SINGLE PUBLIC SERVICE PENSION SCHEME GENERAL OUTLINE OF STANDARD TERMS

Transcription

1 SINGLE PUBLIC SERVICE PENSION SCHEME GENERAL OUTLINE OF STANDARD TERMS January 2013

2 This is a summary guide t the Single Public Service Pensin Scheme and shuld be read alngside r in cnjunctin with the Public Service Pensins (Single Scheme and Other Prvisins) Act This dcument is nt a legal interpretatin f the Act and des nt purprt t deal with every query that may arise. The Single Scheme des nt cnfer pensinability n any categry f public service emplyment which was nt previusly pensinable. Members f the fllwing classes have different terms and are nt cvered in this utline: Members f the Oireachtas including the President, the Judiciary, the Cmptrller and Auditr General and qualifying and designated ffice hlders; Gardaí, Permanent Defence Frce, Prisn Officers and Fire-fighters. 2

3 SINGLE PUBLIC SERVICE PENSION SCHEME: SUMMARY COVERAGE Pensinable public servants (new jiners) recruited n r after 1 January 2013 (the cmmencement date f the Single Scheme) will be members f the Scheme. VESTING PERIOD A standard vesting perid f tw calendar years must be served befre becming eligible fr retirement benefits frm the Scheme. PENSION AND RETIREMENT AGES Pensin age Minimum pensin age f 66 (rising t 67 and 68 in line with State Pensin age changes). Cmpulsry retirement age Early retirement Preserved benefits Scheme members must retire at the age f 70. Actuarially-reduced early retirement facility frm age 55, i.e. befre minimum pensin age. Fr thse wh serve the vesting perid and leave befre reaching pensin age, retirement benefits are payable, n applicatin, at pensin age. ACCRUAL RATE / CONTRIBUTION RATE Accrual Mney amunts (referable amunts) building twards pensin and lump sum are separately accrued each year using the fllwing frmula: Pensin: Accrual rate f 0.58% f pensinable remuneratin up t a ceiling f 3.74 X State Pensin Cntributry (SPC) (currently 45,000) PLUS (where applicable) 1.25% f pensinable remuneratin abve that level. Lump sum: 3.75% f pensinable remuneratin. Cntributin rate 3.5% f net pensinable remuneratin 1 PLUS 3% f pensinable remuneratin. 1 Pensinable remuneratin less twice the rate f the State Pensin Cntributry (SPC). 3

4 CALCULATION OF BENEFITS Calculatin During Scheme membership, the amunts frmula accrued each year will be increased t reflect the CPI increase between that year and retirement. The annual pensin and lump sum payable at retirement will equal the ttal f these CPIadjusted amunts. ILL HEALTH RETIREMENT Retirement n medical grunds Members with less than 2 years service Gratuity f 8.5% f pensinable remuneratin per year f service. Members with mre than 2 years service Immediate payment f retirement benefits accrued t pint f retirement (with n actuarial reductin). Regulatins will prvide enhanced benefits, related t varius factrs such as the members expected career t retirement and service. DEPENDANTS BENEFITS Death in Lump sum payable t the estate f the deceased service member equal t twice annual pensinable benefit remuneratin at time f death. Survivrs benefits Spuse s/civil partner s pensin equal t 50% f member s pensin. Als children s benefits payable (ttal payments nt t exceed 100% f member s pensin). POST RETIREMENT INCREASES Pensin Based n increases in the CPI. increases OTHER Allwances Referable amunts (% f pensinable remuneratin) each year will reflect pensinable allwances payable in respect f that year. Refunds Cntributins refunded where less than 2 years service given. 4

5 1. ACCRUAL AND MEMBER BENEFITS Cverage The Single Scheme s cmmencement date is 1 January The Scheme applies t all pensinable first-time entrants t the Public Service, as well as t frmer public servants returning t the public service after a break f mre than 26 weeks. In certain circumstances, e.g. where the public servant was n secndment r apprved leave r remains n the same cntract f emplyment, the 26- week rule des nt apply. The legislatin giving effect t the Scheme is the Public Service Pensins (Single Scheme and Other Prvisins) Act Benefit structure The Scheme prvides: A pensin and retirement lump sum based n careeraverage pensinable remuneratin. A facility fr early retirement frm age 55 n a cstneutral (actuarially reduced) basis. A facility fr early retirement n medical grunds, subject t certain cnditins. A death in service benefit f twice annual pensinable remuneratin. Preservatin f retirement benefits which are payable n applicatin at the age a member wuld be eligible fr the State Pensin Cntributry (SPC). A pensin fr spuses r civil partners and fr eligible children. Pensin indexatin linked t CPI increases. Accrual and Payment f benefits Members accrue (i.e. build up ver time) referable amunts (i.e. mney amunts) fr pensin and lump sum fr each year f wrk r part theref based n pensinable remuneratin at that time. 5

