Notional service and the supplementary pension.

As i said in earlier posts the post 1995 Supplementary pension is a an absolute mess, unlike pre1995 , the post 1995 retiree will have to deal with social welfare + there former employer + keep up with revenue to ensure their tax allowances are correct, and when they hit 65 will have to go at it again, i dont think if one tried you could make it as complicated.
In my own case i am 62yrs old, having completed 90% service recieving the occupational pension (plus national wage agreement % rises) and the supplementary pension (No % increase since retirement), i have 42yrs PRSI Contributions ie post 1995 plus private sector, so when/If i reach 66 i will get a full contributory OAP which if calculated today would be circa 2.5k more than my Supplementary.
As to notional service i purchased 4 yrs which was paid for weekly , then I stopped when the crash came so came to 4yrs in total, again No information was supplied by employer to say Notional Purchase would Not benefit your Supplementary pension & i calculate that my Supplementary pension on retirement was based on , transferred service, purchased service and actual service
 
So is @Pont62 saying that notional service makes no difference at all? That only your occupational pension gets credited for both actual and notional and it's pot luck with the rest? You can't even buy back PRSI contributions beyond something like 5 years and notional doesn't exist for PRSI contributions unlike service years.

I'm not a figures person, so what is the total gross pension in the example Pont62 attaches?

I have since been on to the Pensions people in the ASTI as well as several others and they claim that the supplementary pension does make up the shortfall. That it exists to bridge the gap for those who don't have all the PRSI contributions. Remember there will be pre 95 retirees whose service is made up of actual and notional and they don't have this problem, they will get the full value for the total. The intention is not to discriminate the post 95 people.

So who is right and who is wrong?
 
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I got confirmation this morning from Pensions in the DES, namely those in charge of my pension, that yes the supplementary pension does bridge the gap and bring you up to the maximum SCP in cases where PRSI contributions are lacking. This was in response to a detailed email from me explaining about my 28 years actual, 10 notional and being short PRSI contributions. Their response backs up what I was told from the ASTI Pensions people and other financial experts, so after several sleepless nights I'm just going to hope for the best, there is no more I can do as apart from the service record I got from the DES [which also counted all service plus top rate of SCP] the DES won't let you get your final figures until you actually retire.

So @stoves1 and @Pont62, I know you mean well and Stoves1 has his/her own experience to go by, but I think you're coming from your own interpretations of the wording around the supplementary pensions and notional service and while you may not be fully wrong, you may not be fully right either as it seems to be calculated on a case by case basis. And the notional service being "excluded" bit is not as simple as that. @Pont62 you scared the hell out of me with those attached figures, can you tell us where you got them from please?

But this is definitely one to watch and unions need to be on top of it as it's a lot more straightforward and a lot easier to retire and retire with peace of mind if you are pre 1995 and that is plain wrong. We are only now at the start of the post 95 retirees so I expect we will all hear a lot more as time goes by.
 
Hi Acequion,

I accept that there is a lack of knowledge, confusion, and concern over the issue of Supplementary Pensions, and as a result there will always be the chance of anyone misinterpreting the appropriate legislation. If DES say that your purchased notional service can be counted in the calculation of a supplementary pension, to your benefit, then you should of course accept that. However, it does seem to clearly contradict the following guidance:

a. advice from DPER "that service acquired via the purchase of notional service scheme, is not counted when calculating supplementary pension". There are equivalent provisions in the Letter to Personnel Officers dated 31 July 1997 in respect of Established Civil Servants and a similar letter in respect of the non-established state employees.”

b. the DES website contains guides to superannuation schemes for teachers that clearly states that "Notional Service is excluded in the calculation of a supplementary pension."

I'm not sure how the above can be considered ambiguous.

As far as the figures I provided, they were just an example using the methodology to calculate a supplementary pension, and the current co-ordination rate, i.e. €48,231.71(€277.30 x 52.18 x 3.333333).

Over the next decade the number of people retiring under post 95 schemes will increase significantly, and if experience to date is anything to go by, it's going to be a challenging for those claiming a supplementary pension. That will only continue after retirement (as I know) when it comes to getting clarification on how supplementary pensions will increase in subsequent years to reflect pay agreements.

