Effect of 3 Day Week on Public Sector Pension Entitlement

Hello.

In the scenario below, what would be the effect on pension benefits of moving to a 3 day week at age 50?

• Earning €100,000 a year.
• Joined the Public Service at age 20 pre-2004.
• Will retire at age 60.
• Continuing fulltime, the expectation would be a pension of €50,000 a year, inclusive of Supplementary/Contributory Old Age pensions.

Thank you.

Every actual year worked will accrue 60% of a year for pension service purposes.

Age 20 to 50 = 30 years service done
Age 50 to 60 = 6 years service accrued.

Retire at age 60, after 40 years work, with 36 years service for pension purposes.


Plug the 36 years into your pension calculations to see the impact on the monthly pension.


I will do the lump-sum calculation.

(100,000) * (3/80) *(36) = 135,000

The lump-sum is 15,000 less due to the 10 years of 3-day weeks.

According to the Modeller:

1 Retire at 60 with 40 years service as above.
Occ Pension = €34,904. Lump Sum = €150,000. Potential Spouse/Survivor Pension = €21,226. If you meet the conditions the Supplementary is €15,096.

2 Retire at 60 with 36 years service as above.
Occ Pension = €31,414. Lump Sum = €135,000. Potential Spouse/Survivor Pension = €19,103. If you meet the conditions the Supplementary is €13,586. At State Pension age you will get this as a minimum in your State Pension but it may be the full State Pension if you meet the PRSI requirements. And as you should get 10 * 52 PRSI contributions for your prospective part-time years this should bring you up to the 40 * 52 required for the full State Pension (and, even if not, there are opportunities to acquire them after retirement at 60).

Thank you.

With only 36 years' service doing the 3 day week, would it be possible then to purchase notional service to cover the "missing" 4 year?

Yes, it would be possible to purchase 4 years for the Occupational Pension and Lump Sum but not for the Supplementary Pension. It is not cheap but it is tax deductible Alternatively you could go the AVC route.

Ruffian said:

but not for the Supplementary Pension

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Are you saying supp pension will not accrue for any notional service purchased? I would have 8 to 9 years by age 60, it rather stuffs my early retirement plan if that is the case.

Nordkapp said:

Are you saying supp pension will not accrue for any notional service purchased?

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I'm afraid not.

You could also fund a AVC to bridge the shortfall in your lump sum.

150,000 - 135,000 is 15,000.

You take out an AVC for 15,000 of which about 1,200 would be set up charges.

So you would get about 13,800 back tax free when you retire.

The 15,000 assuming you are within the pension limits would attract a tax refund of 40% or 6,000 less the approx 1,200 set up costs would give you 4,800 tax free profit.

The lack of supplementary pension on your purchased service could be offset by the PRSI you would not be paying as a pensioner.

on 50,000 that would be 2062 euro or 40 euro per week. The weekly impact of the tax refund over the 5 years would be 20 euro per week.

Potentially between the tax refund and not paying PRSI you could be up 60 Euro per week which is almost the amount that you are down because of the suplementary pension reduction

Deleted as this post was incorporated into an edit of the previous post.

Are you sure Ruffian?

'Are you saying supp pension will not accrue for any notional service purchased? ' Nordkapp

'I'm afraid not.' Ruffian





I am purchasing notional service and the above is a snip of my wage slip with the deductions - there are 2 categories - uncoordinated and coordinated. Does this not show that I am paying for the towards my supplementary?


The Department of Education's pension modeler displays the same supplementary pension figures as long as the total years of service remain unchanged, regardless of variations in the number of years purchased in the Notional Service Purchase Scheme?

Thanks

sidzer said:

The Department of Education's pension modeler displays the same supplementary pension figures as long as the total years of service remain unchanged, regardless of variations in the number of years purchased in the Notional Service Purchase Scheme?

Click to expand...

That is interesting, sidzer, and suggests that it counts. There was someone last year who referred to communication from their employer that the purchase didn't include any Supplementary, and that the purchase costs had been actuarially calculated for the Occ Pension only.

It beats me! But the Dept of Ed have always seemed to be clearer about pension benefits and entitlements than others.

I had my supplementary pension reduced by the purchased years. I only recently retired, and the calculation was done in Sept. It would be great to get some information on this. I would have purchased about 6 years so it would have made a difference. I worked in Higher Education in a TU / IoT.

In my case, when I was paying pension while working, it was not split out separately like above. It was included in the pension deduction.

My Suplementary Pension was calculated along the line of your previous post @Ruffian