Supplementary Pension question please....

[hunter1]

One of the most farcical and unsatisfactory aspects of this is that AVC providers are being allowed into workplaces to give presentations and are failing to mention the supplementary pension at all or if they do mention it they are are interpreting the "through no fault" clause to suit their own interest. In effect, they are downplaying people's pensions entitlements and pushing them towards AVCs instead. Obviously, it's not in their remit to give impartial advice on pensions as they are a vested interest but people don't seem to be aware of this. I haven't come any impartial advice being offered to counterbalance this.

Most Class A (and Class D) people that I have spoken to were completely unaware of the existence of the supplementary pension - let alone being aware of the details such as not being allowed to work while claiming it.

Most senior HR and payroll people and most union officials are Class D and don't care about this issue. Anyone recruited from the private sector into a senior position in recent years is under the single scheme and will likely struggle with understanding the details of the various older pension schemes. .

That's what I am experiencing. There are people who see absolutely nothing wrong with this, even telling us to consider ourselves lucky in comparison to later recruits to the civil service.

They knew what they were signing up to as did I and when I signed my contract I was promised 50% of my final pensionable salary on the day I retired and that is exactly what I intend on getting.

I won't be buying any AVC's and I won't be signing on the dole either.

 

[Early Riser]

But there's still a shortfall and when I asked about this I was told I could not apply for the supplementary pension while being in receipt of JSB because one of the conditions of that payment is that you are not in receipt of social welfare.

Hunter1 - I am reluctant to comment on this again but I believe the advice you have been given by your Employer is incorrect as an absolute statement - although it may be correct in many situations. Supplementary pension may be payable to a person receiving a Social Welfare payment (such as JB) in the circumstance where the level of the Social Welfare payment is less than the current rate of State Pension. It is only payable in this circumstance when the level of Supplementary that would be payable is greater than the Social Welfare payment.

Take the example of someone with full service who retires on a salary of €80,000. Their Occ Pension (as a Class A) would amount to approx €27K (a rounded figure allowing €13K pa, or €250 pw, for the current State Pension). If this person's retirement date is before State Pension age and they sign on for Jobseekers at a rate of €200 p/w, then they would be eligible to apply for a Supplementary of €50 per week (250 - 200).

I am going on a number of sources. Firstly, this is from a Dail reply by the Minister for Finance to a question on the Supplementary Pension:

"The supplementary pension will be equal to the difference between

(i) the occupational pension which would have been payable if it had been based on pensionable remuneration instead of net pensionable remuneration and

(ii) aggregate of the actual occupational pension payable and the actual rate of social insurance benefit payable (including any payments for dependents)."

Pension Provisions

Pension Provisions Dáil Éireann Debate, Tuesday - 12 March 2019

www.oireachtas.ie

Secondly, this is how it is outlined in Teagasc's Staff Handbook:

"The maximum amount payable is the difference between:
the pension he/she would receive if the Teagasc pension was calculated on a non co-ordinated basis (as for D1 staff) and
the person’s actual Teagasc Pension plus Social Welfare benefits if applicable.
.........
A retiree can claim a supplementary pension from Teagasc by providing a letter from theDepartment of Employment Affairs and Social Protection(Social Welfare) verifying that he/she fails to qualify for Social Welfare benefit or qualifies for Social Welfare benefit at a rate which is less than the maximum personal rate of contributory old age pension due to causes outside his/her own control. The amount of supplementary pension payable will vary depending on the amount of a retiree’s pension and whether he/she is entitled to any Social Welfare benefit "

https://www.teagasc.ie/media/website/about/opportunities/Staff-Handbook.pdf

I understand that you don't intend to go down this route in any event.

And please don't shoot me for this post!

 

[Early Riser]

One of the most farcical and unsatisfactory aspects of this is that AVC providers are being allowed into workplaces to give presentations and are failing to mention the supplementary pension at all or if they do mention it they are are interpreting the "through no fault" clause to suit their own interest. In effect, they are downplaying people's pensions entitlements and pushing them towards AVCs instead. Obviously, it's not in their remit to give impartial advice on pensions as they are a vested interest but people don't seem to be aware of this. I haven't come any impartial advice being offered to counterbalance this.

