CLASS ASS A P A PRSI RSI Presented by Samus ODwyer in association - - PowerPoint PPT Presentation

UNIVER IVERSI SITY TY OF OF LI LIME MERICK RICK Sup uperann rannuation uation Sche heme me CLASS ASS A P A PRSI RSI

Presented by Séamus O’Dwyer in association with Liam Mannion, Rockcourt Financial Services Ltd

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 To provide adequate replacement income in

retirement

 To provide benefits to certain Survivors on Death of

the Member during service or in retirement

 To provide a Scheme which is stable and capable of

meeting its liabilities

e.g. not to pay benefits before a specified age

 To have definite rules stating the basis on which

benefits are paid

e.g. Age, Salary, Service, Contributions, Investment Returns

1.

LINKED TO EMPLOYMENT (Occupational Pension Schemes)

• Defined Benefit Scheme
• Defined Contribution Scheme

2.

Private Pension Plan or Top-up to Occupational Pension. e.g. PRSA or AVC

Not sponsored by the employer

3.

Social Welfare Pension (CSP)

 Linked directly to employment

• Membership is compulsory for eligible staff
• Accrual of benefits stops when you leave but

possibility to transfer within Public Sector

 Defined Benefit

• A set of Rules
• You can calculate the pension for an individual if

you have certain facts and know the rules

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Main Features Occupational Scheme Defined Benefit

 Benefits for the Member (Personal Benefits)  Benefits for Survivors (If also a member for Survivor

Benefits)

Contributions No Pension Fund – Pay As You Go

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 University of Limerick Superannuation

Scheme

 Legi

gislat slation: ion: a new Statutory Instrument (S.I. 582 of 2014): Rules for Pre-existing Public Service Pensions Scheme Members Regulations 2014* - updates the current scheme provisions, subject to certain modifications *www.irishstatutebook.ie

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 Pension Contributions  The main components and how a pension is calculated  Minimum Pension Age and Max. Retirement Age  Preserved Benefits and Cost Neutral Early Retirement  Retirement on Medical Grounds  Supplementary Pensions  Death in Service  Survivor’s & Children’s Scheme  Marriage Breakdown and Pension  FEMPI Acts– Impact on pension - recent changes  New Legislation – will it affect me?  Transferred Service  Adding to Service - Purchase of Notional Service and

AVCs

 U.K Pensions

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 Class A PRSI members pay 1.5% of gross

pensionable salary and 3.5% of Net pensionable salary* for personal pension benefits

• In addition there are contributions for Survivor’s

and Children’s Benefits

* Pensionable Salary less 2 X Contributory State Pension rate

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 There are pro-rata contributions for part-

time staff or worksharers:

A x B/C where: A = the contributions payable by an equivalent whole time member B = the number of hours (excluding overtime) worked by the member C = the standard number of hours worked in the equivalent whole time post

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Examining the Key Elements in more detail………

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 Have reached the Vesting Period?  Member of which Scheme or Scheme

Category?

 Service Reckonable for Pension?  Pensionable Salary?  PRSI Class?  Accrual Rate (formula to use)?  Minimum Pension Age?  Maximum Retirement Age?

 This is the qualifying period to have a

pension paid to you

 It is currently 2 years’ as an active Scheme

Member

 Death in Service benefits do not have a

Vesting Period condition

 Class A members* recruited after 5 April

1995

 All appointees to a pensionable post.

* There are separate presentations for Class D PRSI members and

members of the Single Public Service pension Scheme

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1.

Actual Service following admission to the Scheme

2. Service transferred from another Public Sector Pension Scheme via the Transfer Networks 3. ‘Notional’ Added years for

 Death in Service  Ill-health retirement  Professional Added Years

4. ‘Buy-Back’ of earlier service, subject to conditions and where appropriate contributions have been paid

5. Service purchased under the purchase of service scheme 6. Service credited from a Transfer Value payment from outside the Transfer Network

• 7. Sick Pay at full and half pay is credited as full

time service for whole-time Members Note: (1) unpaid leave is not pensionable (2) Temporary Rehabilitation Remuneration is not pensionable (3) maximum pensionable service is 40 years

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

Have reached the Vesting Period? √



Member of which Scheme? √



Service Reckonable for Pension? √



Pensionable Salary?



