Single Public Service Pension Scheme and State (Contributory) Pension

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Pratch

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Apologies for how potentially 'basic' this query is. I've searched this forum and Googled, and I may be misreading some of the posts, but I've come across different opinions. If someone will get €30k p.a. on retirement through the Single Scheme (SS), am I correct that they do not get anything from the Contributory State Pension (CSP)?

So say the Single Scheme will pay out €30k p.a. and the CSP is €13k (rounded up), will they receive only €30k p.a. or will they get €43k p.a. (SS + CSP)?
 
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PS pensions for staff hired sine 1995 are "integrated" witrh PRSI.

Staff pay normal full-rate 4% PRSI and will receive the SP as normal.

The work pension is adjusted downwards, or co-ordinated with the SP.
 
Pratch said:
Apologies for how potentially 'basic' this query is. I've searched this forum and Googled, and I may be misreading some of the posts, but I've come across different opinions. If someone will get €30k p.a. on retirement through the Single Scheme, am I correct that they do not get anything from the State Pension?

So say the Single Scheme will pay out €30k p.a. and the CSP is €13k (rounded up), will they receive only €30k p.a. or will they get €43k p.a. (SS + CSP)?
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The two pension entitlements are calculated separately. If they have sufficient PRSI "stamps" for a full State Pension then they get that as well. In your example they get 30k plus the State Pension.
 
For ease let's assume you had 3 people entered the public sector on €60k and never received a pay increase over a 40 year career. They should all retire with the same entitlement albeit from slightly different sources.

A Pre 95 public sector workers did not pay PRSI so all their pension came from their occupation contributions. In retirement they receive a pension of €30K (€0 state pension+ €30k public sector pension)

Post 95 the system was integrated. So if our example has joined under that scheme they would have paid 4% PRSI. In retirement they will receive €30k (€13k state pension + 17 public sector pension).

Single service scheme as above: €30k (€13k state pension + 17 public sector pension).
 
skrooge said:
For ease let's assume you had 3 people entered the public sector on €60k and never received a pay increase over a 40 year career. They should all retire with the same entitlement albeit from slightly different sources.

A Pre 95 public sector workers did not pay PRSI so all their pension came from their occupation contributions. In retirement they receive a pension of €30K (€0 state pension+ €30k public sector pension)

Post 95 the system was integrated. So if our example has joined under that scheme they would have paid 4% PRSI. In retirement they will receive €30k (€13k state pension + 17 public sector pension).

Single service scheme as above: €30k (€13k state pension + 17 public sector pension).
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If a Single Scheme member retires after 40 with career average earnings of €60,000 they will not be awarded a PS pension of €30,000. They will be awarded a PS pension based on the accrual of their contributions into the Single Scheme. You are correct that a rough and ready guess is that this would amount to about €16.5k.
But whatever they get awarded it is their PS pension - the State Pension is not deducted from it. If after 40 years service (or 30 years service or 45 years) someone gets awarded €30,000 from the Single Scheme it has no impact whatsoever on the separate State Pension calculation.

This is what the OP asked:

Pratch said:
If someone will get €30k p.a. on retirement through the Single Scheme, am I correct that they do not get anything from the State Pension?

So say the Single Scheme will pay out €30k p.a. and the CSP is €13k (rounded up), will they receive only €30k p.a. or will they get €43k p.a. (SS + CSP)?
Click to expand...
 
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Thanks for taking the time to reply on this.

The two points being raised are the two that I have come across online through searching on this topic. One suggests you get the Single Scheme Pension PLUS the State Contributory Pension, the other opinion suggests you get the Single Scheme Pension but only as a 'top-up' to the State Contributory Pension.

1. Single Scheme Pension (€30k p.a.) PLUS State Contributory Pension (€13k p.a.) = €43k p.a. pension
2. Single Scheme Pension is only a 'top-up' to the State Contributory Pension (so the math is €13k CSP + €17k top-up from Single Scheme Pension) = €30k p.a.

To ground it in the real figures.

> Joined Public Service in 2016
> Will accrue 35 years full-time (100%) employment until retirement
> Average salary (taking current payscale increments into account) = €90k
> Using the estimator tools (https://singlepensionscheme.gov.ie/) it's calculating the below

  • Single Scheme Lump Sump = €91,158
  • Single Scheme Annual Pension = €21,653
  • Annual Contributory State Pension = €12,956
It doesn't indicate if my total pension is €21,653 or €34,609
 
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Pratch said:
To ground it in the real figures.

