Pension and A rate PRSI

TheDriver

Can anyone anywhere tell me exactly what is the story for those of us paying A rate PRSI.

Currently, D rate people can retire at 60 and depending on the number of years, get the pro rate of full pension.

A rate apparently gets the same EXCEPT ours is reduced by the amount the PRSI contributory pension gives us which is about 12000 a year. BUT if you retire at 60, you don't get this portion until 66/67. Am i missing something here? Yay, retire at 60 but sorry but 12000 of your pension is not paid until 8 years time???

Obviously, I am pre 2004 where 60 became 65 but I can't get any clarification from the union about this. Anyone out there know what the story is?

rainbowtrout

I think the main difference is that D class employees are not entitled to the Contributory Pension (the 12k p.a.) where as A class are but this portion of the pension as you quite rightly pointed out is not payable until the pension age 66/67/68 depending on when you are eligible for retirement.

D class employees can apply for the non contributory state pension but as far as I know that is means tested and I don't know what the cut off point is but I would imagine given the teaching pay scales that very few teachers would be eligible for it if they had done full service.


Hence the smaller contributions on the D rate, less state entitlements on retirement.

I'm A class myself so I'm not familiar with the fine print.

http://www.welfare.ie/en/Pages/State-Pension-Contributory.aspx

Oops, read that as if you were D class.

TheDriver

thats my problem, there is little or nothing out there about A PRSI. We are told the retire at 60 lark, pension is half final salary etc etc however its a cod if we don't get it until 66/67/68. Union won't give me a straight answer on it.

rainbowtrout

TheDriver wrote: »

thats my problem, there is little or nothing out there about A PRSI. We are told the retire at 60 lark, pension is half final salary etc etc however its a cod if we don't get it until 66/67/68. Union won't give me a straight answer on it.

My understanding is that say you retired on 80k final salary and had 40 years service, Half final salary is 40k - 12k state pension, so if you go before 66-68, you will get your lump sum and 28k p.a. until you are eligible for state pension.

This bit is never mentioned in the media when they go on about our pensions.

Kristopherus

TheDriver wrote: »

thats my problem, there is little or nothing out there about A PRSI. We are told the retire at 60 lark, pension is half final salary etc etc however its a cod if we don't get it until 66/67/68. Union won't give me a straight answer on it.

Why are you asking the Union about it? You should be asking the Superannuation Unit of the Dept of Ed.

TheDriver

I found the following document
http://www.tui.ie/_fileupload/When%20should%20I%20retire.pdf

basically for those of us in the A class prsi prior to 2004, then we can retire at 60 (or earlier under 55/35 rule or cost neutral scenario) but won't see state prsi pension until 68. Can you imagine teaching until that age??

TheDriver

Kristopherus wrote: »

Why are you asking the Union about it? You should be asking the Superannuation Unit of the Dept of Ed.

I'm not paid by DESk and I find super units don't want to talk unless you are actually retiring

rainbowtrout

TheDriver wrote: »

I found the following document
http://www.tui.ie/_fileupload/When%20should%20I%20retire.pdf

basically for those of us in the A class prsi prior to 2004, then we can retire at 60 (or earlier under 55/35 rule or cost neutral scenario) but won't see state prsi pension until 68. Can you imagine teaching until that age??

I will not be seen next or near a classroom at 68. Perish the thought. They'll be lucky if they see me at 58. I'll be 62 when I have 40 years service (one of the lucky ones) and I'm also A class pre-2004.

TheDriver

like myself, I will be able to go on pension at 57 with 33 years done but you must cut your salary in half and then take 12k off it and you won't see that per year until 68. makes it tight. Thinking an AVC to top up those 9-10 years in between along with lump sum. Won't be long passing in fairness.

crossvilla

If you are on A PRSI and pre 2004 your normal retirement age is 60 to a max of 65. If you retire before the state contributory kick in date you will be entitled to a 'supplementary pension' from the DES. This supplementary pension will bring you up to the rate of pension a person on D PRSI would normally receive at that age based on years service and final salary I.e. it doesn't matter if you are A or D you'll get the same.

rainbowtrout

TheDriver wrote: »

like myself, I will be able to go on pension at 57 with 33 years done but you must cut your salary in half and then take 12k off it and you won't see that per year until 68. makes it tight. Thinking an AVC to top up those 9-10 years in between along with lump sum. Won't be long passing in fairness.