Most Class A (and Class D) people that I have spoken to were completely unaware of the existence of the supplementary pension - let alone being aware of the details such as not being allowed to work while claiming it.

Most senior HR and payroll people and most union officials are Class D and don't care about this issue. Anyone recruited from the private sector into a senior position in recent years is under the single scheme and will likely struggle with understanding the details of the various older pension schemes. .

It would certainly seem that AVC salespeople are giving incorrect information or opinions which have no current factual basis. Whether deliberately or not - but the information does strongly favour purchase of their "product".

As regards HR - I would imagine there must be a fair proportion of staff who came in between 1995 and 2013. But I agree that the information being made available is minimal and inadequate.

 

[hunter1]

Thank you for your response.

All social welfare payments are less than the State pension are they not?

Also, my employer is actually following those guidelines:

"18. The revised superannuation arrangements include provisions for the payment of a supplementary pension in certain circumstances to pensioners in respect of periods during which the pensioner is not employed in any capacity which involves a social insurance contribution and, due to causes outside his/her own control, fails to qualify for social insurance benefit[1] or qualifies for such benefit at less than the maximum personal rate.

And to this:

"A retiree can claim a supplementary pension from Teagasc by providing a letter from the Department of Employment Affairs and Social Protection(Social Welfare) verifying that he/she fails to qualify for Social Welfare benefit or qualifies for Social Welfare benefit at a rate which is less than the maximum personal rate of contributory old age pension due to causes outside his/her own control. "


"(ii) aggregate of the actual occupational pension payable and the actual rate of social insurance benefit payable (including any payments for dependents)."

When I retire at 60 I will only be eligible for the JSB, that is the actual rate of benefit that I will be paid.

So from their point of view when I retire at 60 they will give me the occupational part of my pension and if I sign on and receive the maximum personal allowance for JSB, then there is nothing to supplement.

As I said, I have the query in with them and I have now taken legal advice because this entire situation is ludicrous.

 

[Early Riser]

My compulsory retirement age is 60

You are in a somewhat different situation in your sector in that you have a compulsory retirement age of 60. The Minister in the Dail recently referred to this factor and seemed to accept that there was an anomaly that will need to be addressed. However, the anomaly that he seemed to be referring to is that those in the Single Scheme who face compulsory retirement before State Pension age do not have any access to a Supplementary Pension at all. He was speaking specifically about the Defence Forces, but I assume it was wider relevance to those with compulsory retirement:

"The implication, where the agreement is no longer in place, is that a new entrant to the Defence Forces - from 1 January 2013 - who is mandatorily retired at 58 or 60 would have a final benefit less than the value of the State contributory pension. New-entrant Defence Forces officers will be at a loss of approximately €12,390 until they reach the age of retirement, at 66. This is to increase to 68.

The Department of Defence acknowledged in 2009 that the compulsory retirement age set the individuals concerned apart from those in other areas of the public service. There is an anomaly whereby the agreement is no longer recognised. There is a gap between mandatory retirement at 58 and the age of 66."

Defence Forces Pensions

Defence Forces Pensions Dáil Éireann Debate, Thursday - 9 November 2017

www.oireachtas.ie

I was onto my solicitor about it and his advice is to take legal action - discrimination.

I would just have a hesitation about the fees a solicitor would charge to pursue this. Would it be on a "no foal, no fee" basis?

 

[Early Riser]

All social welfare payments are less than the State pension are they not?

Yes they are. But in many situation the potential Supplementary payable will be less than this figure. Because you have 40 years of pensionable service your Supplementary should equal the amount of State Pension. For people with less than full pensionable service this will not be the case. Take the example referred to earlier of someone retiring on a pensionable salary of €80,000 but this time with just 30 years of service. Their Occupational Pension as a Class A would be €20,500. In this case the Supplemenary (when payable) would be €9,500 (ie €30k - €20.5K). The Supplementary amount is always calculated in relation to each individual and their circumstances.

So if this person was on Jobseekers they would have no entitlement to a Supplementary "top-up".

