Pension contributions after 40 years service?

A

acequion

Registered User
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Quick question. I will reach my 40 years this year, made up of 30 actual and 10 notional. I'm a secondary teacher and job sharing this school year. Because I'm loving the job sharing I'm tempted to continue next year but not sure if worth my while financially. So my question is this: Do pension contributions automatically stop once the maximum 40 year limit is reached or do these contributions continue if you are still on payroll? And if they continue is the surplus refunded when you do retire? Not sure if relevant but my age is 65 and I will pass my 66th birthday still working.

Thanks so much in advance for answers.
 
My understanding is that in the case of service beyond 40 years there is provision for a refund of the Spouse/Survivors element of the deductions only - and starting with a refund at retirement of the earliest contributions made:

"Under the both the Original and Revised Schemes, contributions paid by
members are refunded in the following circumstances:
(c) where a member has paid periodic contributions for a period in excess of
40 years; in this case, a refund is made in respect of the excess period only
(starting with the initial contributions paid by the member)."

I don't think there is any provision for a refund (or cessation of contributions) to the main scheme. But your case is different as you will not have in excess of 40 years service - 10 of your years are notional/purchased service. There is some limited provision for refund of notional service purchases but I don't think it would apply to your situation:

"Payments made for purchased service - whether by periodic or lump-sum
contributions - are refundable through the payroll system and only in the following
limited circumstances:
(a) if an officer resigns and receives a marriage gratuity;
(b) if an officer does not qualify for superannuation benefits and does not
transfer his/her service to another employment;
(c) where an officer who is purchasing service leaves the Civil Service before
attaining the minimum service requirement of 9 years, all purchase
contributions must be refunded. Where an officer who is purchasing
service leaves the Civil Service having attained 9 years’ service but before
attaining the minimum service required in respect of the amount of
notional service being purchased, or already purchased, an appropriate
refund of purchase contributions must be made so that the amount of
service actually purchased concurs with the relevant limit in Appendix 3
(taking account of any retained benefits of course);
(d) if an officer, having exercised an option to purchase service,
subsequently becomes eligible for an award of notional service (see
Section 9) as a result of which his/her total service would be in excess
of the maximum reckonable (40 years). (See paragraph 14.29)."

If you are paying the notional service by periodic deductions you would have had the option to cancel or reduce the purchase deductions but it would seem that it is too late to do that now. I think alterations are usually applied from the next birthday.
 
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Thanks so much Ruffian for your reply and information. The wording of it all is so complicated and deliberately vague. Reading between the lines it would appear that were I to continue working, I'd have to continue paying the main scheme contributions plus pension levy, whereas if I retire I will get my maximum pension benefits. Would that be correct? I have already paid all periodic contributions on the notional service, so the 10 years are now fully purchased. In fact it's the reason I couldn't do job sharing until this year, they don't halve the periodic contributions when they halve your salary for job share. I'd have been working for peanuts.

If I'm reading it correctly, that I'll continue paying and won't be refunded, there is little to no incentive to continue. A pity, I think, as there is merit in incentivising experience.
 
acequion said:
Reading between the lines it would appear that were I to continue working, I'd have to continue paying the main scheme contributions plus pension levy, whereas if I retire I will get my maximum pension benefits. Would that be correct?
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That is my understanding of it in the public service in general - unless there has been some recent adjustment for teachers as they are so keen to get them to stay on. But I have not heard of it - perhaps a union enquiry if you are a member?

"Working post mandatory retirement Age
The Public Service Superannuation (Age of Retirement) Bill was signed into law on 26th of December 2018.This law provides for an increase in compulsory retirement age for all public servants including teachers recruited pre-2004.
Public servants can continue to work beyond 65 up to age 70. There will be no change to their pay or terms and conditions. Both Superannuation and the Additional Superannuation Contribution (ASC) are payable on full salary even after full service is attained. They will gain pensionable service and incremental credit progression where applicable while continuing to work as normal."

As for as the Survivor element of the contributions, I do not think they stop after 40 years. Rather the excess is refundable at the point of retirement - and subject to tax!

Also, even if you retire and then return to work part-time it would seem that your pay would still be subject to pension deductions.

"Working after Retirement
Public servants who have retired and are in receipt of their pension can return to work in the public service. They will return on the first point of the new entrant’s scale applicable with full deductions of Superannuation and ASC plus normal statutory deductions"

Second Level - Pensions

Second Level - Pensions
www.tui.ie
 
This seems really unfair as you get no additional benefit! However, as a % of your pay, it is a small part. Would it be enough to stop you from continuing to do a job that you seem to enjoy, especially as it is not full time so would allow you to semi retire? Though depending on your subjects skills etc maybe you could find similar part time work.
 
Also when you retire you won't be paying PRSI contributions either. So by working on, you are paying both pension and PRSI contributions. You may get a benefit from paying more PRSI contributions but it depends on your total contributions etc....
 