PRSI Class?



Accrual Rate (formula to use)?



Minimum Pension Age?



Maximum Retirement Age?

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Some Pay may not be pensionable…………

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

Pensionable Salary excludes:

• overtime
• special fees or bonus
• travel and subsistence

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 Averaging applies where the member

changed grade or salary scale in the final 3 years

• Except where -

 the member died before age 62 or  the member retired on ill-health grounds more than 3 years before age 60

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 The calculation:

• The number of days in the former grade divided by

1095 multiplied by the salary of the former grade at retirement taking into account any increment which would have been if member remained in former grade plus….

• The number of days in the current grade divided by

1095 multiplied by salary held at retirement

example

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

Have reached the Vesting Period? √



Member of which Scheme? √



Service Reckonable for Pension? √



Pensionable Salary? √



PRSI Class?



Accrual Rate (formula to use)?



Minimum Pension Age?



Maximum Retirement Age?

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

Class D (Modified) PRSI or



Class A (full) PRSI Key date: 5th April 1995 You must know this when calculating your pension as it will dictate which accrual rate formula you use in calculating the pension - see

next slide

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 This is the rate of pension credit (or lump

sum credit) a member gets for each year of

• service. It is expressed as a fraction which is

applied to the pensionable salary

 Class A PRSI:

• It is 1/200th

th or 1/80th th for

for pension sion; and 3/ 3/80 80th

th for Lump

mp Sum

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Staff ff appoin inted ted on or aft fter 6 April l 1995 Formula for Pension Calculation:

For Pensionable Salary up to €40,578*: Salary( lary(A)*S A)*Service/20 ervice/200 0 = = X Plus for all Pensionable Salary above €40,578 (if any) Salary( lary(B)*S B)*Service/80 ervice/80 = Y Y Pension is X + Y

* €40,578.64 is the current Maximum Single State Pension (Contributory) Rate X 3.3333 (changed in Jan 2016)

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Post-1995 and Class A PRSI.. Accrual Rate 1/200th and 1/80th John is retiring age 65 with retiring salary of €80,000 and no pensionable allowances. He has 40 years pensionable service. Annua ual l Pension

• n

€40,578.64* x 40/200 = €8,115.73 €39,421.36 x 40/80 = €19,710.68 State Pension = €12,173.59 TOTAL = €40,000 *This figure is 3.3333 times the rate of Contributory State

Pension

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At 40 Y Years rs Pe Pensi nsionable

• nable Servic

vice e For a Class A Member and a Class D Member with the same final salary the Pension is the same but only at 40 years service…………

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Class D Annual Pension €70,000*20/80 = €17,500 Lump Sum €70,000*3/80*3 €52,500 Class A Annual Pension €40,578.64*20/200 = €4,057.86 €29,421.36*20/80 = €7,355.34 Plus State Pension €12,173.59 TOTAL €23,586.79 Lump Sum €70,000*3/80*20 €52,500

 Lump Sum Accrual rate is 3/80th

Alice is age 60 and retiring with Retiring Salary

• f €80,000 and no pensionable allowances. Her

Pensionable Service is 20 years Retirement rement Lump mp Sum €80,000 x 20 x 3/80 = €60,000 This is the same accrual rate and the same calculation regardless of PRSI Class

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

Have reached the Vesting Period? √



Member of which Scheme? √



Service Reckonable for Pension? √



Pensionable Salary? √



PRSI Class? √



Accrual Rate (formula to use)? √



Minimum Pension Age?



Maximum Retirement Age?

