Opting OUT of Pension

drusk

Why can't we opt out of paying into our pensions?

The following was highlighted in another thread:

Teachers, like all public servants, do not get the additional benefit of the state old age pension, despite the fact that they all pay the USC (formally PRSI). This means in effect that teachers contribute in a multitude of ways towards their pensions, (1) Direct pension contributions (2) pension levy (3) USC, which together amount to approximately 21% of gross pay. Teachers have also had to forgo pay rises in the past in recognition of the cost of their pensions to their employers. Teachers have to contribute towards pension for at least 40 years, the average in the private sector is much less at around 26 years.

For new Teachers the situation is even worse. In late 2010 a report prepared by Trident Consulting showed that teachers will pay more in contributions to the scheme than they will get out in pension benefits. In short Future teachers would be better off opting out of the proposed scheme, if allowed to do so, and investing an equivalent contribution into a private pension scheme.

I, for one, feel absolutely robbed when I look at my payslips and then consider how much I will get back from my contributions when I retire.

Lets thrash out a few figures. Let's say my average salary throughout my 40 year teaching career is €50,000 per year. If I were to contribute 21% of this to a pension fund (as I am doing now whether I like it or not), that amounts to €420,000 in contributions. And that's BEFORE that money even begins to earn interest over the span of my career. From what I can see, there is NO WAY I'll get that money back when I retire.

If I could opt out of paying these contributions, and just put half of what's currently being taken from me into my own private fund, then I firmly believe I would be in a much better position financially on retiring.

Is it just me, or are we being robbed?

IS THERE ANY WAY OF OPTING OUT OF THIS MADNESS!???!

delta_bravo

Im doing the PGDE at moment and the ASTI were in to us a few weeks ago.

I don't know too much about the pension but they were saying we would have to live till about 120 to get the full value of the pension.


I doubt you can opt out, the government were trying to do mandatory private ones in the past so its unlikely.

vallo

I don't think that public servants are allowed to have a private pension. I've a very old pension that I used to contribute to pre-teaching and I had to put it into a pension bond rather than a regular pension fund. It earns 4% per year or the rate of inflation whichever is less.
I'd be delighted if someone could tell me I'm wrong here.

E.T.

You can put money into an AVC. I've been doing it for the last 8 years, although at this stage I'm thinking of putting a stop to it, must find out how much I'd lose if I cash it in though.

drusk

E.T. wrote: »

You can put money into an AVC. I've been doing it for the last 8 years, although at this stage I'm thinking of putting a stop to it, must find out how much I'd lose if I cash it in though.

Doesn't it bother you that you feel as though you need to pay more into an AVC, considering the amount of money you're being forced to pay anyway????! And will never see again????!

Surely there's something that can be done about this... There must be some illegality in taking money out of somebody's wages - that's not a tax - without their consent...

Where does the law stand on this? Is there any way at all of opting out? Am I alone here in thinking that this is a scandalous outrage!??

rainbowtrout

drusk wrote: »

Doesn't it bother you that you feel as though you need to pay more into an AVC, considering the amount of money you're being forced to pay anyway????! And will never see again????!

Surely there's something that can be done about this... There must be some illegality in taking money out of somebody's wages - that's not a tax - without their consent...

Where does the law stand on this? Is there any way at all of opting out? Am I alone here in thinking that this is a scandalous outrage!??

You're just projecting your opinion onto someone else there. Some people have AVCs because they got into teaching late and won't have full years done. Some have AVCs so they can bail out early so they don't have to work until 65. Some people aren't on full hours so they want to make it up in other ways.

I'm sure it's in the contract when you sign up, you don't have to take the job.

strawberrie

E.T. wrote: »

You can put money into an AVC. I've been doing it for the last 8 years, although at this stage I'm thinking of putting a stop to it, must find out how much I'd lose if I cash it in though.

Tried shutting my AVC down, but you can only freeze it. Can start payments again anytime. But can't touch money till you retire!!!

E.T.

Sugar. Thanks for letting me know! A friend of mine who retired a few years ago was highly unimpressed with the terms when you do retire. It's something like take the lump sum and be taxed to high heaven, or take the monthly sum THEY decide for you. Doesn't seem worth continuing if that's it, I'd prefer to put my money in something a bit more user friendly - if it exists.

strawberrie

yep, have decided all money is better in my pocket than in the care of any financial institution for now! Takes them a few paychecks to cancel the direct payment too. Have about 10,000 in it after 9 years. Can't touch it, will pay fees for them to continue to manage the money and doubt there will be anything worth mentioning in it when I retire.:eek:

drusk

rainbowtrout wrote: »

You're just projecting your opinion onto someone else there.

