Public Sector Superannuation Schemes
The majority of Civil Servants who commenced full-time employment in a public sector position is a member of one of the 2 main Superannuation schemes.
- Pre 2013 Superannuation Scheme
- New Single Superannuation Scheme – Post-2013
Both schemes provide life insurance, sick pay entitlements, and pension benefits to their members. In order to qualify for these benefits, contributions must be made to earn these benefits.
Compulsory Contributions to earn Superannuation Entitlements
The 2 main compulsory contributions are as follows:
1. Pension Contributions
For each payslip, a contribution of roughly 10% of your Gross (before Tax) earnings are made. These are compulsory contributions and are usually visible on each payslip (right-hand side). The deductions can be named differently on your payslip, depending on which department you are being paid from. The most popular titles for these deductions are:
- Pension Grouped
- Pension 170
- Additional Superannuation Contributions (ASC)
2. ‘Spouses and children’s Benefit’ deduction
Another compulsory deduction that is visible on most payslips is called Spouses and Children’s benefit. This can often be named ‘1.5% Sp &Ch’ on your payslip. This deduction entitles you to a Death-in-Service benefit (see below)
Superannuation Benefits and Entitlements
Every year you work, you earn entitlements as a public servant from whichever superannuation scheme you are a member of. The benefits and entitlements are calculated differently with each scheme. Generally speaking, the Pre-2013 scheme benefits are more significant, particularly when comparing the pension entitlements. The tax-free lump sum and pension entitlements are roughly 40% more with the Pre 2013 scheme than the post-2013 scheme
New Single Superannuation Scheme – Post – 2013
The new single scheme commenced in 2013 for all new entrants into the public sector and all members who have started since then are members of this scheme. Its pension benefits are roughly 40% less lucrative than the pre-2013 scheme. There are some slight variations in relation to Spouses’ and children’s benefits also. Employee Benefits are based on career average earnings and work patterns. Benefits are accrued annually based on earnings in that particular year. Below is a detailed explanation of these entitlements and how they are calculated:
The 3 main entitlements are broken down as follows:
- Pension Entitlements
- Death-in-Service Benefits
- Sick Pay Entitlements
1. POST 2013 - PENSION ENTITLEMENTS
As a member of this scheme you are entitled to 2 main pension benefits
1. A Tax Free Lump Sum
This is a lump sum of money paid tax free to you on retirement.
2. An Annual Pension income
- This is an annual income that will payable after you retire for the rest of your life.
- This income is received on a fortnightly/monthly basis, similar to how your current salary is being paid.
- You will receive a payslip from this pension income each pay period.
- All of this income is taxable – liable for income tax USC and PRSI (ceases at age 66).
How are these benefits calculated?
Every year you work, you earn pension benefits. Please see illustration below. The benefits are accrued each year, adjusted for inflation and banked. These earned entitlement are then brought forward to near year….and so on until retirement.
Tax Free Lump Sum Calculations
For every year that you work, youearn to 3/80ths (or 3.75%) of your Grosspensionable salary as a tax-free lump sum (TFLS). The calculation formula is below;
This benefit is calculated each year, adjusted for inflation, and brought forward etc will be:
Example
John is a teacher who started as a full-time teacher in 2020. He is a class A1 employee
and is on an annual salary of €50,000. He would have earned a tax-free lump sum
entitlement in the previous 2 years worth €3850. At the end of 2023 John would have
earned the following as a lump sum:
€50000 x 3/80ths = €1875.
This is then adjusted for inflation, added to the lump sum already earned from the
previous 2 years (€3850), and brought forward to next year, etc
Pension Income Calculations
For every year that you work, you are earn the following as an annual pension income
- 1/178th or 0.58% of Gross Pensionable Salary up to a limit of *€51537
- 1/80th or 1.25% of Gross Pensionable earnings over €51537*
Please note €51537 is 3.74 times the Contributory state pension.
These calculations are;
- earned annually,
- adjusted for inflation,
- banked
- brought forward etc.
