New Single Public Service Pension Scheme Presented by Séamus O’Dwyer in association with Liam Mannion, Rockcourt Financial Services Ltd 1
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 4
Pension Arrangements in General Occupational Pension Schemes Existing P.S. Pension Schemes 5
PENSION ARRANGMENTS IN GENERAL Pillar 1. S.W . Pensions Pillar 2. Occupational Pension Directly linked to employment Pillar 3. Personal, Voluntary Pensions AVC/PRSA 6
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. 7
EXISTING P . S SCHEMES NEW SCHEME Defined Benefit Defined Benefit Career Average Final Salary Integrated with S.W . Pension Integrated with S.W . Pension Pension Increases based on C.P.I. Pension Increases Pay (up to now!) Contributory Contributory One Scheme (Except…) Hundreds of Schemes with (Slightly) Varying Terms 8
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 9
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 10
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 or 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 13
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 16
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 17
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 on how referable amounts are “tracked” by employers 18
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 of service. The Examples in the next 2 slides show how Pension and Lump Sum accrue independently 19
**In addition State Pension (Contributory) is also payable 20
21
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. 22
The Contrib ibuti utions ons v Benef nefits its debate ate 23
Vesting Period Minimum Pension age Maximum Retirement Age Pensionable Allowances Ill- health retirement - added years? Preserved Benefits ◦ Ill-health ◦ death 24
Death in service Cost Neutral Early Retirement Simultaneous employments Transfer Values Re-employment having received a refund of contributions 25
Purchase of Referable amounts?
Survivor’s Pension Children’s Pension 27
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 28
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 29
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 30
Provis ision ion for Revie iew w of the Sc Scheme me 31
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 32
Sc Scheme e Bookle let 33
Defined Benefit Allowances CPI No 40 year cap Mobility Scheme is in Primary Legislation 34
Superannuation Advice Non Union affiliated Independent Advice on: Income Protection • Additional Death in Service Cover • Investments • Transfer of UK Pensions Regulated by the Central Bank Reg. No. C134810 35
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 . 36
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 of payment. Rockcourt Financial Services Ltd is regulated by the Central Bank ref. C134810 37
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