@misemoi, yes, unfortunately it is enough to make me stop the job. And that is a pity when there is a well publicised recruitment and retention crisis, but there you go! You might think the pension contributions are a small percent, but in real terms it's a sizabale enough chunk every fortnight. Especially if there is nothing to be gained from it. I would receive €70-100 more per week on my pension, with complete freedom to travel when I want and to work a bit extra with extra pay, completely on my own terms. It's a no brainer really and I imagine several experienced people in the public service with still lots to offer have reluctantly come to the same conclusion.
 
acequion said:
yes, unfortunately it is enough to make me stop the job.
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Just wondering if you have sufficient PRSI for the full State Pension? Your 10 purchased years don't count in this regard. If not, you could add to your record by continuing part-time. And get the delayed State Pension ay the higher rate.
 
Enjoy your retirement and I'm sorry the education sector is losing a good employee. It's more we need not less ! I'm sure the system was never designed around people working more than the 40 years but it needs to modernise now.
 
acequion said:
'm loving the job sharing I'm tempted to continue
Click to expand...

acequion said:
there is little to no incentive to continue.
Click to expand...

If you read some other threads here about retirement, having the freedom to work part-time at something you enjoy rather than just working full-time for money is often mentioned as a huge plus point. You have the possibility of doing exactly that.
 
I knew a civil servant who retired at 60 as he had 43 years service and felt like he’d be working for half nothing.

First few years of retirement didn’t suit him and he missed the job.

Think beyond the pure financial element.
 
@ Ruffian, no is the answer to your question about sufficient PRSI. I'm very close but I won't get the full amount. But from my own calculations I'll only be down by very little, 20 euro weekly at most, so I really don't think it's worth working on for that. Also, I think the supplementary pension payable to A PRSI public servants might bridge the gap but again I'm not sure. We had a big discussion here on ABM last year on the loopholes of the supplementary pension and nobody has the full story, not even the unions. But in any case I'm not going to stress over losing a tiny sum.

To the recent replies, thank you for your input. While you have to look at every angle concerning retirement, everyone has to retire eventually and the financial element is huge, especially when you get older. We live in a country with astronomical living costs and they are getting worse. While mortgages might be paid off etc at this point in life, repairs, renovations etc still have to be done and anyone had a tradesperson lately? Their fees have gone through the roof, along with all the costs. So imo it just doesn't make sense to continue working for much less than the pension, plus AVC top ups. Also, the job sharing has worked out fabulous for me this year because my teaching timetable is just lovely. But no guarantees for next year and this year I have a few lovely exam classes who will be gone next year and god knows how they will be replaced! At 66 will I have the patience and energy for lots of young first years or a bunch of bored, unmotivated transition years? Plus PT meetings, staff meetings, CP hours. Don't think so.

You certainly have to look at every angle. But I appreciate that I could be missing something so I'm grateful for the opinions here.

BTW, re PRSI contributions, I did my own calculations last year on my OAP amount. Does anybody know if or where I could get that exact information? The social welfare crowd in Donegal couldn't tell me last year. The dearth of exact information surrounding the whole process is quite unacceptable.
 
acequion said:
Also, I think the supplementary pension payable to A PRSI public servants might bridge the gap but again I'm not sure.
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Your purchased years don't count towards the Supplementary, I'm afraid. So for 30 years actual service it would be €11,322, ie, below what you anticipate from the State Pension. So no top up unfortunately.


Might Citizens Information help? Or there are some posters here who are good with this if you care to detail your record.

Anyway, best wishes for the retirement.
 
@Ruffian, thanks for the wishes and thank you so very much for all your replies and information. It has really helped guide my decisions as retiring is a huge step, but one we all have to face and the more informed in advance, the better.
 
@acequion, having just retired myself, please be aware that if you retire before end of year, be sure to fill out an ASC12 form and submit to your payroll department, as a refund of your ASC contributions may be due to you for this financial year only, year of retirement.
I didn't realise this and was not informed with my retirement pack, but glad to report the refund was upheld and is being processed as I write.
Good luck with your retirement.

Refunds in certain circumstances
The following applies where an individual retains a public service pension benefit in respect of the employment from which they are ceasing. Such an individual may be entitled to a refund of ASC where that individual has not exceeded the annual exemption thresholds and is not intending to return to work in a pensionable public service position in that year.
Annual Thresholds
Note: In accordance with the Act, an individual is entitled to the full set of thresholds in a relevant year. However, to ensure that the ASC liability is spread evenly across the year the thresholds are set up on a pro-rata basis. Where a person ceases to be employed in a pensionable public service capacity mid-year and they do not intend to return to work in a pensionable public service position in that relevant year, they remain entitled to have their ASC liability assessed against the full annual threshold.
Mid-Year Balancing
Where an individual ceases to be employed in a public service body during a relevant year, a mid-year balancing mechanism should be carried out to allow the individual concerned the benefit of the annual thresholds and a refund shall be issued by the employer.
 
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