range would get a lower pension, someone spending most of it at the upper end would get higher one.

Of course, your contributions also fund some other potential benefits - ill-health retirement, survivors pension, death-in service benefit. Actuarially reduced early retirement is also an option.


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## Early Riser (31 Jul 2017)

GetMoving said:


> At the moment I'm earning €70,000, I've a €144,000 pension pot and pay in €1,175 each month



GetMoving - given what you currently pay into your pension you probably would have the capacity to take out an AVC of some sort in the Public service job. This would fund a larger lump sum and and an ARF at retirement.

But, as posters in another similar thread have asked, leaving pension aside which job is the most appealing to you? 26 years is a long time to spend anywhere just for a pension.


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