6 Pensin: Accrual rate f 0.58% f pensinable remuneratin up t a ceiling f 3.74 X State Pensin Cntributry (SPC) (currently 45,000) PLUS (where applicable) 1.25% f pensinable remuneratin abve that level. Lump sum: Accrual rate f 3.75% f pensinable remuneratin. Referable amunts are adjusted annually by reference t increases in CPI and aggregated referable amunts cntinue t be up-rated until retirement. Accrued and up-rated referable amunts ver a cmplete career are added tgether t prduce the pensin and lump sum values n retirement. Members receive an annual benefit statement shwing pensin/lump sum amunts accrued t date. Fllwing retirement, pensin is increased in line with rises in CPI; if CPI falls, the pensin is nt reduced. Member s legal persnal representative will receive a capital sum (equal t twice annual pensinable remuneratin) shuld the member die in service. Pensins are payable t a spuse r civil partner and t eligible children, as defined in the Scheme, in a case f death (befre r after retirement). Scheme members rdinarily pay full scial insurance cntributins and are eligible t receive a State Pensin Cntributry (SPC) (subject t paying sufficient PRSI cntributins and ther criteria that may apply frm time t time), in additin t ccupatinal pensin. Cnsequently, the SPC is taken int accunt when calculating pensins under the Scheme. This is knwn as integratin. Career Average Members accrue mney amunts (referable amunts) twards pensin and lump sum, calculated annually by reference t the fixed percentages f pensinable 6

7 remuneratin and linked t CPI increases. These amunts accumulate ver the span f a career t prduce the pensin and lump sum n retirement. Example A In Year 1 a new recruit earns 25,000. This yields a referable amunt (a sum-twards-pensin) f 145 using a 0.58% accrual rate (up t 45,000) 2. Thereafter that 145 is indexed t the CPI (All Items). Assuming 2% inflatin annually and 40 years t pensin age, the 145 will grw t abut 320 at retirement. Example B In Year 1 a new recruit earns 50,000. This yields a referable amunt (a sum-twards-pensin) f using a 0.58% accrual rate (up t 45,000) and 1.25% fr the balance. Thereafter that is indexed t the CPI (All Items). Assuming 2% inflatin annually and 40 years t pensin age, the will grw t abut 700 at retirement. Amunts twards pensin are likewise calculated fr all subsequent years f service. These referable amunts accrue, accumulate and are up-rated thrughut the member s career in the public service. The ttal f these up-rated annual amunts at pensin age cnstitutes the pensin paid in retirement; the lump sum paid n retirement is built up in a similar way based n a 3.75% accrual rate. 2 The figure f 45,000 was set fllwing talks at the Labur Relatins Cmmissin; the amunt is a multiple (3.74 times) f the SPC at time f Scheme cmmencement (January 2013) and the pay level up t which the 0.58% accrual rate applies will change if/when the SPC changes in future t maintain this relatinship. 7

8 Illustratin f Pensin Accrual Year 1 Year 2 Year 3 Final Year Pensinable Remuneratin up t 45,000 x 0.58% + Pen. Rem. ver 45,000 x 1.25% (1/80th) Increased in line with CPI frm the end f Year 1 until end-year prir t Retirement Date + Pensinable Remuneratin up t 45,000 x 0.58% + Pen. Rem. ver 45,000 x 1.25% (1/80th) Increased in line with CPI frm the end f Year 2 until end-year prir t Retirement Date + Pensinable Remuneratin up t 45,000 x 0.58% + Pen. Rem. ver 45,000 x 1.25% (1/80th) Increased in line with CPI frm the end f Year 3 until end-year prir t Retirement Date Pensinable Remuneratin up t 45,000 x 0.58% + Pen. Rem. ver 45,000 x 1.25% (1/80th) N increase in referable amunt in Final Year Annual Pensin n Retirement Integratin The Scheme is integrated with the scial welfare State Pensin Cntributry (SPC) in tw ways: (i) Pensin accrual rates take accunt f the availability f the SPC at retirement. (ii) Pensin cntributin rates take accunt f the fact that SPC benefits prvide part f the retirement incme. The lump sum is nt affected as n scial welfare lump sum is paid n retirement (i.e. scial welfare benefits are payable in pensin frm nly). 8