 

[hunter1]

Thanks for the links, they expose the anomaly and it's not the "supplementary" pension, it's the fact that people who retire as per the terms of their contract, prior to the state pension age are not and will not be in receipt of their full pension entitlement as per the terms of their contract.

This isn't a complex matter, which is what the links and other documents I have come across show.

It's a very simple matter.

As an employee who will have paid my full PRSI, paid all my pension contributions and worked the required service, on the day I retire I am entitled to my full pension.

I work with people every day who joined prior to 1995, we do the same job, we have the same pension entitlements.

They walk out the gate and get 50% of the final pensionable salary, they don't have to go through any of this nonsense, we shouldn't be penalised because we contributed more to our pensions through contributions and PRSI.

As to being hesitant about taking legal action, I would have no hesitation at all, when I spoke to my solicitor he said that he has a growing number of queries about this.

If my employer intends on making me sign on the dole and sign a declaration saying I am looking for work, the day after I retire, then I will be taking legal action, although looking at the information it seems that this issue has been well flagged, so I would imagine that the anomaly will be resolved before I retire.

Let them make their case to a Judge, let them explain to a Judge why, on my retirement, part of my "retirement" pension is a payment for "jobseekers benefit". This is my retirement pension.

Then they can make the case and explain why, on receipt of a supplementary pension to bring me up to my full pension, that they won't allow me to work, or else this supplementary pension, which is part of my "retirement" pension, will be taken from me.

Thanks for your posts, but I have to be honest with you, the more I read the more convinced I am, that there's a big problem, but it's a problem of their making, not mine and I have no intention of running around for my pension after I retire, when I have done exactly what was required of me to earn my pension.

 

[johnl68]

Appologies for hijacking this thread. I have a question that sort of involves the supplementary pension and AVC's. In another thread I mentioned that when I was sold avc's nobody explained that I would be entitled to a supplementary pension if I was to retire at 60( I'm post 95, pre 2004). However I'm still glad I've paid in as at 60 I will only have 27 years service.
My question is regarding an AMRF v ARF, I understood that I would have to place approximately €66k in an AMRF as my 27 years service would only entitle me to around €8k p.a. which is well short of the €12k+ p.a. that you must have in order to just have an ARF(my reading of it is that an AMRF is more restrictive). However the supplementary pension wil bump me over that requirement, so am I correct in thinking that I might not be tied to the AMRF?

 

[Early Riser]

My question is regarding an AMRF v ARF, I understood that I would have to place approximately €66k in an AMRF as my 27 years service would only entitle me to around €8k p.a. which is well short of the €12k+ p.a. that you must have in order to just have an ARF(my reading of it is that an AMRF is more restrictive). However the supplementary pension wil bump me over that requirement, so am I correct in thinking that I might not be tied to the AMRF?

I am not overly familiar with ARF V AMRF rules so this is my conjecture. Your Occ Pension of approx €8k would be considered guaranteed pension income for life. However, your Supplementary Pension probably wouldn't be as there are conditions attached to its payment (claiming Social Welfare and not working). It will be some time after you retire before you get it (assuming you do), with a seperate application process to your employer.

When you retire you will get a statement of your Occ Pension amount granted from your employer. It will not include the Supplementary. This statement is all you will have to show to your AVC provider re: guaranteed income.

In that case I suspect that Supplementary probably wouldn't satisfy the requirement for minimal guaranteed income:

"................to purchase an ARF you must also have approximately €12,700 per annum of guaranteed income for life, typically from a pension source. Individuals who do not have that level of income must place up to €63,500 in an Approved Minimum Retirement Fund (AMRF) before an ARF can be purchased."

PS. You might consider asking this about ARF V ARMF in a new thread. There are folks on the forum familiar with the rules who might not pick it up in this thread.

 

[johnl68]

I am not overly familiar with ARF V AMRF rules so this is my conjecture. Your Occ Pension of approx €8k would be considered guaranteed pension income for life. However, your Supplementary Pension probably wouldn't be as there are conditions attached to its payment (claiming Social Welfare and not working). It will be some time after you retire before you get it (assuming you do), with a seperate application process to your employer.

