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Wed., Nov 20, 2019
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Colleges Of Home Economics Pension Scheme (On or Before 31 Dec 2012) - Colleges Of Home Economics Pension Scheme (On or Before 31 Dec 2012)

Staff of Colleges of Education Pension Scheme:

Please note that this is not a legal interpretation of the St. Angela’s College Pension Scheme – this is a more user-friendly interpretation of same.  The College accepts no liability for any error or misstatement contained within.  Please refer to the text of the Pension Scheme to view more detailed information.

The Staff of Colleges of Education Pension Scheme Provides a wide range of benefits to pensionable employee’s including:

  • Tax Free Lump Sum on Retirement
  • Pension on retirement
  • Gratuity payable on the event of a member’s death in service
  • Spouses’ and Children’s pension payable on the event of a members death
  • Provision to pay lump sum and pension to pensionable employees who must retire early on the grounds of ill health
  • Preserved Lump Sum and Pension Benefit

The Staff of Colleges of Education Pension Scheme is a “Statutory Defined Benefit Scheme” in that the benefits payable to the scheme members are set out in the Scheme Rules/Statue (mainly the Local Government (Superannuation Scheme)(Consolidation) Scheme 1998) and, unlike a defined contribution scheme, benefits payable are not dependent on the performance of stock markets or investment returns.
Membership of the scheme includes compulsory membership of both the

  • Main Scheme, and
  • The Spouses; and Children’s Scheme

Membership to the scheme requires employee contributions to be deducted at source from your salary.  Contributions are based on which rate of PRSI you pay and are calculated as follows:

Scheme Staff Paying D Rate PRSI Staff Paying A Rate PRSI
Main Scheme 5% of Gross Pay 3.5% of Net Pay    (Pension)
    1.5% of Gross Pay (Lump Sum)
S&C Scheme  1.5% of Gross Pay 1.5% of Net Pay

If you are unsure of your applicable rate of PRSI please refer to your payslip which denotes your specific rate of PRSI.

Generally ‘A Rate’ staff members are those who commenced employment in the public sector after 06/04/1995 and pay a higher rate of PRSI contributions.
Generally, ‘D Rate’ staff members are those who commenced employment in the public sector before 06/04/1995 and pay a lower rate of PRSI contributions.

Under the Scheme all **New Entrants joining the Scheme have;

  • A minimum retirement age of 65 years
  • No compulsory retirement age (subject to suitability and health requirements)
  • A minimum of 2 years’ service is required for eligibility for benefits (no minimum service is required however for death in service benefit)

**New Entrants’ refer to a person who commences employment in the public sector on or after 01/04/2004 or a person who was serving in a public service body prior to 31/03/2004 and left such an office for a period of greater than 26 weeks before joining the service.

If you joined the public sector prior to 01/04/2004, and did not leave the for a period of greater than 26 weeks (as above) the members of the Scheme have;

  • A minimum retirement age of 60 years
  • A maximum retirement age of 65 years
  • A minimum of 2 years’ service is required for eligibility for benefits (no minimum service required however for death in service benefit)

If you joined the public sector on or after 01/01/2013 or a person who was serving in the public sector and left for a period of greater than 26 weeks, you will then become a member of the Single Public Sector Pension Scheme.  Please refer to the Single Public Sector Pension Scheme booklet for details here:  SPSPS Booklet

Reckonable Service
Service reckonable for superannuation purposes consists of;

  1. Actual Service given following admission to the scheme
  2. Actual Service given prior to admission to the scheme
  3. Notional service which has been purchased
  4. Service which has been transferred from another pension scheme
  5. Added years because of early retirement due to permanent infirmity

Verification of Previous Service
Under the terms of our Scheme, previous service with other specified service organisations and public sector bodies (see attached for full listing of all approved public sector transfer bodies) may be transferred to the Colleges of Education Pension Scheme.
If a newly appointed staff member has prior service with any of these public sector bodies they should contact their previous employer(s) to verify this service and confirm whether contributions have or have not been paid for this service.
If the service in previous employment(s) was validated and paid for and the contributions retained by the authority this will be noted on the individual’s record and service recorded as reckonable for benefits purposes.
Previous verified service is segregated as:

  1. Whole-time service
  2. Part-Time/Flexible/Pro-rata Service

It is important to note that historically part-time service was not recognised as service for the purposes of pension entitlement.  However, from early 1990’s this position began to change with the introduction of numerous employment regulations and Acts ultimately culminating in the Protection of Workers (Part-Time Work) Act 2001 which eliminated any distinction between the terms and conditions of a Part-Time Worker against his/her whole-time counterpart and thereby permitted all par time hours worked to be reckonable for the purpose of pension service.

Refer to Circular 25/2008 – this C/L consolidated the position of all part-time service.

