Teaching pension short service

Samsung

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Hi

I wonder if anyone could give me some ballpark figures on possible pension outcome please.

Age 55 now. Started on temp contract with ETB in 2002 till 2012 (equivalent of 7.5 years fulltime service). Had 17 years class A prsi contribution record from 1985 to 2002.

In 2012 got CID (contract of indefinite duration). Currently buying back 7.5 years of temporary contract service & plan to retire age 65. Would love to go at 60 but don't think I can?

By 2028 (year of retirement) by my reckoning I will have 23.5 years service, including my 7.5 years buyback. My retirement salary (based on current scale) should be 65000.

I have tried to use pension model to work out my pension but without success. Could anyone give me some idea of figures please. I have a meeting set up with Cornmarket in a couple of weeks to discuss AVC versus buying back NSP years at full price but would like to have my homework done beforehand & questions ready to ask.

Many thanks in advance.
 
By 2028 (year of retirement) by my reckoning I will have 23.5 years service, including my 7.5 years buyback. My retirement salary (based on current scale) should be 65000.

I take it you joined the Pension Scheme in 2012 - that is before the Single Scheme started and that you are in the post 2004 scheme? Based on this, I reckon that with 23.5 years service and a final salary of about €65,000 you would qualify for an Occupational Pension of about €11,600. In addition, there would be the State Pension at whatever level your PRSI record and the rules at that time would qualify you for - given that you have several years paying PRSI prior to your teaching service you may be at or near full state pension level.
 
From the civil service pension modeller:

If you retire at age 65 you would receive a once off tax-free retirement gratuity of €57,245, less the deduction of any outstanding contributions. You would also receive a pension of €11,628. Your pension would be paid in arrears on a fortnightly basis. Based on your Class A Social Welfare status, you may also be entitled to a Social Welfare contributory Old Age Pension from age 66, currently €12,695.39 per annum. If through no fault of your own you fail to qualify for a Social Welfare benefit, you may be entitled to a supplementary pension.


If you have PRSI contributions from 1985 to 2028 you would almost certainly be entitled to a full pension. However remember state pension entitlement only starts at age 67 from 2021 and 68 from 2028.
 
If you are retiring at 65 you can apply for a Supplementary Pension for the period between then and the State Contributory pension age. It would amount to the difference between the Occupational pension you are awarded (estimate €11,600) and €65,000 * 23.5/80 (€19,093) - that is, about €7490.

The Supplementary would not be payable before 65 in your case, and you have to meet certain conditions. Details here :

https://www.education.ie/en/Educati...ns/Supplementary-Pension-Explanatory-Note.pdf
 
Yes I joined the pension scheme just before the single pension scheme started and I am in the post 2004 scheme. So if I am understanding this correctly, from age 65 to 68 I should receive 11,600 from the occupational scheme AND 7490 as a supplementary, then 11,600 AND the full contributory state pension from age 68 (I will have over 40 years Class A prsi contributions by then).

Many thanks to both of you for replying, I now have to figure out if I am better off to go with AVCs until 2028 or buy notional service. I can pay 320 gross per month into either for the next 3 years and 500 per month for the final 6.5 years.
 
Yes, you get your Occupational Pension from 65 and in adddition the State Pension from 68. Given what we understand about the new PRSI qualifying conditions for the State Pension, due in 2020/21, you should qualify for a full rate pension if you have 40+ years at Class A. And you should qualify for a Supplementary between 65 and 68 if you meet the conditions outlined. You will have to apply seperately for this and show that you meet the conditions.

I now have to figure out if I am better off to go with AVCs until 2028 or buy notional service. I can pay 320 gross per month into either for the next 3 years and 500 per month for the final 6.5 years.

Both have their pros and cons. Consider what you want to achieve. You can use the proceeds of an AVC to top up your tax free lump sum to the max allowed (1.5 * Final Salary) and put the rest into an ARF to be drawn down at a rate you choose (until the funds run out).Of course, there are the charges to consider.

With the notional years you do not have flexibility but you have a guarantee of the benefits. Part of your contribution will go towards the Survivor's Benefit part of the scheme - you do not have any flexibility as regards this. Also, I don't think you can vary the monthly rate you pay into notional years, in the manner you suggest.

There is some reading as to the pros and cons of each here :

[broken link removed]
 
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Thank you, I have much a clearer understanding of where I am now.

One final question, which you may be able to help with. I joined the pension scheme in 2012 when I got my CID. However I commenced employment with the ETB in 2002 on temporary contracts and am currently purchasing back 7.5 years of service given between 2002 and 2012. I have assumed I would be treated for pension purposes as post 2004 new entrant rather than pre 2004 .. is that correct? Once again thanks in advance, your plain English explanations are just what I needed!
 
Like you, I assume that if you joined the pension scheme in 2012 then all your pensionable service, including the buy- back years, will be in the post 2004 scheme. The same applies if you purchase notional years.

On a related note, I assume that you are taking into account the cost of the buy-back years when you are calculating how much you will be able to put towards NSP/AVCs (tax deductible)?

Just to clarify, in my last post I should have said that you can use the AVC fund towards maximizing your tax-free lump sum (now edited to this effect).

Best of luck with it!
 
I joined the pension scheme in 2012 when I got my CID. However I commenced employment with the ETB in 2002 on temporary contracts ... I have assumed I would be treated for pension purposes as post 2004 new entrant rather than pre 2004 .. is that correct? Once again thanks in advance, your plain English explanations are just what I needed!

