Retiring with class A and D prsi

[The Ghoul]

I agree with the above posts. I have also done the sums for Cost Neutral retirement for Class A and Class D employees using the cspension calculator. I am a Class A and becoming increasingly fed up with the job so it is very disappointing to see how much lower my pension is projected to be at age 50 compared to that of a Class D person at the same age.

It seems to me that morale has become terrible in many parts of the public service. I have heard people who have been public servants for 30-35 years say that they have never seen it as bad. Money and pay rises/restoration (or lack thereof) are not the main issue.

A Class D pension of 9360 as mentioned above at age 50 would be a dream for me. As I am single and frugal with no rent or mortgage to pay it would nearly cover my yearly living expenses and I would only need a minimal amount of investment income.

 

[japester]

Hi Japester - I go along with your figures above. In the scenario you present the Class A person is significantly worse off before age 60. And I am afraid that there is no good news on this one, ie. the Supplementary is not available before age 60. Early retirement would not be a realistic option without an additional source of income.(In the case of ill-health retirement different calculations would apply). The Class A retiree in your scenario would be in a position to apply for Jobseeker's Benefit at 50 but this would be exhausted after 9 months. They might be able,depending on circumstances, to continue to sign for credits afterwards though, to preserve full entitlement to COAP/State Pension.

Just for the sake of further comparison I had a look at what the total payments would amount to in your two hypothetical scenarios over a longer period of time (up to age 75 - much less than average life expectancy) :

Class A
To age 60 : 3744 *10 = 37440 + 7332 = 44772 (this includes Jobseeker's)
Age 60 - 67 : (3744+9000)*7 = 89208 (Assuming 67 remains COAP age)
Age 67 -75 : (3744+ 12131)* 8= 127000

TOTAL to Age 75 for A = 260980

Class D

Age 50 - 75 : 9360 * 25 = 234000

So it would seem that the Class A person would do considerably worse up to age 60 but would then gradually catch up with, and then pass out, the Class D. If they both survived a further 10 years (age 85) the difference would be considerably greater.

In the shorter term though it is tougher on A Class person in these circumstances hoping to retire on a pension alone at 50.

I think I just spotted an error there in the Age 60-67 part of the calculation above Early Riser. In my earlier post I was talking about the supplementary pension that would be payable to the class A employee frpm age 60 if cost neutral early retirement had not been taken. It would have been €9000 in the case of the employee finishing on €40k after 30 years service. However, if the same employee had actually taken early retirement from age 50 instead then the supplementary pension would, I presume, have to be subjected to the same actuarial reduction of 0.624, meaning the supplementary pension would be (9000)*0.624 = €5616 instead. This would make sense because then, at 60, the class A employee would have a total pension of €3744+€5616 = €9360, exactly matching the pension which their class D counterpart would be on at age 60.

Therefore the total figure for age 60-67 would be 9360*7 = €65520 instead, making the total for a class A employee to age 75 €237,292 which is almost identical to the total for the class D employee to the same age.

Still good to know that there is decent similarity between the 2 figures overall though. One thing that seems unfair though is that the class A employee cannot take up employment once in receipt of supplementary pension whereas there is nothing to stop the class D counterpart from working throughout retirement. In fact, a class D employee could conceivably retire at 50, receive pension, work for a further 15 years as a class A employee and get a nice chunk of the State Contributory Pension from 65/66/67 to supplement their existing pension! I guess that part of the switch from class D to class A back in 1995 was to close that particular loophole.

Many thanks again for your earlier analysis, it's good to see the figures in black and white.

 

[japester]

I agree with the above posts. I have also done the sums for Cost Neutral retirement for Class A and Class D employees using the cspension calculator. I am a Class A and becoming increasingly fed up with the job so it is very disappointing to see how much lower my pension is projected to be at age 50 compared to that of a Class D person at the same age.

It seems to me that morale has become terrible in many parts of the public service. I have heard people who have been public servants for 30-35 years say that they have never seen it as bad. Money and pay rises/restoration (or lack thereof) are not the main issue.