Cost of Purchasing Reckonable Previous Service:

(a)To purchase service where a refund of contributions was received for previous employment
An employee who is returning to work in the public sector after a previous resignation/break in service and where they took a refund of pension contributions for that previous service may opt/choose to buy back this service.
However, reckoning of such refunded service will be costed as follows;
Gross of amount of refund received plus compound interest at the following applicable rates
Compound Interest rates applicable for buy back of service where refund of contributions was received:

Service up to 31/12/1983   7% per annum
Service after 01/01/1984   6% per annum
Service from 14/11/2004    4% per annum

Tax relief is allowable on the interest element of the repayment only.
Repayment of previous pensionable service for which a refund of pension contributions was given is optional.
This option may be availed of in very limited circumstances.

(b)Class A PRSI Employees’ – Officer
Previous whole-time temporary service – this service is costed with reference to the salary and pensionable emoluments/allowances of the individual.**
The cost to a registered scheme member who is fully insured, paying Class A PRSI, to reckon a period or periods of previous whole-time service in an approved public sector body is as follows:
1.5% of full Pensionable earnings (towards Lump Sum Contributions) AND
3.5% of Net Pensionable earnings i.e. gross earnings less twice the rate of contributory state pension
AND
1.5% of Gross Pensionable earnings towards Spouses’ and Children’s Pension (For the purposes of buying back contributions, this may be by 1.5% additional deductions from salary or by deduction from Retirement Lump Sum at the rate of 1% of Retirement Salary for each year of service).
**Liabilities are usually calculated, at the latest, on the basis of a persons’ current salary at the end of the third month after appointment to a pensionable post.  If part-time; Pro-rata rules apply.

(c)Class D PRSI (Officer Grades appointed pre 06/04/1995)
The cost of purchasing previous whole-time service by a member who is not fully insured paying Class D PRSI (Officer who was appointed pre 06/04/2005), to reckon a period or periods of previous service in an approved public sector body is as follows:

  • Periods prior to 31/12/1985 – 2.5% aggregate salary plus the value of his/her emoluments received.
  • Periods on or after 01/01/1986 – 5% aggregate salary plus the value of his/her emoluments received.

The period of payback will be determined on a case-by-case basis and in line with the terms of the scheme.

(d)Reckoning Previous Part-Time Service
Part-Time Service – Class A Officer Grades
In the case where a Class A employee in an Officer Grade wishes to purchase periods of part-time previous service the following applies

  • Service Prior to 27/05/1977 – where the hours worked were at least 18 hours per week.
  • Service from 27/05/1977 to 31/08/2001 – where the hours worked were at least 10 hours per week.

Back contributions payable for all part-time service prior to 01/09/2001 are costed with reference to the Pensionable Pay and State Pension Contributory rate at 20/12/2001 multiplied by the number of years in question.

  • Part-Time Service from 01/09/2001 – no minimum threshold of hours applies i.e. all hours worked are reckonable for service.

Notional Service Purchase Scheme
Where a staff member will not have potential service of 40 Years at their retirement age of 60/65 years of age i.e. full service, the facility exists within the Staff of Colleges of Education Pension Scheme Rules for employees’ to purchase notional years of service/additional pensionable service at full actuarial cost.
There are two methods of purchasing Notional Service;

  • By Periodic Deduction from Salary/Wages from next birthday until retirement age, OR
  • By way of single lump sum payment (payment in this case must be made within 6 months of exercising this option, otherwise the option is invalid).

The additional service purchased is treated as actual service in calculating pension and lump sum entitlements, including spouses’ and children’s benefits.
The concept of notional service is to allow members of the scheme, subject to certain conditions, to purchase additional years of reckonable service thereby increasing their pension entitlement.
One of the key determining factors used to calculate a scheme members superannuation award at retirement is years of service.
The cost of purchasing notional service is calculated using actuarial rates which are based on a person’s age at their next birthday and the rate of PRSI a person pays i.e. Class A or Class D and whether membership of the Spouses’ and Children’s Scheme applies.

Some of the key points of the notional service scheme are highlighted below.

  • In order to purchase notional service you must have 9 years actual or potential service.  This includes future potential service to retirement age or contract end date for fixed term workers, actual service i.e. service already given and service transferred to St. Angela’s Pension Scheme from another approved Public Sector Body.
  • You may only purchase your shortfall of service to a maximum of 40 years’ service at age 60 or age 65 as appropriate.
  • Notional Service may be purchased with reference to age 60 or age 65 only.  Those members of the scheme who are deemed to be New Entrants (i.e. generally those who joined the public sector after 01/04/2004) can only purchase notional service with reference to age 65.  The rates for purchasing to age 60 are higher than those that apply to purchases to age 65 as purchases are made over a shorter period of time.

