# Is Pension Related Deduction (PRD) applied to retired civil & public servants?



## TheJackal

This came up in another thread.

The Pension Related Deduction (PRD), is paid by all working public servants.

One would think once you retire you no longer pay a pension deduction as you are now not working & instead are drawing down your pension, for which you have spent up to 40 years paying into.

However, it is a "pension" deduction in name only. It is really just a pay cut but it would be bad PR to "cut" the pay of pensioners. 

My point is, *even when you retire and never have another job, you still must pay PRD.*

Can someone confirm this? Can't find a Revenue link or concrete statement of such.


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## jpd

TheJackal said:


> This came up in another thread.
> 
> One would think once you retire you no longer pay a pension deduction as you are now not working & instead are drawing down your pension, for which you have spent up to 40 years paying into.



Again, another fallacy but widely held to be true. Public and civil servants do not pay into a pension scheme, at least not in any way that a private employee or employer would understand.

Private employees and employers pay money into a pension scheme and this is real money handed over to the pension scheme trustees who are charged with investing it wisely.

Public pensions are simply paid from current government revenue ie tax receipts and also deductions from current public and civil employees. However, these deductions are not saved/invested but simply spent as part of the everyday government spending.


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## ajapale

jpd,

You are correct, civil and public servants have pension deductions but the monies are not put into any fund.

However, we need to keep this thread on topic and address the question *"Is the Pension Related Deduction (PRD) paid by retired civil and public servants ?"*


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## jpd

I believe that it is.


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## gipimann

According to this document from Dept of Finance (link at bottom), the PRD is not paid by Civil & Public Service Pensioners on either their pension or their lump sum.

*Exemption Marker for Individual Employees​*_An indicator to allow individuals to be marked as exempt from the Pension Related_
_Deduction will be required. The main group who are exempt are pensioners, as_
_neither lump sums nor pension payments are subject to the Pension Related_​_Deduction._

Taken from: http://www.finance.gov.ie/documents/publications/other/2009/pensionreldedeductions.pdf


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## TheJackal

gipimann said:


> According to this document from Dept of Finance (link at bottom), the PRD is not paid by Civil & Public Service Pensioners on either their pension or their lump sum.
> 
> *Exemption Marker for Individual Employees*
> _An indicator to allow individuals to be marked as exempt from the Pension Related_
> _Deduction will be required. The main group who are exempt are pensioners, as_
> _neither lump sums nor pension payments are subject to the Pension Related_​
> _Deduction._
> 
> Taken from: http://www.finance.gov.ie/documents/publications/other/2009/pensionreldedeductions.pdf


 
Interesting. My father's payroll section, while working out his retirement annual pension, recently told him he would be paying PRD!


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## becky

PS and CS Pensioners do not pay the PRD but do pay the USC. 

If a pensioner comes back to work in another area for a short period such as annual leave cover, sitting on an interview board, this payment is liable to the PRD.


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## Slim

Maybe we are all a bit confused between the various deductions imposed on Public Servants.
1. Pension Levy: only paid by working Ps and Cs - ranges from 5% to 9.6%
2. Pension deduction: Paid by PS and CS Pensioners - from 4 -6 % I think.

Slim


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## becky

Slim said:


> Maybe we are all a bit confused between the various deductions imposed on Public Servants.
> 1. Pension Levy: only paid by working Ps and Cs - ranges from 5% to 9.6%
> 
> 
> Slim


 
The correct term is now Pension Related Deduction or PRD. 

Whe a p60 is issued to a Civil/Public Servant a PRD 60 must also issue. With a p45 a PRD45 must issue. If you leave one public/civil service mid tax year to take up a post in another PS/CS you must submit the p45 and PRD45 to ensure your PRD is caculated correctly.

I agree people get the all deductions mixed up. 

I can't blame them - the deduction side of my payslip is very long. There are 6 items I must pay: 1. Tax 2. PRSI 3. USC 4. PRD 5.Pension 6. Spouces and Children.


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## ajapale

Slim said:


> 2. Pension deduction: Paid by PS and CS Pensioners - from 4 -6 % I think.
> 
> Slim



Im confused ! Are public and civil servant pensioners experiencing deductions (relating to the economic crisis) or not?


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## becky

ajapale said:


> Im confused ! Are public and civil servant pensioners experiencing deductions (relating to the economic crisis) or not?



I didn't notice Slim stated that CS / PS pay a pension deduction, they don't.  If I reach 65 and have to stay on because of my skills I cease contributing to the pension scheme but continue to pay PRD.  My pension is then abated. 

I'm a pre 2004 PS so I have a minimum and max retirement age 60 and 65.  Anyone recruited after 2004 has a minimum retirement age of 65 but no maximum.  If a post 2004 PS has to stay on I presume they continue to be a member of the pension scheme so have to pay into it but I'm not sure of this.

In response to ajapale, pensioners who retired up to 31.12.2010 (not sure if this was extended) got off fairly lightly until the USC.  They pay no PRD and held pay rates applicable prior to Jan 2010.  This was to encourage employees to avail of the early retirement scheme.