When you retire you will get a statement of your Occ Pension amount granted from your employer. It will not include the Supplementary. This statement is all you will have to show to your AVC provider re: guaranteed income.

In that case I suspect that Supplementary probably wouldn't satisfy the requirement for minimal guaranteed income:

"................to purchase an ARF you must also have approximately €12,700 per annum of guaranteed income for life, typically from a pension source. Individuals who do not have that level of income must place up to €63,500 in an Approved Minimum Retirement Fund (AMRF) before an ARF can be purchased."

PS. You might consider asking this about ARF V ARMF in a new thread. There are folks on the forum familiar with the rules who might not pick it up in this thread.

Thanks for that Early Riser.

 

[allaround]

just on the SP, when an A Prsi employee retires they exhaust jobseekers allowance for 9 months (€203), after this they return to their employer with a letter from DSEAP stating they do not qualify for a payment and get SP of €248.30 until attaining state pension age, just for those 9 months there is a difference of €45.30 does the employer provide this?

 

[Early Riser]

just on the SP, when an A Prsi employee retires they exhaust jobseekers allowance for 9 months (€203), after this they return to their employer with a letter from DSEAP stating they do not qualify for a payment and get SP of €248.30 until attaining state pension age, just for those 9 months there is a difference of €45.30 does the employer provide this?

Firstly, you should apply to your former employer (pension office) before any letter from DEASP. I suggest you do this some time before your JB expires. Some will have a specific application form that you will need to complete (eg, Dept of Ed), some will have a specific form that they will require you to get completed with the DEASP (the Dept of Ed have both). So you need to start the ball rolling coming up towards the end of the JB claim.

As regards the amount of Supplementary you will get, this is calculated seperately and may or may not equate to what you may get from DEASP. The Supplementary is the difference between your coordinated Occ. Pension (Class A PRSI) and what your pension would have been if it had been uncoordinated (as a Class D person, ie, 35/80 if you have 35 years service). This could be either more or less than the JB payment - but up to a maximum of the current rate of State Pension (currently €248.30).

However, if at retirement your Supplementary rate (as calculated above) is higher than the current rate of JB, you can apply immediately to your former employer for a Supplementary to make up the difference (ie, Calculated Supplementary minus JB rate). If you are in this situation you should apply immediately at retirement. The same forms will apply.

Complicated. Hope it makes some sense.

 

[allaround]

Firstly, you should apply to your former employer (pension office) before any letter from DEASP. I suggest you do this some time before your JB expires. Some will have a specific application form that you will need to complete (eg, Dept of Ed), some will have a specific form that they will require you to get completed with the DEASP (the Dept of Ed have both). So you need to start the ball rolling coming up towards the end of the JB claim.

As regards the amount of Supplementary you will get, this is calculated seperately and may or may not equate to what you may get from DEASP. The Supplementary is the difference between you coordinated (Class A PRSI) Occ. Pension and what your pension would have been if it had been uncoordinated (as a Class D person, ie, 35/80 if you have 35 years service). This could be either more or less than the JB payment - but up to a maximum of the current rate of State Pension (currently €248.30).

However, if at retirement your Supplementary rate (as calculated above) is higher than the current rate of JB, you can apply immediately to your former employer for a Supplementary to make up the difference (ie, Calculated Supplementary minus JB rate). If you are in this situation you should apply immediately at retirement. The same forms will apply.

Complicated. Hope it makes some sense.

Hi ER, i'm still a bit confused so the period prior to SP, those 9 months when individual claims JB, from my calculations using current rates there is a loss of €45.30?

 

[Early Riser]

Hi ER, i'm still a bit confused so the period prior to SP, those 9 months when individual claims JB, from my calculations using current rates there is a loss of €45.30?

There is a loss 45.30 if the calculation for the retiree's Supplementary Pension amounts to the same as the current state pension.

Take an example of Joe retiring at 65 with 40 years of service on a pensionable salary of €60,000. His Occupational Pension would amount to approx €17,100. If Joe had been on Class D and on an uncoordinated pension, his Occ Pension would have been €30,000. So in this case the calculation for Joe's Supplementary Pension is €30,000 - €17,100 =€12,900, ie, equating to the State Pension. But until Joe is 66 he will not get the State Pension - but he is getting JB. The difference is €45.30 per week. So during this period Joe is entitled to a Supplementary Pension of €45.30. He should apply to his former employer/pension office for this.