I take it you do not share my opinion. How inventive of you to articulate your objection to my opinion by insinuating that I was doing more than just asking a question. Well done.

rainbowtrout wrote: »

Some people have AVCs because they got into teaching late and won't have full years done. Some have AVCs so they can bail out early so they don't have to work until 65. Some people aren't on full hours so they want to make it up in other ways.

Totally irrelevant. Clearly you found it difficult to comprehend the point I made in my original post. Allow me to reiterate. Teachers are currently paying more into their pensions than they will get back when they retire. This payment is defined and compulsory. The fact that some teachers, for whatever reason, pay AVCs is unfortunate and unfair on those teachers, considering that if contributions of even just half the amount were to be invested privately, teachers would benefit much more come retirement. Look at the figures. I can't spell it out any simpler than that for you.

rainbowtrout wrote: »

I'm sure it's in the contract when you sign up, you don't have to take the job.

As always, your cool hand of reasoning knows no bounds. The logic and rationale behind your words is astounding. With an attitude as optimistic and effervescent as yours, the inspiration you expound to your students must be enough to have them spilling out onto the streets at the end of lessons with a boundless conviction that they can move mountains.

It is unjust that we are forced to give away our money, never to be seen again, under the guise that it's our pension and will some day make its way back to us. Your resigned attitude of acceptance is frustrating, offensive and indicative of a laconic apathy that will further denigrate conditions within this profession rather than improve them.

Stark

drusk wrote: »

Lets thrash out a few figures. Let's say my average salary throughout my 40 year teaching career is €50,000 per year. If I were to contribute 21% of this to a pension fund (as I am doing now whether I like it or not), that amounts to €420,000 in contributions. And that's BEFORE that money even begins to earn interest over the span of my career. From what I can see, there is NO WAY I'll get that money back when I retire.

They let people contribute their USC towards a private pension fund now? News to me. Next you'll be quoting from the ASTI handouts and saying that employer PRSI counts as a pension contribution.

A 280,000 annuity (because you don't get to contribute the USC) would buy you approximately 16,000 pa in pension income. Add that to the state pension gives you 26,000. That's €9,000 per annum less than what you'll actually get when you retire. Assuming your pension fund doesn't suffer a fall in value like many have.

vallo

E.T. wrote: »

You can put money into an AVC. I've been doing it for the last 8 years, although at this stage I'm thinking of putting a stop to it, must find out how much I'd lose if I cash it in though.

If you or anyone reading are short of years, and if you can afford it, I believe that you are much better off purchasing notional service rather than AVCs. There was a primetime report on this a few years back.
Ask the department for a quote for buying back years and see what rate they offer.

rainbowtrout

drusk wrote: »

I take it you do not share my opinion. How inventive of you to articulate your objection to my opinion by insinuating that I was doing more than just asking a question. Well done.



Totally irrelevant. Clearly you found it difficult to comprehend the point I made in my original post. Allow me to reiterate. Teachers are currently paying more into their pensions than they will get back when they retire. This payment is defined and compulsory. The fact that some teachers, for whatever reason, pay AVCs is unfortunate and unfair on those teachers, considering that if contributions of even just half the amount were to be invested privately, teachers would benefit much more come retirement. Look at the figures. I can't spell it out any simpler than that for you.



As always, your cool hand of reasoning knows no bounds. The logic and rationale behind your words is astounding. With an attitude as optimistic and effervescent as yours, the inspiration you expound to your students must be enough to have them spilling out onto the streets at the end of lessons with a boundless conviction that they can move mountains.

It is unjust that we are forced to give away our money, never to be seen again, under the guise that it's our pension and will some day make its way back to us. Your resigned attitude of acceptance is frustrating, offensive and indicative of a laconic apathy that will further denigrate conditions within this profession rather than improve them.

Enough of the personal abuse already.

You know nothing of my attitude from one post. And your sarcastic comment about my students has no place in this discussion.

I'm only going to address one point here because it's pointless debating anything with you when you have that attitude

AVCs are not obligatory so the fact that some teachers pay them is not unfortunate or unfair, it's by choice.

drusk

rainbowtrout wrote: »

Enough of the personal abuse already.

You know nothing of my attitude from one post. And your sarcastic comment about my students has no place in this discussion.

I'm only going to address one point here because it's pointless debating anything with you when you have that attitude

AVCs are not obligatory so the fact that some teachers pay them is not unfortunate or unfair, it's by choice.

1. Nowhere have I directed any personal abuse towards you. I take issue with your passive attitude of acceptance with regard to an issue in which teachers are being cheated out of hard-earned money. It's nothing personal against you, just your docile, yielding attitude towards this issue, which is starkly evident in your posts. If you wish to refute this, then please do so by stating your opinion precisely instead of haughtily patronising my points with irrelevant tripe intended to throw the debate off course. The irony that you consider it pointless debating an issue which you did not even properly engage in to begin with - other than to glibly remark "it's in the contract, you don't have to take the job" - is nothing short of laughable. And you are taking issue with MY attitude!?!

