Long term illness, pension queries, are we in big trouble?

[Tomoda]

My spouse has been diagnosed with a long term illness and we don’t know how much longer he will be able to work (depends on progression). We’ve to quickly reevaluate our long term financial plans which had been based on him having a full 40 year public service salary. He doesn’t want to tell his employer yet so hence asking any questions isn’t an option yet.

He’s 50, with 21 years service class A prsi, public servant, hadn’t taken out any illness cover, 4 kids oldest 14.

From reading his superannuation booklet, he could retire early on long term illness and get 6.7 years added years to maximum of age 60 if need be.

Q. Can he preserve this pension until he is 60 (not take it actuarial reduced) and apply for an invalidity pension until reaching 60?

I’m working in the public service as well and had been part time so only have 5 years service to date. Firstly I need to go back fulltime and build up as much funds now for when he won’t be able to work. I had assumed that I would get half his pension should I survive him plus whatever small pension of my own, however, now when I read his pension description, I’m not sure what this “half” is and what my own will be. I think we should have enough while we’re both alive, if he was on his own, he should be ok but mine doesn’t look so good if I’m on my own.

Say after 30 years service, his pension is 30k, made up of 12k state contributory pension and 18k from his employer.

Q. When it says the spouse is entitled to a ½ rate pension, is that ½ of his total pension of 30k or half of 18k?

My own pension is going to be made up of state contributory pension 12k (if I’m eligible, see further q below) and about 9k employer pension. So 21k total

If I’m already getting 12k from state contrib pension, can I also get part of his? Or again, do I only get half of his employer 18k

I’m trying guess if my pension will be 21k plus 9 = 30k or 21k plus 18k = 39k

I would’ve worked in part time jobs while at school but didn’t start a full time job in ireland until I was about 25, hence there’d be a full 10 years without prsi stamps before I started a real job. It seems incredible that you get punished so harshly for working as a teanager)

Q. Does that mean I don’t qualify for the 12k contributory pension so may only get employer pension of 9k?

as I wouldn’t have the average of 48 stamps per annum. In fact, my spouse probably won’t either if his work placement at college counts as his work start date. So then we’re in major trouble!!

For the next while if we’re both full time, I could buy some notional service, pay into an AVC or build up more cash, is there anything I should consider in our current circumstances? (I think we have enough rainy day fund to keep us going until he’s 60)

I think we need to talk to a financial planner but would need to be someone with a good understanding of public pension , state contrib and private pension options, and not trying to sell us something, is there any such thing, I only found “wealth managers” who would be charging a very large sum, not relevant to us

I hope someone can help with some of my queries, thanks!

 

[Leper]

1. Most government Departments have what is known as a Welfare Officer. Perhaps this is your first call and can be done on the quiet and at a place chosen by you.

2.Your husband needs to talk to his employer. In the Public/Civil Service sick leave enquiries are covered by the Official Secrets Act.

3. His employer must supply written information regarding PS/CS pension and don't forget the Lump Sum.

4. If your husband is a member of a trade union there may be a payout due because of serious illness and/or retirement on ill health grounds.

5. When you have this information to hand, then talk to a credited Financial Planner regarding Social Welfare entitlements. But, have a chat with somebody in the Dept of Social Welfare too; this can be done by leaving a query on their website. They are covered by the Official Secrets Act too.

6. Take notes.

 

[NoRegretsCoyote]

From experience, most financial advisers don't really understand public service pension issues. There is well known provider with connections to public service unions which will just try to sell you AVCs.

Information in the public domain on public service pension is fragmented and often hard to understand. The relevant expertise is mostly located within the public service itself. I think he should make approaches to his employer confidentially already and make queries about his options.

I can't answer everything in your post but a few points:

• You do build up PRSI credits from part time work. Request a statement here. (You need a PSC though).
• You can use social insurance contributions from work in another EU country to build up your PRSI contributions.
• The spouse and children's scheme pension scheme is basically simple. If he is receiving a pension and dies, you continue to receive exactly half of it until you die. And vice versa.
• Generally speaking, for late starters purchasing notional service is actuarially better value than AVCs. You need to do worked examples on this though.

Finally: you might want to take out illness cover yourself, as having both of you on very reduced incomes would be a hardship with four children.

 

[Early Riser]

Tomoda - A very difficult and worrying situation. Financially it may not be as bleak as it seems. But it is difficult to give any approximation on the information above. Just a few points.

Can he preserve this pension until he is 60 (not take it actuarial reduced) and apply for an invalidity pension until reaching 60?

Why would he want to do this? If he is granted ill-health retirement (and the added years that go with it) he can take it now with no cost neutral reduction. There is no advantage that I can see in deferring it to 60 (and I doubt that it is possible in any event). If granted ill-health retirement now he can also claim relevant Social Welfare benefits - Illness Benefit initially and presumably Invalidity Pension subsequently.

Say after 30 years service, his pension is 30k, made up of 12k state contributory pension and 18k from his employer.

Q. When it says the spouse is entitled to a ½ rate pension, is that ½ of his total pension of 30k or half of 18k?

You say he is Class A PRSI. Therefore, the method you are using above to estimate pension is highly inaccurate (it only works with retirement on full service at normal retirement age). I suspect that the spousal pension is likely to be somewhat higher than you are currently estimating. If you can give some more approximate details (service to date, approx salary, confirm that he is in the pre -2004 scheme) I can try to give a rough estimate. However, if the above estimate should be accurate, it would not be half of the €30k. You do not get half of his Invalidity Pension - but you can apply for a Survivors/Widows pension on your own behalf.