Now take Josephine. She is also retiring at 65 on a pensionable salary of €60,000. But she has only 30 years of service. As a Class A her Occupational Pension is about €13,000 pa. Had she been a Class D her uncoordinated Occ Pension would have been about €22,500 pa. So the calculation for her Supplementary Pension is €22,500 - €13,000 = €9,500, or €183 p/w. As Josephine's JB payment exceeds this amount she is not entitled to any Supplementary top-up from her former employer.

Whether or not you are entitled to a top-up Supplementary Pension during the period of JB payment depends on the calculation of the Supplementary Pension in your individual circumstances.. If the amount of JB in payment to you is less than the calculation for the Supplementary then you can apply for the difference. If you have full 40 years of service this will be €43.50. If you have a little less service then it will be a lesser amount. If, like Josephine, you have substantially less service then there will be no top-up due.

 

[hunter1]

Hi ER, i'm still a bit confused so the period prior to SP, those 9 months when individual claims JB, from my calculations using current rates there is a loss of €45.30?

The supplementary pension should be the rate of the state pension because that's what the pension is integrated with, even if you don't have full service, then the shortfall will be the rate of the state pension, I posted this link earlier.

Public servants escape new pension rules

Public servants are escaping new pension rules that delay the payment of the State pension.

www.independent.ie

"The Department of Public Expenditure has confirmed that the "supplementary" pension exits, that is basically a substitution for the State pension until public servants reach the State pension age of 66."

If you think back to before they increased the state pension, people retiring post 1995 were receiving the occupational part of their pensions from their employer and then claiming the State pension, both added together would give them their full pension entitlement. The pension scheme is integrated with the rate of the state pension, so logic dictates that because they increased the age from 65, meaning that PS workers forced to retire now didn't qualify for payment of the state pension, then that has to be the shortfall.

 

[dubman1]

Does anyone know the formula to calculate voluntary PRSI contributions that a person would want to make when jobseekers benefit ends and the Supplementary pension begins.?
Also if a civil servant retires before age 62 can jobseekers benefit be claimed at any Post Office as is convenient for the claimant or must it be at the local post office. ?

 

[Early Riser]

Does anyone know the formula to calculate voluntary PRSI contributions that a person would want to make when jobseekers benefit ends and the Supplementary pension begins.?
Also if a civil servant retires before age 62 can jobseekers benefit be claimed at any Post Office as is convenient for the claimant or must it be at the local post office. ?

ASAIK, The JB can be collected at any post office (you will need proof of identity). "Signing" is at your local DEASP office - usually once a month before 62.

Just to note that when JB runs out you should be offered the option of continuing to sign for Credits. The same conditions apply as for the JB claim itself. Credits count towards the State pension in the usual way.

Link to voluntary contributions here: https://www.gov.ie/en/publication/47cee2-operational-guidelines-prsi-prsi-voluntary-contributions/ The rate is linked to your last paid employment, not to your pension.

 

[Conan]

Important to remember that Jobseekers is available to Class A PRSI contributors. If you are a Civil Servant paying Class B or D (pre April 1995) you do not qualify for Jobseekers.

 

[dubman1]

ASAIK, The JB can be collected at any post office (you will need proof of identity). "Signing" is at your local DEASP office - usually once a month before 62.

Just to note that when JB runs out you should be offered the option of continuing to sign for Credits. The same conditions apply as for the JB claim itself. Credits count towards the State pension in the usual way.

Thanks Early Riser,
do you know if this offer to continue to sign for credits is allowable once you are receiving the Supplementary Pension?


Link to voluntary contributions here: https://www.gov.ie/en/publication/47cee2-operational-guidelines-prsi-prsi-voluntary-contributions/ The rate is linked to your last paid employment, not to your pension.

it appears from the above link 6.6% of income will be paid for class A PRSI meaning an annual payment of 2,640 euros will be required for a salary of 40K which seems excessive to me . Am I missing something here?