Example
John is a teacher who started as a full-time teacher in 2020. He is a class A1 employee and is annual salary of €55,000. He works full time. He has pension benefits earned from the previous 2 years of service being brough forward is €589.86
This year he will have earned the following;
€51537 x 0.58% = €298.91
€3463 x 1.25% = €43.28
Pension earned €342.19
This figure is adjusted for inflation, added to previous pension benefits earned €589.86, banked and brought forward.
State Contributory Pension
- In addition to the annual pension calculations above, all Single Scheme
Members are entitled to the contributory State pension. - At present, the state contributory pension is €265 per week or €13780 per year
- It starts paying from age 66 onwards (regardless of when you retire from the
public sector). Please note this age could change in the future in line with
government legislation
2.POST 2013 - DEATH IN SERVICE
All public sector workers have automatic life cover entitlements with their job. These entitlements are quite significant.
- Death Benefit
In general, ifyou die in service a lump sum of circa 2 times Current Gross salary is paid to your spouse/children.
- Pension Benefit
if you die in service or after retirement, there is a pension paid to your surviving spouse or civil partner, and where applicable your children. These benefits are generally as follows;
- Spouses Pension – 50% of your Pension entitlement (excluding any contributory state pension entitlement)
- Children’s Pensions – 1/6th of the deceased pension. The following conditions apply.
- They must be under age 22
- They must be in full time education
- No more than 3 children can claim this entitlement.
3. Sick Pay Entitlements
A public-sector worker is entitled to the following sick pay entitlements:
- Three months (92 days) full pay in a one year period followed by three months (91 days) half pay. This is subject to a maximum of 183 days paid sick leave in a rolling four-year period. However, if you have a critical illnesses or serious physical injuries, then the sick pay arrangements doubles to
- Six months (183 days) full pay in a one year period followed by six months (182 days) half pay. This is subject to a maximum of 365 days paid sick leave in a rolling four-year period.
The ‘rolling four-year period’ means that all sick leave (both certified and self-certified) taken over the previous four years, up to the date of the current illness, is taken into account when calculating eligibility for further paid sick leave. A further look-back of 12 months will determine what rate the sick leave should be paid at. After this leave you may also be entitled to Temporary Rehabilitation Pay (TRP) for a further 12 months. This then ceases after 2 years.
Temporary Rehabilitation Pay (TRP):
If you have exhausted your sick pay entitlements and are still unfit to work, then you may be granted Temporary Rehabilitation Pay.
Temporary Rehabilitation Pay calculation is as follows
- Pensionable Salary to date x (Actual years of service to date PLUS your ill health Added Years) / 80
- This calculation will be paid for a maximum of 2 years only
- Temporary Rehabilitation Pay will only be available when there is a realistic prospect that you will be able to return to work following your illness.
Health Early Retirement Pay (ERP):
After you have exhausted your TRP entitlements (2 years maximum) you then have the option to retire early due to ill health.
To qualify for this payment, you must be incapable of performing your day-to-day duties and the illness will most likely be permanent.
You will be paid an immediate pension and will be awarded ‘ill-health added years’.
Please see the table below:
Please note that once you draw down you ill health early retirement pension, you have in effect left your position on a permanent basis. You can never go back to work on your current arrangement. If you do decide to go back to work, you will be treated as a new 2013 entrant in relation to recruitment process qualify for their reduced pay and superannuation entitlements.
Other Superannuation Rules/Relevant Information
Calculating years of ‘Reckonable/Pensionable Service’
Calculating your pensionable years of service can be very difficult, especially if you moved locations, positions within your career in the public sector. When get closer to retirement, you can request your retirement papers for the relevant public sector department. They will have your reckonable years of service worked out on the statement. However, it is very important to examine this document in detail so that all of your service has been accounted for; from our experience, sometimes it is not.
