Advice re Leaving Public Sector

Gordon Gekko said:
So if she takes the private sector role, works to 68, and just takes the €10k employer contribution, she’ll have 28 years of investment growth plus a pension of €27k or thereabouts.

Not bad.
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Yes. If she works in the private sector until 68 she should get an Occupational public sector pension of about €13.5k from 60, plus the full State pension from 68, plus whatever she gets from the private sector pension DC Scheme. There is also the public sector lump sum of €60000 (payable at preserved pension age - 60, I understand in her case).

However, that is based on a salary of €80,000 (ie, what increments might bring her to if she stayed). Based on a current salary of €70000 the corresponding figures would be a public sector Occupational Pension of about €11,200 from 60 and a lump sum of about €52.5k. The state pension is the same of course.

Still not bad!
 
Gordon
There are several things that she needs to take into account,she is giving up a pension no longer available in the public service,the best part is the perk allowing her to receive state prsi pension from age 60 any shortfalls in the state pension will be made up, if the government cut the state pension the day after she retired it will have no affect her on her pension ,
1) There is a lot to be said for retiring at 60 never again will she get the chance to retire and get her work pension and state pension at 60 ,
2) if she fell into ill health forcing to retire early she may fair out better if she stayed where she is,
3) If she stayed where she is at present she has the option of building up AVC to take her pension to 52500k tax allows you to build up 50% before state pension,
4) Is the 90k + 10 k pension contribution the going rate in the private sector and will it stay that way for the next 20/28 years
5) is she happy and fulfilled in her present job ,If the money was the same would she move ,If I was her and enjoying my present job and work place I would stay and work on being in a position to retire before I reached 60 knowing I could stay beyond sixty if I felt like it,
 
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If she retires at 60, will her pension not be reduced even if she has 40 years of contributions by then? Or does this only apply to more recent hires? I myself will have 40 years of contributions by approx age 63 and would love to be able to retire then rather than staying until 65! In facet I find it a little unfair that I will have to pay 42 years of contributions to my pension up to age 65 and get no more benefits than somebody who has paid 40 years of contributions - I think once people have paid their 40 years their contributions should stop, but unfortunately that' not the case I understand.
 
Some elements of the whole thing seem very unfair;

- Forcing people to sign-on for a number of months

- Messing around with the whole “supplementary pension” rubbish; just pay someone €50k if they were on €100k and get on with it

- Taking contributions from someone who stays on beyond 40 years
 
Early Riser said:
Pre- 2004 public servant entrants can retire at 60 based on number of years served, without actuarial reduction.
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Thanks for that - unfortunately I am post 2004 so that explains it :( With working until 70 now being an option, it is very likely some people will have 45 years+ of contributions and still only receive the same pension as somebody with 40 years of contributions, they really do need to look at this and at least drop part of the contribution once 40 years have been paid imo.
 
Gordon Gekko said:
Messing around with the whole “supplementary pension” rubbish; just pay someone €50k if they were on €100k and get on with it
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The Supplementary was brought in circa 1998/99 so that Class A payers would not be financially disadvantaged relative to Class Ds if retiring between 60 and 65 (the age for what was called the "Transition Pension" then).
 
I understand for post 2012's they wont be eligible for the Supplementary either.
 
Early Riser said:
The Supplementary was brought in circa 1998/99 so that Class A payers would not be financially disadvantaged relative to Class Ds if retiring between 60 and 65 (the age for what was called the "Transition Pension" then).
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Agreed. But if someone’s done their 40 years, just pay them their pension instead of messing around with unnecessary complexity.
 
Retired, not sure how you are combining gross pay/net income here but it makes no sense.

The figures you and your friend were referring to were gross pay presumably. Not affected by changes in PRD, USC, PRSI etc. The context of this discussion was gross pay.

If you want to compare net pay that's fair enough but you haven't done that.
 
For pre-2013 recruits your pension in payment is based on your final salary on retirement, or resignation, whichever comes first.

Your pension contributions are calculated as a % of your salary as you go through your career.


This makes the pension a good deal for someone with a career like a hockey stick, say with most of your promotions shortly before you retire. You have made contributions at a rate much lower than what your pension will be based on.

On the other hand, if you have a career which tops out early, then the pension is not so (actuarially) beneficial. You are making contributions at or close to the rate your pension will be based on. This may be relevant for the OP. There is also the fact that the PRD comes quite heavy on high earners and confers no additional pension entitlement.


So if you've topped out salary wise at 40 then there isn't much upside to your pension the way there is if you have lots of promotion possibilities ahead of you.
 
So with that in mind, you have to work out will you have the full years served to the get the full pension.
Also if the promotion ahead of you is congested with similar or young people. What are your promotional chances.
 
NoRegretsCoyote said:
For pre-2013 recruits your pension in payment is based on your final salary on retirement, or resignation, whichever comes first.

Your pension contributions are calculated as a % of your salary as you go through your career.


This makes the pension a good deal for someone with a career like a hockey stick, say with most of your promotions shortly before you retire. You have made contributions at a rate much lower than what your pension will be based on.

On the other hand, if you have a career which tops out early, then the pension is not so (actuarially) beneficial. You are making contributions at or close to the rate your pension will be based on. This may be relevant for the OP. There is also the fact that the PRD comes quite heavy on high earners and confers no additional pension entitlement.


So if you've topped out salary wise at 40 then there isn't much upside to your pension the way there is if you have lots of promotion possibilities ahead of you.
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I was making the same point on another tread on a different topic ,In the private sector most Irish DB schemes got into trouble because the people at the top cleaned out the people at the bottom,
The company I worked for operated a different DB system needless to say it was a German company that came up with the system to be fair to the people on flat income all of there life on lower grades,
 
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NoRegretsCoyote said:
Your pension contributions are calculated as a % of your salary as you go through your career.

There is also the fact that the PRD comes quite heavy on high earners and confers no additional pension entitlement.
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Its not a straight % though. It is 3% of pensionable earnings plus 3.5 % of net pensionable earnings. As an example, for Person A on €40,000 this works out at €1696, while for Person B on €80,000 it is €4296.

When we add in PRD, Person A's total pension deduction is €2496 while for Person B it is €9196.

RETIRED2017 said:
1) There is a lot to be said for retiring at 60 never again will she get the chance to retire and get her work pension and state pension at 60
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It is not accurate to say that a person gets the State Pension at 60. A pre-2004 Class A retiree may qualify for a Supplementary Pension. In monetary terms this will often be less than the state pension - maybe substantially less - unless the retiree has full 40 years service.

There are conditions attached to receiving the Supplementary Pension, different from the State Pension. Probably the principal one being that the person cannot work in any earning capacity, employed or self-employed, full-time or part-time. Also, it is reviewed from year to year or as determined by the employer/pension office.
 
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