> Joined Public Service in 2016
> Will accrue 35 years full-time (100%) employment until retirement
> Average salary (taking current payscale increments into account) = €90k
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Take the State Pension currently as €13,800.
So the CSP threshold is this multiplied by 3.74 = €51,600. You get 0.58% of this multiplied by your years of service = €10,475.
The amount above the CSP threshold (90,000 - 51,600) is €38,400. You get 1.25% of this by years of service = €16,800.

So the approximate estimate for your PS pension is 16,800+10,475 = €27,275.

Quite separately from this you apply to the DSP for your State Pension at State Pension age. If you meet the criteria for a full State Pension you will currently get about €13,800. If you only have 35 years worth of contributions/credits on your record you may only get 35/40 of this. But you may have PRSI (paid or credited) from elsewhere to make up 40 years worth.
Either way, you get both the PS pension (as above) and the State Pension (full amount or 35/40). If you do manage to qualify for the full amount of State Pension you get (rough estimate) €27,275 + €13,800 in combined pension income

Of course, this is a notional and rough estimate as we do not know what your actual career average earnings will be.
 
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I'd suggest having a look at the Single Scheme Member Booklet and working through the calculations on Page 10 for contributions and 16 onwards for benefits. I did this myself recently to satisfy my curiosity.

The way I approached this was to calculate the annual referrable amounts I expect to build up each year until retirement, based on my expected grade/increment within that year. Summing them all together should give you a feel for both the lump sum and pension benefit you should expect.

In my own case, with salary/service not dissimilar to your own:
Sum of 'referrable amounts' accrued over my career to give annual Pension Benefit: 29.5k
Plus (full) Contributory State Pension p/a: 13.8k
Total Pension: 43k
 
Early Riser said:
Take the State Pension currently as €13,800.
So the CSP threshold is this multiplied by 3.74 = €51,600. You get 0.58% of this multiplied by your years of service = €10,475.
The amount above the CSP threshold (90,000 - 51,600) is €38,400. You get 1.25% of this by years of service = €16,800.

So the approximate estimate for your PS pension is 16,800+10,475 = €27,275.

Quite separately from this you apply to the DSP for your State Pension at State Pension age. If you meet the criteria for a full State Pension you will currently get about €13,800. If you only have 35 years worth of contributions/credits on your record you may only get 35/40 of this. But you may have PRSI (paid or credited) from elsewhere to make up 40 years worth.
Either way, you get both the PS pension (as above) and the State Pension (full amount or 35/40). If you do manage to qualify for the full amount of State Pension you get (rough estimate) €27,275 + €13,800 in combined pension income

Of course, this is a notional and rough estimate as we do not know what your actual career average earnings will be.
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Thank you again for this. Very helpful. Also suggests the estimator tool is inaccurate.

My exact career average salary, based on seven years of known salary and 28 years of increments from the current salary scales for my role, will be €90,784. This may be higher in reality as pay increases are negotiated over my life-time, but it's the current best estimate.

I have over 5 additional years of paying PRSI before working in the public sector, so will have at least 40 years of PRSI contributions.

Based on your calculations, working from the €90k average I previously gave, I'm looking at €41,075. That's far better than I was expecting when I read some posts suggesting I would not receive the contributory state pension. I can live with €41k.

Thank you again for the information.
 
newtoinvesting said:
I'd suggest having a look at the Single Scheme Member Booklet and working through the calculations on Page 10 for contributions and 16 onwards for benefits. I did this myself recently to satisfy my curiosity.

The way I approached this was to calculate the annual referrable amounts I expect to build up each year until retirement, based on my expected grade/increment within that year. Summing them all together should give you a feel for both the lump sum and pension benefit you should expect.

In my own case, with salary/service not dissimilar to your own:
Sum of 'referrable amounts' accrued over my career to give annual Pension Benefit: 29.5k
Plus (full) Contributory State Pension p/a: 13.8k
Total Pension: 43k
Click to expand...

Thanks for the steer to that page. I started reading parts of it and just got a bit head melted from it. I've been very reassured to realise my pension will be Single Scheme + Contributory State Pension. Far more comfortable to live off in retirement.
 
skrooge said:
For ease let's assume you had 3 people entered the public sector on €60k and never received a pay increase over a 40 year career. They should all retire with the same entitlement albeit from slightly different sources.