2. Yes, AVCs are not obligatory and are by choice. I did not state otherwise. Yet again you have failed to interpret simple English. My point was and is that it is unfortunate and unfair that teachers feel as though they have to pay them. I've put the part that you missed in bold to make it easier for you.

Toto Wolfcastle

Stop sniping at each other please.

Pwpane, please do not back seat mod.

solerina

The entire pension issue is a disgrave but the SPCH deduction really makes my blood boil (spouses and children)....correct me if I am wrong but as far as I know its a deduction so that if you die your pension can be passed on to your surviving spouse or children.....which in my case do not exist....is it not wrong to deduct money for people who do not exist (and may never exist). The old scheme used to return the money to you at retirement but the new one doesnt....so where does all this money go ???

jools69

Yes it's a rip off. The media never portray these facts however and continue to insinuate that teachers receive a pension for free. In addition to your points, research suggests that the government are making an approximate 80 million euro profit each year out of teacher pensions. This is the deficit between the contributions the government receive and how much of that they actually use to pay currently retired teachers. In essence, the money that we pay in is not being put away for us. It is being spent as soon as it's collected with a significant profit to boot. In addition those who are not married and have no children still have to pay 1% of their income into a spouses and childrens pension fund throughout their working life.

Whether I like it or not I must pay €426 every four weeks into this pension fund, this is before PRSI or USC. It is a huge proportion of one's wage with no guarantee of anything back in return. It is an enforced payment that has been doubled recently and can be doubled again. If the Government have no money in the pot when I reach retirement then that's just too bad isn't it. What can I do? Nothing.

I see a problem developing in so much as many new entrants are going to demand out of this pension scheme in order to set up private schemes. If there is enough resistance, then this may become commonplace. If this does happen who will pay for teacher pensions say in twenty years time?

Our contributions are currently paying for present retirees as we would assume further down the line that working teachers will pay for our pensions. There will be a lot more elderly people in twenty five years time. However if enough people want out of the scheme, where will the money come from? Given a choice I would prefer to save this money under my mattress than hand it forcefully to the government each week. I honestly think there would be a greater return on it in years to come.

ChowChow

It's encouraging to see some awareness and debate on this matter at last. I think another important point to note is that the National Pension Reserve Fund has been liquidated as part of the bank bailout deal. This is extremely bad news - the purpose of this fund was to pay social welfare and public sector pensions for people planning on retiring in the year 2025 and beyond. What I find particularly galling is the general attitute of the media (RTE, Irish Independent etc) towards the NPRF - i.e. a slush fund which can be used to plug whatever hole needs to be filled. Then again how stupid of me to expect fair or impartial reporting in relation to those working in the public sector.

So my question is: if the NPRF is effectively gone, where exactly is the money going to come from to pay PS pensions in the above timeframe?

I have concluded that the stark reality is that there will be no pension or at best a social welfare pension for most public servants planning on retiring in a decade or so from now. Pension deductions are nothing more than another thinly disguised pay cut. I wish the pathetic teaching unions would get off their backsides and actually do something about this.:mad:

maude6868

I totally agree, I would dearly love to opt out of the pension scheme. What can I do anyone?

Godge

Have read the report from Trident. It needs to be read with a huge grain of salt.

The core assumption is that a teacher starts at 21 and retires at 65 paying contributions for 44 years. A much different outcome would be reached if you calculated it on the basis of starting at 21 and retiring at 60 with 39 years service. Less years paying in and more years benefitting means that a teacher would definitely not be paying in more than they receive.

Now, I can see that by changing one simple assumption in the Trident Report. There are a number of other complicated assumptions in the report which can be challenged. I am not saying that the new system is fair or unfair, all I am saying is that the Trident Report can best be seen as propaganda rather than an independent report. Neither would I take on face value any Government report as I am sure their assumptions would be biased the other way.

For me, a public sector pension is still a highly desired benefit even after the changes and you would definitely be mad to consider opting out. In fact if the Trident Report convinces teachers to campaign for an opt-out, it will have done long-term damage to teachers' interests.

Jippo

I have recently taken up a Part-Time Pro-Rata position in an Irish Third Level institution.

In my past three payslips I have paid €160 (and paid a pension levy of €153 lol).

I am 25 years of age and don't give a damn about a pension --- I don't want one. I asked (someone in payroll) today could I opt out and I was told that no I can't opt out.

It's a pain in the ass.

Delphi91

solerina wrote: »

The entire pension issue is a disgrave but the SPCH deduction really makes my blood boil (spouses and children)....correct me if I am wrong but as far as I know its a deduction so that if you die your pension can be passed on to your surviving spouse or children.....which in my case do not exist....is it not wrong to deduct money for people who do not exist (and may never exist). The old scheme used to return the money to you at retirement but the new one doesnt....so where does all this money go ???

