Pension query defined benefit scheme and state benefit

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phoenix53

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I have a deferred defined benefit pension scheme which will become payable when I am 60, ie, 5 yrs from now.

At age 65, the co pension amount will reduce by 100% of the sum of the then state contributory pension amount. I presume this means that my pension will reduce by approximately 900 euro per month for the years from age 65 to 68 when the state pension becomes available? Does this sound correct? Quite a significant reduction for a period of time.

The above has lead me to look at the new TCA (total contributions approach) for those qualifying for the state pension from Sept 2020. It states that you have to have 2080 (40 years) weekly reckonable prsi class a and s (paid or credited) contributions paid or credited over a working lifetime in order to qualify for a full state contributory pension

I obtained a copy of my prsi contributions from the dept and work out that I have 1703 contributions paid as at end 2017. Adding on 52 more for 2018, this currently give me 1755. 1755/2080 means that if I pay no more contributions, I will get 84% of the state pension payable at 68. To get the full pension at 68, I think I will need to work for another 6.25 years based on today's qualifying criteria. Could someone confirm whether or not I am on the right track?

I also worked in northern ireland for 3 years and paid social contributions there. Would these be taken into consideration by irish revenue when trying to reach my 2080 contributions total?

I know the above is very basic and in layman terms. I'm just trying to get it somewhat sorted in my head rather than leaving it until the last minute.

Thanks for taking the time to read and comment.
 
On Northern Ireland issue, get in touch with the UK DWP for a statement of your UK NI contributions.

These can be added to your PRSI contributions. Do it in plenty of time before you plan to retire as it takes time.
 
Will do. Thank you.

Do you know if I can apply on line?

Good news that they can be added to Prsi contributions.
 
in DB schemes it is common for the final pension to be reduced by the amount of the state pension and as far as I know that will continue for as long as you receive the pension. You will of course have the option of taking a tax free lump sum and either buying an annuity or putting your balance into an Approved Revenue Fund.
 
Thanks Feemar5. I understood that I could take a tax free amount but I thought for defined benefit, I would have no choice beyond that.
 
If it's a DB scheme then you have the option to commute part of your pension for a lump sum (up to 150% of Salary). But the balance is a reduced annuity for life.
 
Thank you all for the replies.

With regard to the reduction of pension from age 65 and not being in receipt of the state pension until age 68, I suppose you could use all or part of your tax free amount to fund the reduction.
 
phoenix53 said:
I have a deferred defined benefit pension scheme which will become payable when I am 60, ie, 5 yrs from now.

At age 65, the co pension amount will reduce by 100% of the sum of the then state contributory pension amount.
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It might be worth checking the scheme rules on the state pension reduction. It doesn't sound like you are getting a full 40 years worth of DB pension and usually the state pension offset is pro-rated to your service and benefit.

For example, on a salary of 60K, if the DB scheme provides for a total benefit of 40K after 40 years of service, the scheme would pay the full 40K from age 60 to 65 and then the scheme would reduce by the anticipated 12K of state pension. However, if you only had 20 years of service and a total benefit of 20K, the scheme should only reduce by 6K, not by the full 12K. And if you only had 10 years service so a total benefit of 10K, the scheme should reduce by 3K and not (obviously...) 12K.

So I would definitely check the scheme rules to make sure only a part of the state 12K is deducted from your DB pension.
 
Orka, thanks for that. That would certainly make a difference. I will check out the scheme rules.
 
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