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 1
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
LINKED TO EMPLOYMENT (Occupational 1. Pension Schemes) Defined Benefit Scheme ◦ Defined Contribution Scheme ◦ Private Pension Plan or Top-up to 2. Occupational Pension. e.g. PRSA or AVC Not sponsored by the employer Social Welfare Pension (CSP) 3.
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 4
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 5
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 6
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 7
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 8
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 9
Examining the Key Elements in more detail……… 10
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 13
Actual Service following admission to the 1. 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 16
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? 17
Some Pay may not be pensionable………… 18
Pensionable Salary excludes: - overtime - special fees or bonus - travel and subsistence 19
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 20
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 21
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? 22
Class D (Modified) PRSI or Class A (full) PRSI Key date: 5 th 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 23
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: th or 1/80 th th for ◦ It is 1/200 th for pension sion; and th for Lump 3/ 3/80 80 th mp Sum 24
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) 25
Post-1995 and Class A PRSI.. Accrual Rate 1/200 th and 1/80 th 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 on € 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 26
At 40 Y Years rs Pe Pensi nsionable onable 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………… 27
Class D Class A Annual Pension Annual Pension €40,578.64*20/200 = €4,057.86 €70,000*20/80 = €17,500 €29,421.36*20/80 = €7,355.34 Plus State Pension €12,173.59 TOTAL €23,586.79 Lump Sum Lump Sum € 70,000*3/80*20 €52,500 €70,000*3/80*3 €52,500 28
Lump Sum Accrual rate is 3/80 th Alice is age 60 and retiring with Retiring Salary of €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 29
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? 30
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 31
For those who are not “new entrants” or members of the New Single Scheme, 30 30 th 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 o compul ompulsory sory retireme rement age For members of the New Single Scheme 70 is the com ompulso pulsory y retireme rement age 32
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? √ 33
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