I'll have 33 years done at 55 ( or 35 at 57). Already have the AVC set up.

crossvilla

The supplementary pension is available with the 35 year rule as this is specific to teachers and is considered normal retirement. This means you can go from 55 if you have at least 35 years service. It's a great deal and only available to those pre 2004. An AVC is good as you'll get a bit extra tax free lump sum with the remainder in a fund which you draw out of every year as income called an ARF.

TheDriver

crossvilla,
this is the info no one seems to be able to say, so thank you. have you any link regarding the supplementary pension? Is that what the phrase "if you aren't entitled to a state pension....through no fault of your own, you get a supplementary pension" i.e. they won't give you the state part til 66 so you get the supplementary part in between?

How much is the supplementary part do you know?

solerina

We had a guy in a few weeks ago at lunchtime to discuss pensions. He said A rate people pre 2004 can retire at 60 but wont get the majority of their pension until they are elligible for the state old age pension (which he maintained could be 70 by then)...and what was worse he said that if you were paying AVCs to contribute to your pension that you couldnt access it unless you were getting a minimum of 18,000 per year and that there was no way youd be getting near that anyway. Post 2004 the same except that there is no option to retire at 60 apparently !!! Yeaaaah, we have great pensions :-(

TheDriver

solerina, that seems to be what the "advisors" are saying however as crossvilla has said and my investigations have also brought up is that you get a supplementary pension until the prsi old age one kicks and its in the statutory instruments for pre 2004 and post 1995 people.
According to varies legislation, you apply for a supplementary pension if you retire early from public service and can't claim disability/unemployment/old age pension etc because our pension is integrated.

Also it does seem the 55/35 rule applies to this too.

So I can retire at 57 with 33 years served and am happy with the outcome.

Those advisors really don't know what they're on about but then again, they want commission
http://debates.oireachtas.ie/dail/2010/07/08/00464.asp

http://www.askaboutmoney.com/showthread.php?t=163807 [read down through it including the links shown especially post 16]

2011abc

How are all you guys talking about "Post 2004" or even "Post 1995" AND retirement in the same paragraph!?Ive been signed up to pension scheme since around 1993/1994 (practically straight out of college ) and STILL have barely 20 years service accrued .You guys joined pension scheme late ?
As a Class D PRSI person I have the heartwarming knowledge that if Im made redundant I dont get a red cent from the state !!!!!(Most of my peers dont know this !!!)
So are you guys within lunging distance of the finishing tape after paying vast sums in AVCs /Buybacks etc etc ?Any general advice ?Considering how hard it is to even contact the salaries Section to change address etc it must be a hoot trying to enquire about terms and conditions of retirement .

I remember the advice given to us before signing up to Pension Scheme (and changing PRSI rate ) was 'get a good dental check up'!!!Never said anything about us losing ALL dole entitlements !!!

I wouldnt trust those pension advisors as far as I could throw them !All theyre interested in is which scheme makes them the most commission .

rainbowtrout

2011abc wrote: »

How are all you guys talking about "Post 2004" or even "Post 1995" AND retirement in the same paragraph!?Ive been signed up to pension scheme since around 1993/1994 (practically straight out of college ) and STILL have barely 20 years service accrued .You guys joined pension scheme late ?
As a Class D PRSI person I have the heartwarming knowledge that if Im made redundant I dont get a red cent from the state !!!!!(Most of my peers dont know this !!!)
So are you guys within lunging distance of the finishing tape after paying vast sums in AVCs /Buybacks etc etc ?Any general advice ?Considering how hard it is to even contact the salaries Section to change address etc it must be a hoot trying to enquire about terms and conditions of retirement .

I remember the advice given to us before signing up to Pension Scheme (and changing PRSI rate ) was 'get a good dental check up'!!!Never said anything about us losing ALL dole entitlements !!!

I wouldnt trust those pension advisors as far as I could throw them !All theyre interested in is which scheme makes them the most commission .