To be honest, I'm not sure why I paid my unions dues, they should have been on top of these post 95 scheme issues long before now.
 
Hi Pont62, There was an interesting post in the Irish Times relating to Garda retiring and getting the SP and the JSB. I'll post the link below...It will affect us all and with so many Class A retiring it will have a big effect.

Imagine thousand of able bodied people not being allowed to work or being severely penalised ( i.e. losing 14k per year) while employers are crying out for workers, huge shortage of teachers, nurses etc. Vacancies galore and the Irish government penalises people if they return to work! What country does that? And when many Garda at 55 would be well able to work, they just need a less stressful job! The government basically says no wait til your 66 then you can work without penalty! Who ever thought this was a great idea?. Now the government are also missing out on thousands of people paying tax too! when the economy is booming..Bonkers.
Jobs are going unfilled!
Incentive people to go to work dont penalise them!
Most early retirees pension will push them into the high tax bracket so when they work the government will get back 50% in tax, it's a win win!


If they make the change for the Garda they will have to make it for all!..Have a read and let me know what you think of it... A solution may be coming as an election is coming too!
 
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Hi acequion, Case by Case basis, either the Supplementary pension recieves % national wage agreement increases in line with pre 1995 retirees or else all post 1995 retirees will see their pension decrease, as to Notional Service if it is included as part of your service for lump sum calculation well then it is included when calculating your supplementary pension, one would think that if people purchased notional service that they were purchasing it based on the idea that they needed the extra yrs to try and get to maximum service before mandatory retirement and so qualify for the equivalent pension as a pre 1995 retiree ie pre19995 = post1995 + Supplementary
 
Hi stoves1, I'd like to clarify that my "case by case" basis remark was what I inferred from talking to the Pensions people on the phone, no body actually said that. However, Pensions replied by email to my detailed email querying whether my notional service would be included in the calculations for supplementary pension that yes it would. However, you cannot dispute that fact that as Pont62 has pointed out, it is written in black and white that notional service is not included in the calculations. Not one person supposedly in the know has been able to give me a clear answer on this and I have consulted Pensions in the DES, the ASTI, Cornmarket and paid PSRA for financial advice. None seem to have a thorough grasp of this issue and what I've been getting from all of them is that post and pre 95 pensions have to be equal and that yes the supplementary pension will bring me up, however none of them seem to fully grasp that the notional service question is an anomaly. Which is a disgrace. It's either clear or it's not and the so called experts would want to fully familiarise themselves.

In my case it's a matter of about €10 a week so it's not a huge deal if Pont62 is right and if I do end up down that amount. However the principle of the thing is a MAJOR big deal. The supplementary pension is not a social welfare pension, it is paid by the DES so there is no logic in excluding notional service when notional service is included in the other calculations ie lump sum etc. That is, if it really is excluded, we don't even know. This would not be an issue for the pre 95 retiree purchasing notional service because all service would be counted for the pension. So logically it should not be an issue for the post 95 retiree either and we must bear in mind that notional service is a huge financial commitment, especially in my case where I was 15 years buying back 10.

Fair play to you Stoves1 for your lobbying work on this issue. We all need to get behind it as there really are too many anomalies.
 
The supplementary pension is a right mess currently esp with early retirements, with Departments seemingly interpreting it differently

DES Circular 07 of 2005, appendix 2 clearly states

A Supplementary Pension may be paid where the person...due to circumstances outside his or her control, fails to qualify for certain Social Welfare benefits or qualifies for such benefits at less than themaximum personal rate

Here the idea is you do not get the Supplementary Pension if you retire early. This was your choice so not due to circumstance outside your control. So if a post 2003 worker retires early at say 55 instead of 65, for those 11 years til state Pension Contributory kicks in at 66, you will be down the 14K of SPC and no supplementary pension to bridge the gap.

