Retirement ‘grace’ period extended to the end of April 2019
The Grace period - that allows calculation of retirement lump sum and pension on the basis of the June 2013 salary and allowances (i.e. before the HRA cuts applied) - is April 2019.
This means that TUI members who retire on or before April 1st 2019 are entitled to have their pensions and pension lump sums calculated as if the pay reduction under the Haddington Road Agreement, as well as any incremental pause or freeze, had not been applied to their salary. In effect, their pensions and lump sums will be calculated on the basis of their June 2013 salary, inclusive of relevant pensionable allowances.
Those who commenced employment before 1st April 2004
A teacher/lecturer who commenced employment before 1st April 2004 must retire at the end of the school year in which they reach 65 but may retire on pension voluntarily any time after reaching age 60.
Those who commenced employment on or after 1st April 2004
New entrants (as defined in Section 2 of the Public Service Superannuation (Miscellaneous Provisions) Act 2004 i.e. a person who commenced employment in the public service on or after 1 April 2004, or returned to employment on or after that date following a break in public service employment of more than 26 weeks) may retire on pension at age 65.
Those who commenced employment on or after 1st January 2013
A new Single Public Service Pension Scheme applies to those who commenced employment on or after 1st January 2013. The minimum pension age for these teachers/lecturers is linked to the state pension age, currently 66. CL 07/2013 refers.
(i) Normal Retirement
Pension: 1/80th of Final Pensionable Salary for each year of Pensionable Service (maximum 40/80ths).
Gratuity: 3/80ths of Final Pensionable Salary for each year of Pensionable Service (maximum 120/80ths).
(ii) Death in service
Spouse’s Pension: 50% of Member’s expected pension at normal retirement date.
Children’s Pension: 33 1/3% of Spouse’s Pension (maximum 3 children reckonable).
Lump Sum: 3/80ths of Pensionable Salary at date of death (minimum 1 x salary; maximum 1.5 x salary).
(iii) Death in retirement
Spouse’s Pension: 50% of the Pension the member is receiving at the time of their death.
Children’s Pension: 33 1/3% of Spouse’s Pension (maximum 3 children reckonable).
Several types of service are reckonable for purposes of pension.
Pensionable Service with any Local Authority, Public Service Department and most semi-state bodies and Universities. Pensionable Service as a National, Secondary, Vocational or Community/Comprehensive teacher. Subject to certain limits, temporary service including service as a teacher, temporary or part-time.
The rates of contribution vary depending on PRSI Class. For example, the Class D rate of contribution is 5% of annual salary and allowances. . All new staff are required to participate in the Spouses’ and Children’s Pension scheme and contribute an additional 1.5% of salaries and allowances.
A teacher who has reached the age of 55 and has 35 years pensionable service may retire on pension. Two years will be credited for a 4-year training period, one year for a 3-year training
period, to assist a teacher reaching the 35-year threshold (but will not count towards accrued pension entitlement). There is no provision for early retirement at third level except on an actuarially reduced basis as set out below.
A teacher may retire because of ill health. A Disability Pension is payable to a teacher who fulfils minimum service requirements and whose employer is satisfied that due to infirmity the teacher is not capable of performing his/her duties and the infirmity is likely to be permanent. Actual pensionable service may be increased by added years, (maximum of 6.66 years), in calculating pension and lump sum.
Actuarially Reduced Pensions
Pension legislation gives serving teachers and new entrants (i.e. those who commenced employment between 1st April 2004 and 31st December 2012) the right to retire from age 50 and 55, respectively, but with actuarially reduced pensions. Pensions will continue to be calculated at the rate of 1/80th of final salary per year of service, but because such teachers will be in receipt of the pension for longer, it will be reduced on an actuarial basis.
The Department of Finance has developed a website which provides details of pension benefits and choices for this type. The website address is www.cspensions.gov.ie See also Circular Letter PEN 07/05
Spouses’ and Children’s Pension Scheme
If you should die after retirement on pension, your spouse / civil partner is entitled to half the pension you were receiving provided you contributed the additional 1.5% of salary. On the death of a spouse / civil partner, a serving or pensioned teacher is also entitled to a contributory widow’s/widower’s or survivor’s pension based on the teacher’s own contributions. (See PRSI and Health Contributions section of diary)
Retired staff on pension receive an increase in pension with effect from the date on which increases are paid to staff and in line with the increase awarded to staff. It is advisable to apply in advance in writing to your ETB, or your College, or the Department of Education if in a C & C school for a statement of benefits due to you on the date of retirement. Acting early in this manner may avoid delay in payment of gratuity and pension allowance. Your gratuity is not liable for income tax but teachers who opted into the Spouse’s and Children’s scheme will be liable for a reduction of 1% of retiring salary for each year’s reckonable service for which no contributions have been made.
Pensionability of Part-Time Service
Certain part-time service has been reckonable for pension purposes since 1st September 1996. See Circular Letter 25/2008.
Enhancement of Retirement Benefits
There are a number of options for members who wish to enhance
their pension benefits at retirement. These are:
1. Added Years for Professional and Technical Service
You may be entitled to up to 10 added years if the nature of your employment precluded you from acquiring maximum service at age 65 due to recruitment conditions. These years may be granted at retirement subject to the consent of the minister for education.
You may be eligible to apply for added years if the nature of your employment falls into one of the following categories:
- Professional posts for which third level degrees or equivalent professional qualifications are required.
- Technical posts for which diplomas or equivalent technical qualifications are required.
- Specialist posts for which certain experience is required or which has an age limit in excess of 25 years.
The onus is on the individual to apply to their employer for these added years. Your employer will then make application to the minister on your behalf. Each application will be judged on its own
2. The Notional Service Purchase Scheme
You may opt to purchase additional years of service through the Notional Service Purchase Scheme (NSP). This scheme is operated through your employer and allows you to pay additional contributions to purchase extra years of service at a specified cost per year. This cost will depend on your age, whether you are integrated with the State pension or not and your chosen retirement age.
As it is no longer possible to avail of tax allowances on pension contributions over the previous ten years, members purchasing by instalment are advised to begin purchase as early as possible and to purchase by lump sum at the earliest date allowed.
When purchasing notional service you must purchase the full range of benefits – you cannot choose which additional benefits you would prefer. On the other hand, pension arising from service purchased under this scheme increases/decreases with pay of serving peers unlike pensions purchased under AVC, PRSA or other private schemes which normally rise with inflation subject to a maximum increase of 3% per year.
There is however, a limit to the number of years that can be purchased. These limits are set out in the rules of the scheme and vary considerably depending on your potential service to age 60/65. Under the current rules of the scheme you may only purchase the service that you will be missing at age 65 (or 60 for teachers employed in community or comprehensive schools).
Therefore, it is not possible to purchase notional service if you will have 40 years service at normal retirement age.
If you opt to purchase service under the NSP Scheme and continue to make the recommended contributions to retirement, your additional benefits are guaranteed.
It is important to remember that if you retire early or discontinue or reduce contributions to the NSP Scheme, the rules provide for a reduction in the actual benefits accruing.
To obtain more information in relation to the Superannuation Scheme, Notional Service or Professional Added years you should contact the Human Resources Section of your employer or the Superannuation Section within the Department of Education & Skills, Cornamaddy, Athlone, Co Westmeath, 090-648-3600.