Like you, I assume that if you joined the pension scheme in 2012 then all your pensionable service, including the buy- back years, will be in the post 2004 scheme. The same applies if you purchase notional years.

Sorry to re-open this if it's not of interest, but I think this is a critical question for a lot of people, including myself.

I also started employment pre-2004 but was not admitted to the pension scheme until post-2004. I can see from my HR calculations that my pension is reckoned on the considerably less favourable post-2004 basis. Is there not an implication in allowing buy-back based on service before 2004 that we should also be in the pre-2004 category?

Like many pension matters, it seems this is a rather arcane point and we are at the mercy of the employer in how it is interpreted. Is there any way to get specialist, non-AVC sales pitch advice on this?
 
Like many pension matters, it seems this is a rather arcane point and we are at the mercy of the employer in how it is interpreted. Is there any way to get specialist, non-AVC sales pitch advice on this?

Have you tried your union? I doubt it is that rare an issue - but an important one.

I also started employment pre-2004 but was not admitted to the pension scheme until post-2004.

Any reason that you are aware of that you may not have been admitted to the pension pre -2004 ?


Here is the relevant section from The Superannuation Handbook :


3.3 Definition of “New Entrant” in the Act – reference Section 2 of the Act

The term “new entrant” is defined in detail in Section 2 of the Act. In general, a person who is appointed as a public servant, as defined in the Act, on or after 1 April 2004 is a new entrant. There are, however, some exceptions. For example,

- staff on paid or unpaid leave or on secondment from public service bodies on31 March 2004 will not be regarded as new entrants on their return;

- a person who received a written offer of employment prior to 1 April 2004but had not taken up duty by that date will not be regarded as a new entrant on accepting that appointment;

- persons training in the Garda College who were admitted to training prior to1 April 2004 will not be regarded as new entrants on completion of theirtraining;

- staff who were employed in a temporary or seasonal capacity prior to 1 April2004 will not be regarded as new entrants if they resume duty in the public service within the same contract of employment.

Provision has also been made that any public servant who was serving on 31 March 2004 and who leaves employment but subsequently returns, within a period of 26 weeks, to a public service job, will not be regarded as a new entrant. To facilitate mobility, there are also provisions regarding staff who transfer within the public service.
 
Thanks so much for this. It's really useful.

Any reason that you are aware of that you may not have been admitted to the pension pre -2004 ?
I don't see one, other than my employer has decided that's how it is. Perhaps it's general policy, as it would minimise obligations?

I think there might be a discussion here...
- staff who were employed in a temporary or seasonal capacity prior to 1 April2004 will not be regarded as new entrants if they resume duty in the public service within the same contract of employment.
. My post-2004 CID contract is broadly similar -- and in the same department -- but it brought together multiple previous contracts under one. Perhaps that's it, but I would dispute the reasoning there.
 
Hi,
(I have posted this on another thread also, but it may also have some relevance here)

I’m looking into my pension arrangements at the moment and have quite a few questions which I would like to get clarity on.


My situation is

Teacher, 41, pre-2004 entrant (an ‘old entrant’).

Began teaching at age 23, with two career breaks since (career breaks are not a break-in-service, so I remain on the ‘old’ pension scheme)

Purchased AVCs from/through Cornmarket from 2004-2008; not sure why I stopped, but I do recall there was somewhat of an anti-Cornmarket feeling at the time, perhaps I was influenced by this.

I began purchasing Notional Service from the Dept. of Education about 5 years ago. This will make up my shortfall in years, bringing me up to 35 years service.

Unmarried, no children and no plans to change this situation.


Some of my questions are;

1) I am 41, so I can contribute 25% of my gross salary to a pension and get tax relief on it. This tax relief will be at my marginal rate, i.e. 40%. This is, in general, very tax-efficient so I would like to do it. Is all this correct?

2) At the moment, I am contributing

‘Dept. Of Education’ Pension 6%

Spouse and Child Pension 1.5%

Notional % Contribution, I am not sure of (For ease of use, let’s say 2.5%)

So, 6% + 1.5% + 2.5% = 10%.

Therefore, am I ‘wasting’ 15% of my tax-relief allowance? (Allowable tax-relief 25% - Claimed tax-relief 10% = 15%)

If I am ‘wasting’ it (perhaps ‘not utilising it to its maximum’ would be a better phrase), is there anything I could/possibly should be doing in order to better make us of the tax-relief?

3) With this in mind, can I resume my Cornmarket AVC payments? Or transfer that AVC money to another AVC PRSA with another Revenue approved provider of my own choice? Or just allow the Cornmarket AVC to ‘sit’ and open another AVC PRSA with another Revenue approved provider?

4) If I resumed my Cornmarket AVC payments, can I over-contribute to my pension (get tax-relief now, but suffer on drawdown/in retirement)? Is there a tipping-point at which I should not put money into an AVC?

5) My ideal would be; Continue purchasing Notional Service . Max out my tax-relief allowance (25% of gross) through an AVC PRSA of my own choice. Retire and have my ‘Dept’ pension, a big lump sum (with the AVCs having built it). If the lump sum was over 200k, could I put the excess in an ARF and would this shield it from marginal rate/punitive tax? Could I get the AVC money as a drip feed on top of my reglular Dept. pension? I am inclined to think this must not be possible, Revenue are hardly that generous ...

6) I never though about it until now, but does holding the Cornmarket AVC (currently c. 8K) and purchasing notional at the same time put me in breach of anything?

I have a few more questions, but I’ll try to get clear on the above first.

Any help/insights/experiences would be appreciated
 
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