Then you see INTO here in June 2017 saying the opposite

There is a further clarification required in respect of Class A contributors. At present, most teachers, subject to meeting the minimum service requirement, can retire from age 55 (as described above under pre-1 April 2004 –Old Entrants heading). However, the state pension is only paid from age 66 onwards. There is a mechanism in place to ensure that there is no income gap for these teachers. In the interval between a teacher retiring and reaching age 66 the DES will pay the teacher a supplementary pension. This additional amount of pension is based on what a teacher would receive if s/he was a Class D contributor and the DES has sole responsibility for paying full pension. On reaching age 66 ,the state pension commences and the additional ‘supplement’ paid by the DES will cease (or in some cases reduce). Before the DES commence the payment of the supplementary pension, a teacher is required to claim job seeker’s benefit for nine months. When the job seeker’s benefit has been exhausted, the DES will commence the payment of the supplementary pension until the teacher reaches age 66 (as described above).

As more and more post 1995 workers near retirement and complain to their unions, I assume these issues will get ironed out in the coming years. Expect a new circular to issue then for all Depts to clarify the new procedures
 
Hi IanC12, thanks for the link to the recent Irish Times article. This is part of the GRA (and other unions) efforts to get the Govt (in this case DPER) to change legislation and procedures to make it easier for their retiring members to claim supplementary pensions. I expect that the unions will have several specific objectives, such as: -

1. "For those retiring (before age 66), who do not then start employment elsewhere, a full supplementary pension is payable until they qualify for the State Pension, without having to claim Job Seekers Benefit (JSB)". (One exception to this would be for those retiring on ill health grounds with existing entitlement to Illness Benefit or Invalidity Pension, which would need to be included in any determination of a “partial” supplementary pension).

Although this change would mean Departments and public service bodies paying a full supplementary pension in most cases from the outset of retirement, this would be offset by the resulting saving for the State in not paying JSB for the first nine months (especially if retirees didn’t claim the new pay related JSB due to be introduced later this year, the value of which for most retiring public service employees will exceed the maximum rate of the State Pension!).

However, should these retirees still ‘sign on’ anyway for PRSI credits only, to ensure they qualify for a full State Pension in future or, just as important, to ensure a husband, wife or partner would qualify for a full State survivor’s pension if they died before age 66? Could it also affect entitlement to dental and optical benefits if PRSI contributions/credits are not maintained before age 66?

2. "For those retiring (before age 66), who start employment elsewhere, a full supplementary pension is payable until they qualify for the State Pension to ensure parity with pre 1995 employees (who qualify for a full non-co-ordinated pension and have no restriction on employment elsewhere)".

The Irish Times article includes a DPER quote that a supplementary pension is not payable to anyone in “full time” employment. However, the relevant legislation for the various superannuation schemes just says that someone cannot work if claiming a supplementary pension (no distinction between full or part time work). This might suggest DPER are willing to concede a bit on this point, for example, applying the same rule for part time work that applies when claiming JSB i.e. someone can work for a maximum of three days per week and receive JSB only for remaining non-working days.

3. "Notional Service to be included in the calculation of a Supplementary Pension"

Although there is considerable confusion on this issue (as mentioned by Acequion), the unions will want this clarified. DPER may resist inclusion due to the additional cost involved and argue that the lower rate Class A notional service charge (compared to Classes B, C and D charge rates) provides for an enhanced co-ordinated pension and lump sum only. Any resulting supplementary pension should not in effect guarantee the equivalent of up to a maximum State Pension where there is a significant ‘gap’ in someone’s PRSI record, that an individual could have addressed by way of voluntary PRSI contributions. This might seem a bit harsh, but may be the reasoning behind the original decision for notional service to be excluded from supplementary pensions calculation rules?

Whatever the outcome of all this, the additional administration work required in pension sections, and ensuring a consistent approach across the public service, are going to be significant issues as the number of post 1995 retirees increases in the years ahead.
 
Hi Pont62, and thanks for your contribution i am over 2 yrs retired from An Garda having reached maximum retirement age of 60, i joined in 1999 ie post 1995, when i joined in 1999 the retirement age was 57, so i purchased service via weekly payments from my wages, and at no stage was i informed that this purchase would only cover circa 66% of my pension. The Supplementary pension is paid from justice ( not DSP) with the rest of my pension, and this supplementary amount has stayed static since 1st day of retirement ( not recieving national wage agreement % increases) which i believe is wrong as government documents state that a pre 1995 pension = post 1995 occupational pension + Supplementary, which i have been raising since my retirement. As to the administration of this it is obvious that the people it didnt effect, didnt care, and if they really cared about public servants it could be administered and sorted very easily.
 
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