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 This is the earliest age at which you may retire

and receive an immediate lump sum and pension without actuarial reduction (except Ill-health)

 Age 60 for those who commenced service before

1 April 2004

 Age 65 for “New Entrants” as defined in the Public

Service Superannuation (Misc. Provisions) Act

• 2004. Includes all recruits from that date unless

they had been in the Public Sector within the last 6 months and were not “new entrants” in that earlier post

 For members of the New Single Scheme it is the same as the

Social Welfare pension age – now 68 for most new recruits

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 For those who are not “new entrants” or

members of the New Single Scheme, 30 30th

th

Sept ptember ember after r reachi aching ng 65 65 is the comp mpulsory ulsory ret etiremen irement age ge

 For “new entrants” (2004 Act) there is no

• compul
• mpulsory

sory retireme rement age

 For members of the New Single Scheme 70 is the com

• mpulso

pulsory y retireme rement age

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

Have reached the Vesting Period? √



Member of which Scheme? √



Service Reckonable for Pension? √



Pensionable Salary? √



PRSI Class? √



Accrual Rate (formula to use)? √



Minimum Pension Age? √



Maximum Retirement Age? √

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 Where a member resigns before minimum pension

age, pension and lump sum benefits are Preserved

 Must have completed the vesting period  If the member has not completed the vesting period,

the member gets a refund of contributions unless he

• r she is transferring the service

 Member has the option of applying for Cost Neutral

Early Retirement if within 10 years of min. pension age

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 This allows a member who is resigning and who has

completed the vesting period and who is within 10 years of the minimum pension age to apply for an immediate lump sum and pension instead of Preserved Benefits.

 The benefits will be actuarially reduced to reflect the

early draw-down. The pension will be subject to the reduction because it will now be paid over a longer period

 Must be applied for before resignation, otherwise the

benefits are preserved

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If Minimum Pension Age is 60

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 If Minimum Pension Age is 65

Formula: [A + ((B/365) x (C-A))] x Preserved Benefit

Where

A = Actuarial reduction in the table based on age last birthday B = No of days since last birthday C = Actuarial reduction factor based on age next birthday

If approved: with more than 5 years actual pensionable service:

1.

Pension is payable immediately and

2.

Added years may be awarded If vesting period completed, but less than 5 years actual service, immediate pension but no added years

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Added years calculation: Service between 5 and 10 years: The service is doubled but capped at potential service to age 65 Service between 10 and 20 years: Service is topped up to the better of a total of 20 years (capped at potential to age 65) or

• r 6 and 2/3rds years (capped

at potential to age 60) Service above 20 years: 6 and 2/3rds years added, capped at potential to age 60.

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 When Payable

• To whom?
• In what circumstances?

 How is it calculated?  How is it Reviewed?

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 Death

th Gratuity tuity payable when a member dies in service

• the more favourable of:

 One year’s actual salary  Lump sum payable as if member had retired due to ill health (including added years, if applicable)

 Spouses and Children’s* Pension

(with additional notional service) *incl. Civil Partner

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 Impact of Finance Circular 11/2012 on:

• Death in Service Benefits
• Benefits on retirement on medical grounds

 Where the member is working at less than

wholetime hours

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The Scheme originally covered Spouses* and Children but now covers a Civil Partner in a

Civil Partnership recognised under the 2010 Civil Partnership Act. * Includes same sex marriages under the Marriage

Act 2015, following the Referendum

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 The S&Cs scheme applies to all male

members of the Scheme from1 January 1980 and from 1 September 1984 for female members

 Membership is now compulsory for all

members recruited who are members of the Superannuation Scheme

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 The Spouse is the legal spouse as recognised in

the Irish State.

 The legal status of the spouse is not affected by:

• A Church annulment
• A legal or a judicial separation under the 1995 Family

Law Act.

 Since the enactment of the 2010 Civil Partnership

Act where the word “widow” or “spouse” is used in the scheme it also includes a “Civil Partner”

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 A Person under 16 or under 22 if in full time

education or training and

• is unmarried and
• is dependent on the Member.

There is no age limit if a person has a permanent disability and the disability occurred before age 16, or 22 if in full-time education or training.