A Class D pension of 9360 as mentioned above at age 50 would be a dream for me. As I am single and frugal with no rent or mortgage to pay it would nearly cover my yearly living expenses and I would only need a minimal amount of investment income.

Hi The Ghoul, I'm very sorry to hear your predicament, it's not easy to be in a situation like that where the job is getting you down. And unfortunately this is the reality of cost-neutral early retirement for the class A employee, as I say it's a non-runner for the vast majority. Is it possible for you to consider a move to another section where you work or even take the nuclear option and apply for another area within the public sector, a change might work wonders for you. Failing that, you might consider a private sector role? Depending on your salary, a lower paid private sector role might have similar take-home pay to your public sector job, given the PRD/paycuts etc.

I'd be harbouring hopes to retire from 55 but I'd probably end up preserving pension to age 60 rather than option for CNER. I'd have to thrash out the maths of it again closer to the time, but the lack of any supplementary from 55-60 could be crucial in my decision. It would really depend on what kind of savings I'd have at that point in time. But for the vast majority of post 95 folk it really does seem like a pipe dream to take pension before 55.

 

[Early Riser]

I think I just spotted an error there in the Age 60-67 part of the calculation above Early Riser. In my earlier post I was talking about the supplementary pension that would be payable to the class A employee frpm age 60 if cost neutral early retirement had not been taken. It would have been €9000 in the case of the employee finishing on €40k after 30 years service. However, if the same employee had actually taken early retirement from age 50 instead then the supplementary pension would, I presume, have to be subjected to the same actuarial reduction of 0.624, meaning the supplementary pension would be (9000)*0.624 = €5616 instead. This would make sense because then, at 60, the class A employee would have a total pension of €3744+€5616 = €9360, exactly matching the pension which their class D counterpart would be on at age 60.

I am not sure if you are correct on this one, Japester. Let's take the Class A person from your example with 30 years service and a salary of €40000. If he/she is 60 and takes immediate retirement the occupational pension is €6000 and ,if the conditions are met, a supplementary of €9000. If he she is 50 and opts for a preserved pension the same pensions figures will apply at age 60, ie, €6000 + €9000 supplementary. In both cases the Supplementary will cease at State Pension age.

Now if at 50 he/she opts for actuarially reduced retirement, the occupational pension is reduced to €3744 to reflect the extra years it is statistically likely to be in payment. But the Supplementary does not become payable until age 60 and it will be payable for the same length of time as in the previous two options. There is no justification for it to be actuarially reduced. There is no reference to actuarial reduction of the supplementary in any of the documentation (that I have seen anyway).

You note that the actuarial reduction would give the Class A the same Figure as the Class D at 60 - but this does not take of account of the substantially higher figure that the Class D person had been receiving for 10 years. For the actuarial reduction to apply to the Supplementary, it would have to have been payable from the date of early retirement. This is excluded by the scheme and by the nature of its association with Social Welfare eligibility. I suppose if the Supplementary was available on an actuarially reduced basis it might make early retirement more attractive to some Class A people.

Still good to know that there is decent similarity between the 2 figures overall though. One thing that seems unfair though is that the class A employee cannot take up employment once in receipt of supplementary pension whereas there is nothing to stop the class D counterpart from working throughout retirement. In fact, a class D employee could conceivably retire at 50, receive pension, work for a further 15 years as a class A employee and get a nice chunk of the State Contributory Pension from 65/66/67 to supplement their existing pension! I guess that part of the switch from class D to class A back in 1995 was to close that particular loophole.

Yes, the Class A person cannot both work and claim the supplementary whereas working does not impact on the Class D pension payment. On the other hand if they both retire at 60 and neither work again the Class A has the opportunity to continue to build his/her PRSI record and possibly receive a higher total pension after the State Pension kicks in than the Class D (as per the example in previous post). There are certainly pros and cons to both schemes.

