New entrant teacher's pension - Completely confusing!

R

RJD

Registered User
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15
Hi all,

I've just been appointed as a permanent teacher in September, so in terms of pensions, I'm considered a new entrant by the civil service.

Its completely impossible to work out a civil service new entrant pension. I dont particularly trust Cornmarket either from what I've read here.

According to the online documentation I've been reading up on, the 2004 superannuation act;
"- made 65 the minimum age at which superannuation benefits may be paid to all other new entrants to the civil service;"

Now.. does that mean that I will not see a cent of my teachers pension until I'm 65 in any circumstances?

Does it mean that if I resign at 55 and live on my savings that I will have a reduced pension on the day I turn 65? How would that be calculated if so?


Its so confusing its crazy.. :confused: and so frustrating!!


On a calmer note.. If I was going to put away a few bob every week to make a fund from which I could live on between 55 and 65 if I wanted, would anyone have any recommendations? It'd have to be zero risk.

Thanks for your help, and sorry if my question is covered elsewhere here! I didnt find exactly what I was after with the search function.
 
DrMoriarty said:
Welcome to AAM, RJD.

Have you had a look through this section of the DES website, or the associated FAQ?
Click to expand...

Hi, thanks for that. I should have mentioned that I'm a primary teacher so I'm not sure if that all applies.

I've downloaded as much as I think is relevant from that section of the department website, but I find a lot of it confusing. For example..

"At retirement, a new entrant will qualify for a retirement gratuity at the rate of 3/80th of retiring pay for each year of service, subject to a maximum of 40 years’ service"

Does this mean if I did 30 years and resigned at 56 years old (I'm 26 now) that I wouldnt be penalised any more than just having the 3/80th x 30 as opposed to x 40 if I stayed to 66 years old?

Also..

"Pension will be payable at the rate of 1/80th of co-ordinated retiring pay for each year of service, subject to a maximum of 40 years’ service. Co-ordinated pay is pay less twice the maximum personal rate of Old Age Contributory Pension. Twice the maximum personal rate of OACP is, currently, €17,459.43(May 2004)."

SO.. They take twice the annual OACP out of my annual pension.. and give the OACP back to me then... i.e. they take away 17k and give me back 6.5k? Im still down 6.5k a year then! That makes no sense!

"Resignation/retirement before age 60: where an officer retires or resigns before age 60 the provisions at 9.4.3 (9)(b) will apply as if the reference to minimum retirement age was a reference to age 60."
"9.4.3 (9)(b) Resignation with preserved benefits: where an officer resigns before minimum retirement age with entitlement to preserved benefits, the net
award is reduced to the amount represented by the formula
C x A
(A + B)
where
A = actual reckonable service at date of resignation;
B = the period between the date of resignation and the date on which
the officer attains minimum retirement age; and
C = the amount of the net award."



Is C, the net award, referring to the pension amount payable per year after they've taken twice the OAP from it?




I make this out to be 30/40 if I resign at 56.. meaning I'll lose a quarter of my pension rights by resigning at 55 as opposed to going at 65? Again surely theres something majorly wrong there?? A quarter!?!


Sorry for such a long post.. Its just been a month since I started trying to figure this out and this website is the only light at the end of the tunnel this month!! :)
 
It's true that retiring early has a disproportionate effect on your pension - this is true of nearly all pension schemes. Pension trustees/funds do not like early retirement and so they make it uncomfortable if you choose to retire early.
 
Hello again.

First of all, you are not a civil servant.

Yes, the rules have changed. I don't think it's impossible to retire pre-65, but it is either more difficult, or else you can retire pre-65 on a lower pension than an older pension.
 
Current primary teachers can retire at 55 with 35 years service, and at 60 with no requirements.
 
I was told I was a civil servant because Im paid from Oireachtas funds.. maybe I got that wrong.

Because I'm a new entrant, I can retire before 65, but I'll be penalised very heavily.
 
There is a good reason they take away twice the OACP from your gross salary.

This is because the 10k OACP pension replaces 20k of salary.
 
To be honest, I'm not sure how the penalty works, but yes, you retiring at 55 or 60 probably won't get as much as now.
 
Protocol said:
There is a good reason they take away twice the OACP from your gross salary.

This is because the 10k OACP pension replaces 20k of salary.
Click to expand...


I dont really understand what you mean here. Thanks for all the explanation by the way.. its been quite a day for learning about pensions!
 
I'm not sure either - is it something to do with taxation of each or something?

Apropos of this and several other recent threads - these public/civil service/teachers pension schemes/options seem awfully complicated!
 
It took me a while to work out how integrated pension work.

I'll try to explain.

You pay your class A PRSI, and so you should get a PRSI pension, currently 210 pw.

Now, your occupational pension is designed to replace half your gross wage.

Well, consider that the 10k pa PRSI pension is covering the first 20k of your gross wage. So your superannuantion only has to cover the balance.

So, when calculating your "integrated" pensionable salary, it's your gross less two times the OACP.
 
So the "twice OACP" reduction is directly linked to the pension being 50% of former salary.

Equally, if your pension is designed to replace 66.66% of former salary, then the "offset" is "1.5 times OACP".

It took me a long time to grasp this concept!!
 
ClubMan said:
.. these public/civil service/teachers pension schemes/options seem awfully complicated!
Click to expand...

Agreed.... but integrated/coordinated DB schemes exist in the private sector as well!

A lot of the confusion arises because of attempts to lump together public service superannuation schemes which are different (often sublty different) in terms of benefits, contributions etc.
 
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