 Calculate “the deceased’s” pension

The Spouse’s Pension is one-half of the “deceased’s pension

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John dies in service at age 40 with pensionable salary of €60,000 and 20 years service:

• the spouse’s pension is one-half of

(€60,000-€12,174)*40/80 = €11,957. The service for the spouse’s pension is increased to the member’s potential service to age 65 because the member died in service.

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Calculate “the deceased pension” Spouse If 1 Child: 1/6th of “deceased’s pension” If 2 Children: 1/3rd of “deceased’s pension” If 3 or more Children: ½ of the “deceased’s pension” divided equally among the children No Spouse: If 1 Child: 1/3rd of “deceased’s pension” If 2 or 2+ Children ½ of “deceased’s pension” divided equally among the children

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 Deducted from salary  Class A PRSI:

 1.5% of pensionable salary

 Periodic contribution continue beyond 40

years but excess is refunded beginning with the earliest

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 Where all periodic contributions have not

been paid e.g. for pre-scheme service, a member has option of paying additional periodic contributions in multiples of 1.5% to clear the arrears or part of the arrears.

• e.g. I had 2 years pensionable service in another
• rganisation before I joined UL. I can clear the

arrears by paying an addition 1.5% deducted by payroll for a period of 2 years

Alternatively…………………………..

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 Deduction from retirement Lump Sum ((or Death

Gratuity) @ 1% of pensionable salary

 Payable only if the Member was married (or in a

Civil Partnership) during Scheme membership

 Payable in respect of periods of service for which

contribution have not been paid (e.g. pre-scheme service)

 Payable also in respect of potential service to age

65 (capped at 40) in cases of ill-health retirement or death in service

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 Public Sector Transfer Network

• Service may be transferred from a Body which is a

member of the Network to another member Body.

• Usually on a ‘knock-for knock’ basis but may be
• n the basis of transfer value or “16c”
• Service is transferred but the terms of the

receiving scheme apply

• Outstanding contributions plus interest on the

service being transferred must be paid for

• The preserved service in the former scheme is

cancelled

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 A member may add to their pension by:

• Purchasing additional years in the scheme within

certain limits – this is part of the superannuation scheme

• Buying back earlier service where pension

contributions had not been paid

• Making Additional Voluntary Contributions (AVCs) –

this is not part of the superannuation scheme

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 Limits on Purchase (Revenue Rules)  Cannot purchase to be over-pensioned (40yrs)  May purchase by a single lump sum payment or

by periodic deductions from salary

 May purchase by reference to age 60* or 65  Purchase Tables have the rates. Different rates

for purchase to 60 and 65, whether a member of S&Cs Scheme and whether Class A or Class D PRSI

 *2004 New Entrants may purchase to 65 only

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 Reductions in the amount purchased if:

• Leaving earlier than the target date
• Taking periods of unpaid leave
• Taking Pension before the target date

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 It is the only way you can guarantee actual

added years in pension and lump sum

 Rules can be rigid. You may have to set up

multiple contracts if taking breaks in service

 Can be “winners” and losers” – Cross-subsidy.  Cannot buy lump sum only, separate from

pension

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 Church annulment  State Decree of Nullity  Divorce abroad  Marriage abroad  Legal Separation  Judicial Separation - 1995 Family Law Act  Divorce - 1996 Family Law (Divorce) Act  Civil Partnership Act 2010

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 A member’s Pension, Lump Sum and Death in

Service entitlements along with an actuarial valuation of the pension entitlement may be used by the Courts to make a Pension Adjustment Order for the spouse or dependants

 A PAO can be made against the Death

Gratuity, Retirement Lump Sum, Member’s Pension or Spouse’s Pension

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 PAOs – made by a Court under the Family Law

Acts

 These bind the Scheme to pay to the non-

member spouse a specified part of the pension which would normally be paid to the member or the member’s current spouse

 Can be varied in some circumstances  PAOs override the Scheme rules

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 Shifting sands

• Pay restoration
• PRD (Pension Levy) reductions
• PSPR (Pension reductions being restored)

 Thinking of retiring?