 

[japester]

I am not sure if you are correct on this one, Japester. Let's take the Class A person from your example with 30 years service and a salary of €40000. If he/she is 60 and takes immediate retirement the occupational pension is €6000 and ,if the conditions are met, a supplementary of €9000. If he she is 50 and opts for a preserved pension the same pensions figures will apply at age 60, ie, €6000 + €9000 supplementary. In both cases the Supplementary will cease at State Pension age.

Now if at 50 he/she opts for actuarially reduced retirement, the occupational pension is reduced to €3744 to reflect the extra years it is statistically likely to be in payment. But the Supplementary does not become payable until age 60 and it will be payable for the same length of time as in the previous two options. There is no justification for it to be actuarially reduced. There is no reference to actuarial reduction of the supplementary in any of the documentation (that I have seen anyway).

You note that the actuarial reduction would give the Class A the same Figure as the Class D at 60 - but this does not take of account of the substantially higher figure that the Class D person had been receiving for 10 years. For the actuarial reduction to apply to the Supplementary, it would have to have been payable from the date of early retirement. This is excluded by the scheme and by the nature of its association with Social Welfare eligibility. I suppose if the Supplementary was available on an actuarially reduced basis it might make early retirement more attractive to some Class A people.





Yes, the Class A person cannot both work and claim the supplementary whereas working does not impact on the Class D pension payment. On the other hand if they both retire at 60 and neither work again the Class A has the opportunity to continue to build his/her PRSI record and possibly receive a higher total pension after the State Pension kicks in than the Class D (as per the example in previous post). There are certainly pros and cons to both schemes.

Thanks again for the information above Early Riser - what you say above makes sense in relation to the supplementary pension. The fact that is hasn't been received before age 60 means that it shouldn't, in theory at least, be subjected to actuarial reduction. That is very good news from my own perspective in any case, if I were in a position to retire before 60.

I'm just wondering about what you said in relation to the PRSI record. Is it the case that I'd need to sign on for credits from age 60 to ensure I'd get the max state pension? I was under the impression that there was some new rule coming in around 2020 that basically says that max state pension can be achieved with 30 years of PRSI contribs, irrespective of when you start working? This would then mean continuing to sign on for credits after 60 would not be necessary (assuming the 30 years have been completed). I think this was to deal with the issue where some people might have started working early (say in a part-time job) in their teens, may then have gone to college, may have had some "gaps" in their PRSI contribs hsitory for whatever reason and then their average yearly PRSI contribs didn't reach the magical 48 (I think thats what it is!) in order to recieve full pension.

 

[Early Riser]

I'm just wondering about what you said in relation to the PRSI record. Is it the case that I'd need to sign on for credits from age 60 to ensure I'd get the max state pension? I was under the impression that there was some new rule coming in around 2020 that basically says that max state pension can be achieved with 30 years of PRSI contribs, irrespective of when you start working? This would then mean continuing to sign on for credits after 60 would not be necessary (assuming the 30 years have been completed). I think this was to deal with the issue where some people might have started working early (say in a part-time job) in their teens, may then have gone to college, may have had some "gaps" in their PRSI contribs hsitory for whatever reason and then their average yearly PRSI contribs didn't reach the magical 48 (I think thats what it is!) in order to recieve full pension.

I don't have much knowledge of the precise Social Welfare requirements for full pension. I had heard something of the new system that's proposed to come in but, as far as I know and I could be very wrong, there has been no definite confirmation of this as yet. I'm sure there are others who could tell us where this is at. My comments previously relate only to the system as it is now and on the understanding that everyone checks out their own contribution record and where it puts them for eligibility. If you think you meet the requirements without signing for credits then it is up to you. Presumably you possibly may miss out any other benefits that Class A supports - again, this is only speculation on my part.

I had a further look at the figures from the example you gave in Post 18. It seems from these figures that the assumed life expectancy they use to calculate the actuarial reduction at age 50 is about 76.6 years (26.6 years in retirement) as it is at this stage that the Class D and Class A pensions equalise. My sums are as follows:

Class D
9360*26.6 = €248,976.00 total

Class A
3744*26.6 = €99590
9000*16.6 = €149400
Total = €248,990

I used the Supplementary Pension amount in the Class A calculation as this is the amount guaranteed by the scheme (Conditions being met). If the retiree does better through Social Welfare entitlements (State Contributory Pension) this is outside of the scheme. Therefore, the value of attending to the PRSI record.