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## ajapale

Still confused! 

Slim stated : 





Slim said:


> 2. Pension deduction:* Paid by PS and CS Pensioners* - from 4 -6 %


 I suspect this is not correct but am open to persuasion. Perhaps Slim meant *paid by PS and CS employees*?

So, (to use as an example which seperates out changes for very recent public/civil service pensioners) if you are a "ninety year old nun" who retired as a principal do you have a deduction / reduction in your pension over and above the deductions (usc etc) levied on private sector pensioners?


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## becky

ajapale said:


> Still confused!
> 
> Slim stated :
> I suspect this is not correct but am open to persuasion.
> 
> So if your a "ninety year old nun" (to use as an example) who retired as a principal do you have a deduction / reduction in your pension over and above the deductions (usc etc) levied on private sector pensioners?



Slim is wrong, pensioners do not pay pension deduction (ie: what was known as superannuation) or the PRD.  Yes, he may have meant PS/CS workers.

In answer to the nun who retired 27 years ago she didn't suffer from the Jan 2010 pay reduction or the PRD, the 2 main cuts which were applicable to existing PS/CS workers.


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## gipimann

The last budget introduced a 4% cut in cs and ps pensions for those who are retired (pensions for those retiring up to Feb 2012 are still based on pre-2010 salary scales).

I think this is what Slim was talking about.

I'll find a link and post it.

Edit: Here's a link to the Budget 2011 leaflet produced by Dept of Finance:
http://www.budget.gov.ie/budgets/2011/Documents/Budget 2011 Leaflet.pdf

The heading "Public Service Pay and Pensions" includes the info on reduction of Public Service Pensions by an average of 4% (this is in addition to the USC).


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## Protocol

I may be able to help.

The pension levy on *WORKERS* was introduced first.

Officially known as the PRD.

In the last Budget, the Govt announced a cut to PS *pensions*.

However, the gross pension was not cut (I don't know why not).

Instead, the cut has come in the form of an extra deduction on the payslip.


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## gipimann

I wonder if the gross pension wasn't cut because of the legislation which determines how it's calculated (i.e. 1/80th of salary for every year worked up to a maximum of 40/80ths)?   Would an actual cut in the gross pension have needed a change to that legislation?


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## TheJackal

Protocol said:


> I may be able to help.
> 
> The pension levy on *WORKERS* was introduced first.
> 
> Officially known as the PRD.
> 
> In the last Budget, the Govt announced a cut to PS *pensions*.
> 
> However, the gross pension was not cut (I don't know why not).
> 
> Instead, the cut has come in the form of an extra deduction on the payslip.


 
Yes, *C&P Service Workers* pay PRD. 
It's 0-15: exempt; 15K-20K @5%; 20K-60K @10%; bal @10.5%

*C&P Service Pensioners* had the cut in the last budget.
It's 0-12K: exempt; 12K-24K @6%; 24K-60K @9%; bal @ 12%

But my Dad's payroll dept. is telling him that when he retires in a few momths he will pay have both the PRD and Budget cuts?! Seems incorrect.


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## TheJackal

Did we come to a definitive answer on this? I'm still confused!


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## gipimann

Questions 10 and 35 from the document linked below may make things clearer, especially no 35.

It indicates that the PRD is not payable on pensions.

http://www.finance.gov.ie/documents/guidelines/faqprdjul09.pdf


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## Protocol

Yes, when that document was written in 2009, the pension levy (PRD) applied to wages only.

PS pensioners had no gross pay cuts or pension levy to pay.


BUT, in the most recent Budget, the Govt announced cuts to existing PS pensions.  In reality, instead of it being a straight cut to the gross pension, it turned out to be a new deduction.

Which they called the PRD - thus the confusion!!


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## Protocol

*Letter to the Irish Times today on the same issue.*



*Pension cut a reduction or deduction?*



Madam, – The method of applying the recent public service pension cut is worrying.
Section 4.7 of the Four-Year Recovery Plan states: “The Government has therefore decided on a reduction . . . in the annual cost of public service pensions . . .” Chapter 6 of the Budget 2011 speech states: “. . . Legislation to provide for this reduction will be brought before the Oireachtas . . .” (my emphases).
But pension slips now show the gross pension unchanged and instead an apparent deduction of the amount in question. Would a reduction involve breach of contract by the Government because the gross pension would now be smaller than was actually paid for in contributions and agreed with the Government? Do pensioners not have ownership rights over deferred salary contributed over a lifetime and held in trust by the Government until retirement? Did the Minister feel legally unsafe presenting the cut as a reduction?
An inquiry to the Revenue Commissioners verifies that the pensioner is now taxed, not on the gross pension shown but on that gross minus the apparent deduction – the “taxable gross.” So it really is a reduction disguised as a deduction. Why? – Yours,etc,


SEÁN FALLON (Secretary),
Retired Secondary Teachers’
Association,


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