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Origi gina nal l Reduct ctions ions fo for Retiremen ent t between n 1 July y 2013 and wi within n the Gr Grace Period*

 Pension

• n Cut only for those on pension above

€32,500:

 Up to €12K

• exempt

 €12K - €24K

• 2%

 €24K - €60K

• 3%

 €60K - €100K- 5%  €100K+

• 8%

Lump mp Sum m not affected. *Rates amended by the 2015 FEMPI Act – see next slides

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 Grace Period Extended to 1 April 2019  Restoration of PSPR (Pension Cuts)  The next table covers pensions which come

• nto payment anytime after 29 February

2012 but only where the pension is over €32.5K

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PSPR on pensions (retired after March 2012) above €32,500

2015 2016 2017 2018

Band Rate Band Rate Band Rate Band Rate Up to €12K 0% Up to €29.3K 0% Up to €39K 0% Up to €60K 0% €12K — €24K 2% €24K — €60K 3% €29.3K — €60K 3% €39K — €60K 2% 2% €60K — €100K 5% €60K — €100K 5% €60K — €100K 5% €60K — €100K 5% €100K + 8% €100K + 8% €100K + 8% €100K + 8%

 Internal Disputes Resolution Procedures  Refer to the Pensions Department in the first

instance

 Further steps if not resolved:

• Appeal to the Minister for Education & Skills (and

Minister for Public Expenditure and Reform)

66

 Pensions Ombudsman – Procedures and time

limits

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 2012 Act Requirements  Pension Act Requirements  Data Protection  Family Law Information Requirements

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 Added to service where the essential

educational qualification or experience required for the post could not be gained before age 25. Subject to rules set out in Circulars and in the entry competition.

 Professional Added Years plus Notional Ill-

health Service cannot exceed 10 years

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 CPI Pension increases (Subject to Ministerial

• rder) (S.47)

 Abatement across the Public Service (S.52)  Cap of 40 years’ service across P.S.

Schemes(S.52)

 Duty to give information (S.49)  Use of PPSN (S.50)  Duty to make declarations (S.51)  One Survivors’ Pension(S.54)

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[Section 52, subsections (1) to (5), of the Public Service Pensions (Single Scheme and Other Provisions) Act 2012]

• Key innovation in 2012 law: risk of pension abatement

where pensioner returns to any publi lic ser ervice ice job

• For any new hire:

(1) Determine in principle if pension abatement could apply

• Pensioner must be “appointed to a [remunerated] position”
• … on or after 1 November 2012

(2) Then calculate by how much the pension is abated

• Range of outcomes: zero to 100% of pension abated
• Calculation basis unchanged in 2012 law, so …
• 3 parameters: pension (€), new salary (€), old salary

(updated) (€)

• Abate pension to the extent that [Pension + new salary] >
• ld salary

Have you ever worked in the UK? You may have a pension entitlement there. What are your options?



Superannuation Advice



Non Union affiliated



Independent Advice on:

• Income Protection
• Additional Death in Service Cover
• Investments



Transfer of UK Pensions

73

Regulated by the Central Bank Reg. No. C134810

74

Roc

• ckco

kcourt Finan inancial ial Services vices Ltd, 6-9 9 Trinity inity Street eet, , Dubli blin 2. Roc

• ckco

kcourt Finan inancial ial Services vices Ltd, Main in street et, , Glena enama madd ddy, , vi via Castl tlerea erea, , Co. . Galway. lway. Tel: l: 01-209 2091955 55 / 094 94-9638 638533 3 Email: mail: info fo@r @rockcour

• ckcourt.ie

.ie

Rockco court urt Financ ncia ial l Service vices s Ltd, d, tradi ading ng as Rockcourt urt, is regulat lated by the Central ral Bank of Ireland land C134810 10 .

 The College is pleased to facilitate this

presentation but it does not endorse Rockcourt

• r any Financial Services Company.

 This Presentation is intended as a guide only. It is

not a legal interpretation of the Scheme. Benefits will only be payable on the basis on the rules, relevant legislation and circulars in force at the time of payment

 Rockcourt Financial Services Ltd is regulated by

the Central Bank ref. C134810

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