Because some people like to be prepared in the longterm aside from the actual value of the pension when retiring anytime from 55 on depending on when you started.

People have long mortgages now. 35 year mortgages were practically unheard of in 1993/94 when you started teaching but for anyone starting 10 years after you they were commonplace. That's a whole teaching career (assuming full time hours, which are also non existant for most new teachers).

Going to college has become a social norm rather than the exception and it's quite expensive and probably going to get more so. People on the whole are getting married later and having children later, so a teacher who started in teaching in the 70s/80s/90s would have possibly married at an earlier age (if they got married) and had children at an earlier age. The very fact that they had a third level education back then when the majority didn't might suggest that they were on the whole a bit better off than the average joe and could afford a third level education.

Taking your average college graduate who has left college with the PGDE in the last few years might consider a mortgage or already be a couple of years into a 35 year mortgage with negative equity and may only have their first child at 35 (or later) means that if that child goes to college they might be considering the cost of that in their mid to late 50s. The cost of retirement and pensions is a very real issue even if it is 20 years away. And as we won't be getting a state pension until 68, it's worth considering what you are going to do for money during the time between retirement and then if you have all of the above to factor in.

PS pension doesn't look all that attractive for post 2004 teachers given that so many of them are on such low hours and pension will be an average of career earnings. There's nothing to bring down the career average than 4 or 5 years on the bottom of the scale doing <11 hours a week.

TheDriver

planning for retirement is important. I want my kids to be grown up by the time I retire so it impacts on family planning, I want to coordinate my retirement with my wife, I want to make sure I will have enough income when I retire so do I need to start paying AVCs etc, i may want to make use of tax relief.
Do i want to go for promotion because it may depend how many years I have left in the job e.g. 10 years as principal vs 20 years left and burnt out?

Made redundant isn't something a PWT teacher should be thinking about I would have thought hence why D class was paid in the first place?

annamarie2013

Lots of people (younger- 30 ish or slightly more) in my staffroom cancelled their AVC policies as they were advised to do so ( their words!!) Some of them had been only paying into them for a short while. Were they right to do so??

solerina

annamarie2013 wrote: »

Lots of people (younger- 30 ish or slightly more) in my staffroom cancelled their AVC policies as they were advised to do so ( their words!!) Some of them had been only paying into them for a short while. Were they right to do so??

No one can really answer that question properly (without a crystal ball)...at the moment we get tax relief on AVCs so they are possibly still worth it...this tax relief will no doubt be removed in the future so that will change things. At the moment we cant see what the AVC will/will not be worth at retirement age (for those retiring in 20/30 yrs) so its impossible to accurately answer your question. Its really like a big gamble...risk it and you dont klnow if you will won or lose in the long run.

TheDriver

I found in the last week that a lot of effort had to go into finding out the details of my pension. Even the cornmarket prepared TUI booklet I found claims you won't get the OAp section of pension until 68 (which they are rigght but you get it under a different name). Most of my staff weren't aware of my findings. Having said that, good few didn't care.

People tend to go into AVCs like income protection because those guys are good at selling. Its difficult to know what to do but people need to ask, why do you need an avc? when do you want to retire? and lastly, is it worth it because you also need money now.

Unfortunately very few people under 55 are interested in pensions.
Why am I interested? because I want to keep an eye on things so if any horrible change comes in, I can get onto the union to fight it. However most changes only come in for new entrants because its legally very very difficult to change commitments once payment into the scheme has begun e.g. s&s scheme pensionability.

annamarie2013

I plan to retire at 55 ( or as soon as I can) as thats what I was told by salesman at the time???

rainbowtrout

annamarie2013 wrote: »

I plan to retire at 55 ( or as soon as I can) as thats what I was told by salesman at the time???

I don't know if the sales reps are just lazy, or assume most teachers want to get out at 55 or if the greatest commission is on the policy that allows the teacher to get out in the shortest time as perhaps the contributions are the highest but I remember when the AVC rep came to my school about 5 years ago and I was talking to her she more or less pitched with 'so you'll be retiring at 55 then...' once she heard I was permanent and would have 33 teaching years done at 55 rather than asking me when I would like to go. I made her go through the different options, I did not want to be sold a policy out of convenience.