Someone please correct me if I am wrong on this, but I am nearly 100% certain that I was told by a financial advisor aligned to one of the second level unions, that if you are unmarried and have no children when you retire, you get back your SPCH contributions? I was told this 2 years ago.

Is there a threshold in terms of dates when the "new scheme" you refer to came into operation?

Geuze

drusk wrote: »

Why can't we opt out of paying into our pensions?

The following was highlighted in another thread:

Teachers, like all public servants, do not get the additional benefit of the state old age pension,

THIS IS INCORRECT.

All public servants hired since April 1995 do pay full-rate 4% PRSI and should get a State pension.



despite the fact that they all pay the USC (formally PRSI).

THIS IS INCORRECT.

PRSI has not been replaced by the USC.

The USC replaces the former health and income levies. The USC is a tax, and has nothing to do with pensions.


This means in effect that teachers contribute in a multitude of ways towards their pensions, (1) Direct pension contributions (2) pension levy (3) USC, which together amount to approximately 21% of gross pay.

Yes, public servants pay:

PRSI at 4%
Supernnuation at 6.5% of their adjusted wages (not their full wage)
Pension levy

BUT the USC is not included here.


Teachers have also had to forgo pay rises in the past in recognition of the cost of their pensions to their employers.

I never heard of this, and I have been following teachers pay for 15 years.

Teachers have to contribute towards pension for at least 40 years, the average in the private sector is much less at around 26 years.



Is it just me, or are we being robbed?


All public pensions are heavily subsidised by tax payers. Employee conts do not come anyway close to covering the cost of benefits (nor should they)

IS THERE ANY WAY OF OPTING OUT OF THIS MADNESS!???!

Thanks.

doc_17

NoSpouse wrote: »

... not talking. I suggest you all visit here again within the next two days.

Dahix

Yes, its 1.5% of your salary on this spouse and child allowance, it is completly unfair against those who are unmarried or will not have children.

Can anyone confirm if this money is given to you at retirement? (if unmarried)
After all 1.5% may seem small but it is a huge figure over a lifetime of payments!!

solerina wrote: »

The entire pension issue is a disgrave but the SPCH deduction really makes my blood boil (spouses and children)....correct me if I am wrong but as far as I know its a deduction so that if you die your pension can be passed on to your surviving spouse or children.....which in my case do not exist....is it not wrong to deduct money for people who do not exist (and may never exist). The old scheme used to return the money to you at retirement but the new one doesnt....so where does all this money go ???

E.T.

I'm sure I saw on the INTO website that if you've been paying this pension since before 2005, if you are single at the age of retirement, you do get a refund of your contributions to the Spouses and Children's Pension, minus tax and PRSI. Post 2005, no refund.

killbillvol2

E.T. wrote: »

I'm sure I saw on the INTO website that if you've been paying this pension since before 2005, if you are single at the age of retirement, you do get a refund of your contributions to the Spouses and Children's Pension, minus tax and PRSI. Post 2005, no refund.

You had to specifically opt in to remaining under the old scheme in 2005 (which allowed you to get a refund of the Spouses & Children's Pension contributions at retirement). If you took no action you were deemed to accept the terms of the new scheme which doesn't allow for a refund.

solerina

killbillvol2 wrote: »

You had to specifically opt in to remaining under the old scheme in 2005 (which allowed you to get a refund of the Spouses & Children's Pension contributions at retirement). If you took no action you were deemed to accept the terms of the new scheme which doesn't allow for a refund.

I was working then and never got any notification of the opt in/opt out, when I rang Athlone to question this they told me I was too late and basically tough luck....I wonder could we get the unions to fight this in the EU. The way I see it its basically an insurance policy which we didnt ask for and are forced into paying....

ChowChow

To be honest I think you are missing the bigger picture and asking the Unions to do anything about the Spouses & Children's Pension contributions is a complete waste of time. The NPRF has €5.3 billion left from an original amount of €25 billion (remember it was established to pay public sector pensions and social welfare from the year 2025 onwards). I think you would be better off asking the Unions how PS pensions are going to be funded in the future when the pension scheme is completely insolvent.

killbillvol2

solerina wrote: »

I was working then and never got any notification of the opt in/opt out, when I rang Athlone to question this they told me I was too late and basically tough luck....I wonder could we get the unions to fight this in the EU. The way I see it its basically an insurance policy which we didnt ask for and are forced into paying....

I got a very detailed letter about it from the DES as did the rest of my staff. We also got some info from the INTO and a reminder of the deadline. I remember this because a lot of the younger staff sought my advice - they found it difficult to make a decision which would have repercussions 35 years down the line.

As to the unions fighting it - they didn't fight it at the time so it`s unlikely now. IIRC there were some benefits to the new scheme depending on your circumstances.