A Pre 95 public sector workers did not pay PRSI so all their pension came from their occupation contributions. In retirement they receive a pension of €30K (€0 state pension+ €30k public sector pension)

Post 95 the system was integrated. So if our example has joined under that scheme they would have paid 4% PRSI. In retirement they will receive €30k (€13k state pension + 17 public sector pension).

Single service scheme as above: €30k (€13k state pension + 17 public sector pension).
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Just so I don't have my hopes up incorrectly. Where might I read the information about how the pension breaks down like this?
 
Pratch said:
Just so I don't have my hopes up incorrectly. Where might I read the information about how the pension breaks down like this?
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It doesn't break down like this - you get both pensions. But notionally it makes sense for someone with full service if you know their career average salary.

Take your estimated career average earnings of €90,000 and say you had 40 years service. If you use the method on P16 from the Single Scheme member booklet, which@newtoinvesting referenced, to calculate your Single Scheme Pension it would come to about €31,200. Combining this with the State Pension and you get to €45,000, ie, 40/80 of career average salary. In pre-1995 (Class D) pension schemes people with full service got 40/80 of final salary as pension (and no State Pension).

However, this 40/80 is not actually used to calculate your Single Scheme pension. And what you are awarded in the Single Scheme is in addition to what you are awarded in the State Pension (as is the case in all post-1995 Class A PRSI PS pensions).
 
Both pre and post 95 workers with 40 years service will retire on a pension of 50% of pensionable earnings. Pre 95 workers pension does not include tha state pension as they did not pay class A Prsi. Post 95 workers pension includes the state pension as they paid class A Prsi. So far they are equal. If however they both retire before age 66 and take up new employment they are no longer equal. The pre 95 worker can benefit from class A or S Prsi until age 66 and could possibly qualify for a portion of the state pension. The post 95 worker would not gain any further state pension benefits.
 
To simplify greatly, is it fair to say the following:

1) a single scheme entrant on a high salary with no promotions will not have a much lower pension than if they had entered pre-2013
2) a single scheme entrant who enters at a low grade and has many promotions would have a much better pension if they had entered pre-2013
 
NoRegretsCoyote said:
To simplify greatly, is it fair to say the following:

1) a single scheme entrant on a high salary with no promotions will not have a much lower pension than if they had entered pre-2013
2) a single scheme entrant who enters at a low grade and has many promotions would have a much better pension if they had entered pre-2013
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In general, my gut feel was to agree with your thinking @NoRegretsCoyote , though I had to run some numbers to check. And of course this all depends based on individual circumstances and assumes my own calculations are correct...

For case 1), I assumed the following: 5 years at HEO, 5 years at AP, 30 years at PO (so that the person in Case 1 and Case 2 ends at the same point). Based on my calculations this person would be entitled to:
Lump sum: Approx. €154k (1.5x average salary, 1.31x final salary)
Pension (including full CSP): €51k (0.5x average salary, 0.44x final salary)

For case 2), I assumed the following: 5 years at CO, 5 years at EO, 5 years at HEO, 5 years at AP, 20 years at PO. Similarly, this person would be entitled to:
Lump sum: Approx. €122k (or 1.54x average salary, 1.04x final salary)
Pension (including full CSP): Approx. €43k (or 0.53x average salary, 0.37x final salary)

For comparison, for a pre-2013 pension (after 40 years service) which ends at PO LS2 (currently €118k):
Lump sum: Approx. €177k (1.5x final salary)
Pension (including full CSP): Approx. €59k (0.5x final salary)

So, on the basis of the above, both single scheme pensions are lower than the corresponding pre-2013 pension, and case 2 is quite a lot lower.
 
newtoinvesting said:
So, on the basis of the above, both single scheme pensions are lower than the corresponding pre-2013 pension, and case 2 is quite a lot lower.
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Well the notional employer contribution is something like 29% vs. 9% for the pre-2013 and post-2013 groups.
 
Is the Public Sector pensions still vastly superior to working in the private sector? I recently spoke with an advisor from Standard Life about potentially setting up a PRSA AVC and he told me it would be very difficult for a private sector worker to match the public sector pension even still to this day, despite public sector pensions not being what they once were.
 
PoundMan said:
Is the Public Sector pensions still vastly superior to working in the private sector? I recently spoke with an advisor from Standard Life about potentially setting up a PRSA AVC and he told me it would be very difficult for a private sector worker to match the public sector pension even still to this day, despite public sector pensions not being what they once were.
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I would say that in the vast majority of cases, he is 100% correct.
 
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