9 2. CONTRIBUTIONS Cntributin rate (3.5% + 3%) Percentage f net pensinable remuneratin Public Servants 3.5% 3% Percentage f pensinable remuneratin The Scheme is integrated with the scial welfare system and the cntributin rate takes accunt f the SPC benefits which are being cntributed t by the member and the emplyer by way f scial insurance cntributins. In each pay perid an amunt equivalent t 3.5% f net pensinable remuneratin PLUS 3% f pensinable remuneratin will be deducted as the member s cntributin under the Scheme. Pensinable remuneratin means basic pay that is recknable fr pensin purpses, generally cmprising salary and pensinable allwances, but excluding vertime. Net pensinable remuneratin means pensinable remuneratin less twice the value at that time f the SPC fr a single adult withut dependents. 9

10 3. PENSION AND RETIREMENT AGE Minimum Pensin Age This is set, initially, at 66 years. It will rise in step with statutry SPC age increases t 67 in 2021 and 68 in Early retirement n reduced pensin Retirement n pensin frm age 55 is allwed, subject t frmal apprval, based n actuarially-determined cstneutral reductin f benefits. Cmpulsry Retirement Age A general cmpulsry retirement age f 70 applies. 4. PURCHASE/TRANSFER Purchase f additinal pensin / lump sum and transfers frm funded schemes The ptin t allw purchase f additinal pensin and lump sum n a full cst basis t the member is catered fr in the Scheme. The Scheme can als cater fr transfers frm funded schemes. The Minister fr Public Expenditure and Refrm is t make regulatins t s prvide. It is anticipated the Scheme will allw fr nce-ff r peridic purchase and that the mney paid in wuld be recrded in the lump sum referable amunt being accrued fr the year in questin and then up-rated until retirement where it culd be cmmuted t pensin r payable as part f the lump sum. 10

11 5. OTHER BENEFITS Cst Neutral Early Retirement The Scheme prvides that a member wh has reached age 55 may retire early n an actuarially reduced (r cstneutral) basis. The benefits paid are reduced by reference t the member s age at resignatin in accrdance with actuarial tables apprved by the Minister fr Public Expenditure and Refrm. Early retirement n medical grunds In cases f medically certified incapacity t wrk, immediate payment f pensin benefits accrued t pint f retirement with n actuarial reductin is prvided fr in the Scheme fr members with mre than tw years service. In such cases, regulatins will be made t prvide fr enhanced benefits payable, having regard t factrs such as the member s career t date and expected career t retirement. Fr members with less than tw years service, a gratuity f 8.5% f pensinable remuneratin per year f service is paid. Death in Service Benefit A lump sum is payable t the estate f the deceased equal t twice annual pensinable remuneratin at time f death. Survivr s Pensin 50% f a deceased member s pensin is payable t a spuse r civil partner. In additin, in cases f ne, tw r three eligible children, 1/6th f member's pensin is payable per child; in cases f fur r mre eligible children, ne half f member's pensin divided by the number f children is payable per child. These children s pensins are dubled if the nn-member spuse is als deceased. 11

12 Allwances Pensinable allwances r emluments r premium payments, r equivalent, in existence and payable befre Scheme cmmencement n 1 January 2013 are treated as pensinable remuneratin under the Scheme. Allwances r premium payments first arising after cmmencement are pensinable prvided they are (i) apprved as being pensinable, (ii) permanent in nature, (iii) subject t cntributins and (iv) have been advised t the Scheme member as being pensinable. Return f cntributins Scheme members wh leave befre cmpletin f the vesting perid (i.e. 2 years) are entitled t a refund f their cntributins adjusted fr tax / ther statutry deductins. Preservatin f benefits Where, after cmpleting the vesting perid but befre reaching minimum pensin age, a persn ceases t be a public servant (ther than n cst neutral early retirement r medical grunds) he/she will be entitled t a pensin and lump sum payment, payable n applicatin n attaining minimum pensin age. The amunt f this preserved pensin and preserved lump sum is the amunt which wuld have been awarded t the Scheme member had he r she attained the minimum pensin age n the date f ceasing t be a public servant, adjusted fr CPI. Restrictin n number f pensins payable under the Scheme Only ne full-time emplyment r the aggregated equivalent at any time can be taken int accunt t accrue retirement benefits under the Scheme. 12