 

[jjm]

What happens if the change the rules before you reach pension age and you did not sign on.They can changed at any time

 

[martin ohanlon]

Does anyone have any more information on the requirement to be seeking work for someone that has retired (at 60) and must apply for the Jobseekers benefit before the supplemental pension is paid?

 

[Early Riser]

Does anyone have any more information on the requirement to be seeking work for someone that has retired (at 60) and must apply for the Jobseekers benefit before the supplemental pension is paid?

I think you are hoping for more first-hand feedback than I can give you - maybe someone else reading can oblige ?

In the interim I can tell you that I know, and have previously spoken with, a number of retirees who have been in this situation. To summarise their accounts - they filled the form, arranged an appoinment and were interviewed. What exactly they put on the form I can't say but obviously if you state you are not looking for work, the Application has to be refused. In any event they were interviewed, not queried about their jobseeking efforts, nor was this followed up on subsequently. The general view was to the effect that the Welfare staff were familiar with this type of situation and did not ask any "awkward" questions. They were granted Jobseeker's Benefit for which they had to "sign on" regularly (monthly, I think). Afterwards they stayed signed for Credits - yearly, (I think that after 62 this is now by post rather than in person, but not sure). They got the Supplementary subsequently.

Based on the above feedback (and also something I had read) I took it that some employers were insisting on the Jobseeker's route before engaging on the Supplementary. However, another poster here -Nordkapp - has indicated that there is a directive to all Public Sector employer's to this effect. You said in your opening post that your own employer has directed that you must apply for Jobseekers. Based on all of this, and if you are retiring shortly, you would seem to have little option but to apply. What happens if you apply for Jobseekers, explicitly say you do not want work, are refused benefit and then return to your employer seeking the Supplementary ? I have no idea on this - maybe it will then be granted (?) However, I note from your earlier post that you have just 16 years of Class A stamps to date. Another 6 years worth of credits might be valuable in terms of the State Pension rate you receive at 67.

I think we would all prefer if this process was somehow clearer and "cleaner". But this is as it is for now. Only you can decide what to do in your own situation.

 

[martin ohanlon]

I think you are hoping for more first-hand feedback than I can give you - maybe someone else reading can oblige ?

In the interim I can tell you that I know, and have previously spoken with, a number of retirees who have been in this situation. To summarise their accounts - they filled the form, arranged an appoinment and were interviewed. What exactly they put on the form I can't say but obviously if you state you are not looking for work, the Application has to be refused. In any event they were interviewed, not queried about their jobseeking efforts, nor was this followed up on subsequently. The general view was to the effect that the Welfare staff were familiar with this type of situation and did not ask any "awkward" questions. They were granted Jobseeker's Benefit for which they had to "sign on" regularly (monthly, I think). Afterwards they stayed signed for Credits - yearly, (I think that after 62 this is now by post rather than in person, but not sure). They got the Supplementary subsequently.

Based on the above feedback (and also something I had read) I took it that some employers were insisting on the Jobseeker's route before engaging on the Supplementary. However, another poster here -Nordkapp - has indicated that there is a directive to all Public Sector employer's to this effect. You said in your opening post that your own employer has directed that you must apply for Jobseekers. Based on all of this, and if you are retiring shortly, you would seem to have little option but to apply. What happens if you apply for Jobseekers, explicitly say you do not want work, are refused benefit and then return to your employer seeking the Supplementary ? I have no idea on this - maybe it will then be granted (?) However, I note from your earlier post that you have just 16 years of Class A stamps to date. Another 6 years worth of credits might be valuable in terms of the State Pension rate you receive at 67.

I think we would all prefer if this process was somehow clearer and "cleaner". But this is as it is for now. Only you can decide what to do in your own situation.