The same applies to estimating your own pension - the method you are using doesn't work. If you want to give details as per your spouse (plus age) I can try it. But a lot can change between now and your retirement age. I wuold be inclined to put this one slightly on the back burner until you are clearer about other matters.

As regards a rainy day fund, don't forget his retirement lump sum.

I would’ve worked in part time jobs while at school but didn’t start a full time job in ireland until I was about 25, hence there’d be a full 10 years without prsi stamps before I started a real job. It seems incredible that you get punished so harshly for working as a teanager)

It is fairly certain that pension entitlements will move to a total contributions approach within the next few years, so you won't be punished for this gap in service the way you would be now.

I would suggest that your spouse arranges to talk to someone in HR very soon. When requesting the meeting he can say that it is on a strictly confidential basis. (They will probably say that there are limits to this - that is fine - it is to cover disclosures that may need to go to Tusla/HIQA/Gardai - not relevant here).

You should both arrange to make an appointment with Citizens Advice, if possible, to discuss Social Welfare entitlements for you both.

 

[Early Riser]

The spouse and children's scheme pension scheme is basically simple. If he is receiving a pension and dies, you continue to receive exactly half of it until you die. And vice versa.

Hi Mr Coyote,

Actually, for Class A public servants (as above) it is not that simple. Here is an example (from the Modeller - which is slightly out of date in its figures) for a pre-2004 Class A taking normal retirement on a salary of approx €65K and service of approx 30 years :

"If you retire at age 60 years and 1 days you would receive a once off tax-free retirement gratuity of €73,085, less the deduction of any outstanding contributions. You would also receive a pension of €14,845. Your pension would be paid in arrears on a fortnightly basis........ If you are a member of the Spouses and Children's scheme and should you predecease your spouse following your retirement, your spouse would receive a pension of €9,802 pa. Pensions are payable in respect of eligible children up to a maximum of €9,802 for three or more children."

This is seperate from any Social Welfare payment to which the retiree may be entitled or to which the surviving spouse may be entitled.

 

[Tomoda]

Thanks so much for all your replies. I'd come up with the figures from public service cspension modeller I found
(Unfortunately the buying notional service part doesn't work.)
His salary is 73k, age 50, pre 2004 Class A.
I'm assuming he manages to get 31 years service based on added years if he can work a few more years.
"f you retire at age 60 you would receive a once off tax-free retirement gratuity of €85,148, less the deduction of any outstanding contributions. You would also receive a pension of €18,511. Your pension would be paid in arrears on a fortnightly basis. Based on your Class A Social Welfare status, you may also be entitled to a Social Welfare contributory Old Age Pension from age 66, currently €12,695.39 per annum."
(Spouse pension if death "11,723")

I was getting the 30k from the 18k employer pension and then 12k from either contributary pension or invalidity benefit type payment.
So was thinking if I was on my own, I'd get some pension of my own (might be tiny if PRSI contrib is under) and then 11k spouse pension but not the "half" of his pension that is described in booklet, ie. half 30k.

Noregretscoyote, I have a public service card so tried to get PRSI record online but it says I now have to go back and present a mobile phone to validate my ID before I can access it. grrr, but will do that, also very good point re illness cover for me. Will try and get him to approach HR confidentially

Really appreciate all the feedback

Early Riser, thanks for that, I had assumed he'd have to take actuarial reduced if he took pension early so that's big relief,

 

[Early Riser]

I had assumed he'd have to take actuarial reduced if he took pension early so that's big relief,

No, if granted early retirement on ill- health grounds there is no actuarial reduction.

"f you retire at age 60 you would receive a once off tax-free retirement gratuity of €85,148, less the deduction of any outstanding contributions. You would also receive a pension of €18,511. Your pension would be paid in arrears on a fortnightly basis. Based on your Class A Social Welfare status, you may also be entitled to a Social Welfare contributory Old Age Pension from age 66, currently €12,695.39 per annum."
(Spouse pension if death "11,723")

Yeah, this is the correct ball-park estimate for 31 years service at €73K pensionable income. Given the circumstances you describe your spouse should get Illness Benefit/Invalidity Pension in addition to the €18.5k annual pension. The estimate for survivors pension also is correct ball-park.

(Just to note - the sentence from the modeller estimate saying your spouse may be entitled to a Contributory Pension of €12695 is standard in all estimates it provides. It doesn't mean that you, or your spouse, or anyone else using the modeller, will automatically get this level of state pension. The level of State Pension is calculated seperately by the Dept of Social Protection based on the individual's total PRSI record.)

I take it you should also qualify for a Social Welfare survivor's pension based on your spouse's PRSI record, if not your own. So if you were to find yourself as a survivor it would be €11700 plus the Social Welfare Survivor's pension.

Have a look at Citizens Information :http://www.citizensinformation.ie/e..._related_benefits/widows_contrib_pension.html . It may be worthwhile visiting Citizens Information to discuss Social Welfare entitlements more generally (eg for dependent children or Carer's Benefit, should it be relevant).

So was thinking if I was on my own, I'd get some pension of my own (might be tiny if PRSI contrib is under) and then 11k spouse pension but not the "half" of his pension that is described in booklet, ie. half 30k.

If his pension booklet is saying the above then it does not relate to a standard public service pre-2004 Class A PRSI pension scheme. The estimate from the Modeller is ballpark correct. Can he check if his Booklet is correct for his scheme with HR?

 

[NoRegretsCoyote]

Thanks @Early Riser , I was mistaken on that.