New Single Public Service Pension Scheme Presented by Samus ODwyer - - PowerPoint PPT Presentation

New Single Public Service Pension Scheme

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

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 PUBLIC SERVICE PENSIONS (SINGLE

SCHEME AND OTHER PROVISIONS) ACT 2012

 “Other Provisions”

• Current serving staff come within the scope of some of

these provisions

 Duty to give information (S.49)  Use of PPSN (S.50)  Duty to make declarations (S.51)

 Context  Drivers  Key Features  Scope

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 Pension Arrangements in General  Occupational Pension Schemes  Existing P.S. Pension Schemes

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PENSION ARRANGMENTS IN GENERAL

 Pillar 1.

S.W . Pensions

 Pillar 2.

Occupational Pension

 Directly linked to employment

 Pillar 3.

Personal, Voluntary Pensions

 AVC/PRSA

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Occupational Pension Schemes

• Defined Benefit (DB)
• Defined Contribution (DC)
• Hybrid

This is the trend in the private sector: A new recruit to a private sector scheme would not be offered membership of a D.B. Scheme. Many members of private sector DB schemes are being moved to DC. Many DB schemes cannot meet their DB promise. Some DB scheme funds have been wound up.

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EXISTING P . S SCHEMES



Defined Benefit



Final Salary



Integrated with S.W . Pension



Pension Increases based on Pay (up to now!)



Contributory



Hundreds of Schemes with (Slightly) Varying Terms

NEW SCHEME



Defined Benefit



Career Average



Integrated with S.W . Pension



C.P.I. Pension Increases



Contributory



One Scheme (Except…)

 Cost:  In 1997 Accrued Liability

est. €25 Billion

• Most recent estimate

€100 Billion

 Equity  Part of P.S. Pension Reform (Green Paper,

Government Programme)

 Uniform Terms (Single Scheme) Across all Public

Service Bodies (with some exceptions)

 Terms set out in Primary Legislation

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 Defined Benefit  Career Average  Integrated with S.W

.

 C.P.I. Uprating of accrued pension credit and

Pension Increases

 Minimum Pension Age 68 if under 55

• Increase in line with S.W

. Pension Age

 Maximum Retirement Age of 70

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 On commencement on 1 January 2013, Scheme

applied to all Public Service Bodies

• Excluded Bodies (Commercial) listed in schedule to Act.

 Applies to all staff except:

• Staff Serving in pensionable post on commencement date
• r on secondment /leave of absence with right to return
• Recruited after 1 Jan 2013 but written offer of appointment

to pensionable post prior to 1 Jan 2013

• Pensionable staff returning on same contract of

employment *

• Pensionable staff returning to Public Service within 26

weeks* * These conditions may be terminated by Ministerial Order

 The Calculation  Integration in the Scheme  Practical examples and Impact on Pension Benefits  Contributions from Scheme Members  Contributions v Benefits debate  Additional Features of the New Scheme

Prin incip iple les s of Career r Average ge Pensio sion n Sc Scheme

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Reflecting the career average principle:

 Accrual (pension credit) no longer calculated in

terms of service but in terms of:

 “Referable Amounts”

• This is the pension credit a member earns in a calendar
• year. It is expressed as a money amount and is uprated each

year to pension age by C.P.I.

• There is a separate Pension and Lump Sum referable

amount calculation

Referable Amounts:

 For Annual Pension

• 0.58% of pensionable pay and allowances which are less

than 3.74 x contributory state pension (CSP) – about €45,000

• 1.25% of pensionable pay and allowances greater than

3.74 x CSP

 For Lump Sum

• 3.75% of pensionable pay and allowances

 Referable amounts are ‘banked’ for each year  What is a year?

• A year is the Tax Year

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 Pension at retirement is the sum of the career

“pension referable amounts” increased by CPI during career

 Lump Sum is the sum of the career “lump sum

referable amounts” increased by CPI during career

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 The Pension Calculation (0.58% + 1.25%) reflects

integration of pension with CSP but includes a tapering element to favour the lower paid.

 Pro-Rata applies for work-sharing. This will impact

• n how referable amounts are “tracked” by

employers

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A “referable amount” is calculated during each Tax Year for each member for Pension and Lump Sum . CPI is added at the end of year 2 and up to the beginning of the final year

• f service.

The Examples in the next 2 slides show how Pension and Lump Sum accrue independently

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**In addition State Pension (Contributory) is also payable

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 3.5% of net pensionable remuneration  3% of pensionable remuneration

Note: “net pensionable remuneration” is pensionable remuneration minus twice the single rate of Contributory State Pension.

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The Contrib ibuti utions

• ns v Benef

nefits its debate ate

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 Vesting Period  Minimum Pension age  Maximum Retirement Age  Pensionable Allowances  Ill- health retirement - added years?  Preserved Benefits

• Ill-health
• death

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 Death in service  Cost Neutral Early Retirement  Simultaneous employments  Transfer Values  Re-employment having received a refund of contributions

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 Purchase of Referable amounts?

 Survivor’s Pension  Children’s 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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Provis ision ion for Revie iew w of the Sc Scheme me

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Obligations on Employers in the Act

 Single Scheme

• Calculation of referable amounts and contributions in

each pay period

• Statement to each scheme member within 6 months of

end of tax year or on leaving service:

 Total contributions paid in that tax year  Referable amounts accrued in that tax year  Cumulative amount of Pension Credit (Uprated)

• Accounting for Contributions

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Sc Scheme e Bookle let

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 Defined Benefit  Allowances  CPI  No 40 year cap  Mobility  Scheme is in Primary Legislation

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

Superannuation Advice



Non Union affiliated



Independent Advice on:

• Income Protection
• Additional Death in Service Cover
• Investments



Transfer of UK Pensions

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Regulated by the Central Bank Reg. No. C134810

 Rockcourt Financial Services Ltd, 6-9 Trinity Street, Dublin 2.  Rockcourt Financial Services Ltd, Main street, Glenamaddy, via

Castlerea, Co. Galway.

 Tel: 01-2091955 / 094-9638533  Email: info@rockcourt.ie

Rockcourt Financial Services Ltd, trading as Rockcourt, is regulated by the Central Bank of Ireland C134810 .

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 The University is pleased to facilitate this

presentation but it does not endorse Rockcourt or 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

• f payment.

 Rockcourt Financial Services Ltd is regulated by the

Central Bank ref. C134810

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