Primary School Teacher Pension

[Tim Robbins]

HI,
Rooting around trying to figure out how primary school pensions work to help someone.
There are lots of what if's and depends to the point it is difficult to see roughly how these pensions work.
Goal is to figure out how much AVC's need to be contributed.
So, I gather these pensions used to be defined benefit and now it's hard to know to know if they are fully defined contribution or a bit of both defined benefit and defined contribution.
So, before getting into AVC's trying to figure out if you don't and you start a teaching job post 2013, how much are these things actually worth?
So let's say you started in 2015, at age 40 and work 25 years as a primary school teacher, what would be your pension roughly at 65?

Thanks

 

[Ruffian]

So let's say you started in 2015, at age 40 and work 25 years as a primary school teacher, what would be your pension roughly at 65

As Single Scheme pensions work by accumulating a proportion of annual salary it is very difficult to answer this question. For example, lets say John and Joan each retire with 25 years service on a final salary of €100,000 pa. John may get a considerably higher pension than Joan if he got the bulk of his promotions early in his career whereas Joan only got to the top of her scale very late on.

Anyway, you can do a rough ready-reckon if you are prepared to take a guess on what your friend's "career average salary" might be in today's terms. So look at the scale from where he (or she) started, where he projects ending up and his probable rate of progress to that point. Estimate an average based on that.

Lets just say you guess his career average (in today's terms) as €80,000.
Then his Occupational Pension at normal retirement age (currently 66 for the Single Scheme and not 65) would look something like this - (80,000 *25/80) - (State Pension * 25/40) = 25,000 - 9,375 = €15,625. This is his Occupational Pension.

As well as that he would have the State Pension. Based on his 25 years teaching he would at a minimum qualify for 25/40 of the full rate of pension, ie, €9,375. But based on his total PRSI record he may get anything up to the full State Pension (approx €15,000) - he may, for example, have PRSI from earlier work.

But this is only a rough indication. We don't (and can't at this stage) know his career average earnings.

 

[LDFerguson]

Older-style Defined Benefit and Public Service pension schemes operated on the basis of your final salary being the figure used for calculations. The Single Scheme uses your career average salary, as @Ruffian explains above.

There's a really good thread on the Single Scheme here on AAM. https://www.askaboutmoney.com/threads/the-single-public-service-pension-scheme.236839/

The Single Public Service Pension Scheme's own website has a calculator that allows you to estimate your benefits at retirement. It's something, but it can't take account of future promotions and jumps in salary.

As well as AVCs and AVC PRSAs, it's also possible to purchase referable amounts in the Single Scheme, i.e. buy extra benefits directly from the scheme. That won't suit everyone but it should be considered as an option.

 

[Protocol]

All PS pensions in Ireland are Defined Benefit.

 

[ClubMan]

All PS pensions in Ireland are Defined Benefit.

What about these?

Pension Arrangements in Commercial Semi-State Bodies (CSSBs)

Public Service Pensions

Pension Arrangements in Commercial Semi-State Bodies (CSSBs)​

...

CSSBs operate a range of Defined Contribution and Defined Benefit schemes. Defined Benefit Schemes in CSSBs are generally closed to new members, with new employees joining the relevant Defined Contribution scheme operated by their employer.

 

[Ruffian]

The biggest difference between Single Scheme pension benefits and traditional PS pension benefits is that they are based on career average earnings as opposed to final salary.
On a traditional scheme a "full pension" after 40 years amounts to 40/80 final salary (and pensionable allowances), inclusive of State Pension for post 1995 schemes.
For 40 years in the Single Scheme it is 40/80 of career average earnings. However, unlike in traditional schemes, a member can continue to accumulate benefits beyond 40 years - but only to the Occupational Pension element. For someone with 43 years service it would roughly equate to (Career Average *43/80) - (40/40 * State Pension).

 

[publicservice1]

As Single Scheme pensions work by accumulating a proportion of annual salary it is very difficult to answer this question. For example, lets say John and Joan each retire with 25 years service on a final salary of €100,000 pa. John may get a considerably higher pension than Joan if he got the bulk of his promotions early in his career whereas Joan only got to the top of her scale very late on.

Anyway, you can do a rough ready-reckon if you are prepared to take a guess on what your friend's "career average salary" might be in today's terms. So look at the scale from where he (or she) started, where he projects ending up and his probable rate of progress to that point. Estimate an average based on that.

Lets just say you guess his career average (in today's terms) as €80,000.
Then his Occupational Pension at normal retirement age (currently 66 for the Single Scheme and not 65) would look something like this - (80,000 *25/80) - (State Pension * 25/40) = 25,000 - 9,375 = €15,625. This is his Occupational Pension.

As well as that he would have the State Pension. Based on his 25 years teaching he would at a minimum qualify for 25/40 of the full rate of pension, ie, €9,375. But based on his total PRSI record he may get anything up to the full State Pension (approx €15,000) - he may, for example, have PRSI from earlier work.

But this is only a rough indication. We don't (and can't at this stage) know his career average earnings.

I would say that Ruffian has it all covered here. Just to add that in the sector generally, promotions do tend to happen later in a career.
When a Board is employing a Principal, for example, five years of teaching is a pre-requisite, and middle management experience is desirable, though not necessarily required.