The following is classed as Reckonable/pensionable Service
- All of your Full time established Service
- Any job sharing or work sharing service
- Any non Established service prior to your appointment to an established post
- Additional Service or ‘Added Years’ granted
- Transferred service
- Any Notional or Actual years service purchased
Added Years Entitlements
Some public sector professionals qualify for additional Notional added years which is over and above the actual years that they worked. The added years differs from job to job. 10 years is the maximum added years with which any employee can qualify for? Some examples include Army Officers, Gardai, and various medical consultants.
Buying Back Years
If you are likely to have less than 40 years’ service by your retirement age, you can top up your pension through buying back years. This means buying back missing years of service by lump sum or a regular payment which would be a percentage of your salary.
You can buy back years in the following two scenarios:
- Purchase of Previous Actual Service
This is where you can purchase years that you have actually worked but did not pay into the superannuation scheme. Such purchase of years may be applied to years of part-time service. This option provides excellent value for employees and costs less than the other option listed below.
- Purchase of Notional Service
This is where you can purchase years that you did not actually work. i.e. ‘notional years’. Notional Service may be purchased by regular deduction from salary or by payment of lump sum. This is usually a very expensive option; it is rarely cost effective or advisable to avail of this option as annuity rates available in general are very low.
Cost Neutral Early Retirement
If you retire prior to your normal retirement age (NRA), you have two options in drawing down your pension:
- Defer drawing down benefits until NRA to avoid any penalties
- Draw down pension benefits and incur the relevant penalties to your tax-free lump sum and pension.
See table below for breakdown However, if you have critical illnesses or serious physical injuries, then the sick pay arrangements double to
Normal Retirement Age Rules
If you were employed before the 1st of April 2004 your normal retirement age is 60.If you were employed on or after the 1st of April 2004 to the 31st of December 2012 your normal retirement age is 65.
If you were employed on or after the 1st of January 2013 your minimum retirement age is the state pension age (68) to a maximum retirement age of 70.
Remuneration will not fall below €65,000 as a result of the application of the reductions set out above; pro rata reductions apply to staff who work on a part-time or work-sharing basis.
Allowances – Pensionable vs Non-Pensionable
Pensionable Allowances Include:
- Approved special allowances payable in respect of higher qualifications or higher degrees.
- Approved allowances payable in respect of special certificates.
- Approved allowances in relation to special duties, or for working in particular work areas (e.g. location allowances, theatre allowances paid to nurses)
- Living out allowances and approved stand by.
- Approved allowances payable to staff roster within normal working week for weekend, night, bank holiday duty.
Non-Pensionable Allowances include:
The following are not included in your pensionable remuneration;
- Overtime payments, call-out/on-call allowances apart from the special allowances referred to above, are not normally pensionable.
- Overtime, commission, gratuity, special fees, travelling and subsistence allowance are not pensionable payments.
Maternity Leave Entitlements
If you give birth to a child, or reach the 24th week of pregnancy, you are entitled to 26 weeks paid maternity leave and 16 weeks’ additional unpaid maternity leave.
Maternity leave will ordinarily begin on such day as you select, unless medically certified that the leave should commence on a particular date.
However, the commencement date must be no later than 2 weeks before the due date and four weeks must be taken after the baby’s birth.
If the birth occurs a week before you started your maternity leave, then the maternity leave must start immediately and the employer must be informed.
Unpaid maternity leave commences on the day immediately following completion of paid maternity leave, you have the option to take a maximum of 16 consecutive week’s statutory additional unpaid maternity leave.
If you avail of statutory additional unpaid maternity leave you may be entitled to receive PRSI credits.
Taking a Career Break
You can be granted a career break for any of the following reasons:
- domestic reasons, e.g. child-rearing;
- educational purposes, e.g. to attain a post-graduate qualification;
- Foreign travel
You must have completed your probation period to be eligible to apply for a career break.
If you are still on probation you may be granted a career break in exceptional circumstances, e.g. to cope with unusual domestic difficulties, however your period of probation is extended by the length of the career break.
The minimum period for a career break is one year (except where leave is required to cope with unusual domestic difficulties) and the maximum period is five years.
You may take a career break immediately following a period of special leave with nominal pay provided the combined leave does not exceed five years.