Notional Service may be purchase by lump sum or periodic deduction.
Lump Sum is the payment of one amount based on

  • The person’s salary at the time of the purchase and
  • The rate based on their age next birthday and Class of PRSI (A or D), and whether membership of the Spouses’ and Children’s Scheme applies

Staff my make one lump sum purchase in any calendar year subject to a minimum payment of 10% of annual full time salary (unless a lower amount is needed to provide for 40 years reckonable service).
Purchases by periodic payroll deduction are paid via deduction from salary. This deduction is a percentage therefore as a person’s salary increases the amount deducted will increase proportionately. An option to purchase service by periodic deduction may be made at the time up to age 63 years with reference to age 65 and up to age 58 with reference to age 60 subject to certain conditions.
In order to exercise the option to purchase notional service you must notify the pension section in writing clearly stating the option you wish to exercise i.e. the reference age and purchase method (either lump sum or periodic deduction).
If an employee purchases by either single payment of by periodic deduction and subsequently retires before age 60 (or age 65 for New Entrants), an actuarial reduction of their notional service credit will be made.
Please note that if you opt to purchase notional service and subsequently leave St. Angela’s College before the age at which you have agreed to purchase service until or you cease to make the periodic payments the amount of added years you will have purchased at retirement will be less than the amount you contracted to purchase initially.  This will reduce your benefits

Tax Relief
Tax relief is allowed on annual aggregate superannuation contributions as a percentage of a persons’ gross salary.  Tax relief is allowable from a minimum of 15% to a maximum of 40% of remuneration based on a person’s age.  Part of this tax relief is already applied to a person’s regular contribution to the pension scheme.  The balance may be utilised for repayment of contribution due for previous service, purchase of notional service or contributions to an AVC scheme or other authorised pension product.  Tax relief for purchases of notional service by periodic deduction is applied at source by for lump sum purchases the pension section will provide a statement of the cost of the purchase which the employee must submit to the Revenue.

Additional Voluntary Contributions (AVC)
An AVC is an additional investment option made available to employees’ to enable them to make additional savings (outside of the occupational pension scheme) for retirement while receiving tax and PRSI relief on these savings.
You can make Additional Voluntary Contributions if the benefits that you will receive at retirement from your main scheme and any benefits retained from any employments are projected to be lower than the maximum allowed by Revenue.
Additional Voluntary Contributions is a private arrangement made by the employee independent from St. Angelas College with a Financial Services Company.  The payroll department can, however facilitate deductions from salary in respect of the AVC plan taken with the AVC provider.

Early Retirement/Cost Neutral Early Retirement
The Cost Neutral Early Retirement facility allows members of the pension scheme to retire from age 50 (or age 55 in the case of New Entrants) with actuarially reduced superannuation benefits.  This facility will be made available to serving staff and the option will be extended to staff who resigned with and entitlement to preserved superannuation benefits as and from 01/04/2004.
The benefits payable to a scheme member who opt to retire under this scheme at age 58 are illustrated in the example below.
Example: Retirement at age 58, Class D PRSI existing member
A person on Class D PRSI to whom a non-co-ordinated pension is payable, with a preservation age of 60, retires on his/her birthday.
Final Annual Salary: €50,000 Age: 58 Reckonable Service: 40 Years
Pension Benefits under Cost Neutral Early Retirement:

If opting to preserve benefits If availing of cost neutral early retirement
Due at age 60 (in 2 years)  Due now
Lump Sum:    €75,000 €72,075 (reduced to 96.1%)
Annual
Pension:        €25,000 
€22,525 (reduced to 90.1%)
Calculation of preserved Lump Sum: 3/80 x 50,000 x 40 = €75,000
Calculation of preserved Pension: 1/80 x 50,000 x 40 = €25,000
Anybody who wishes to look into Cost Neutral Retirement as a possibility will have to liaise with the Finance Department directly

Death In Service:
Where an employee (who is a registered member of the Pension Scheme) dies while in service, a death gratuity is payable to their legal representative.
The death gratuity payable is equal to the Lump Sum which would have been payable if the staff member had ceased to hold employment on the grounds of ill-health at the date of death.
OR
One year’s salary

Leaving/Resigning
This section addresses the impact that leaving/resigning from your position in St. Angela’s College will have on your Staff of Colleges of Education Pension Scheme Membership and applicable benefits where the member is;
Transferring to another Public Sector Body
OR
Leaving St. Angela’s College with greater than 2 years pensionable service
OR
Leaving St. Angela’s College with less than 2 years pensionable service

  1. Transferring to another Public Sector Body:
    If you are leaving/resigning from your current position to take up pensionable employment in another public sector organisation, which is party to one of the public sector transfer schemes, you may apply to the pensions department of your new employment to have your pensionable service transferred to that organisation.
  2. Leaving with greater than 2 years pensionable service
    If you are leaving St. Angela’s having completed greater than 2 years pensionable service, your pension benefits will automatically be preserved.
    Where Pension benefits are preserved, the pension and lump sum will be payable to you on application from age 60 and age 65 for New Entrants.
    If an individual should become permanently infirm before attaining the age of 60/65, the preserved lump sum and pension may become payable from the date of infirmity, as determined by medical reports.
    Should a member with preserved benefits die before reaching their retirement age, a gratuity equivalent to the retirement lump sum is payable to that person’s estate.  Where the person was a member of the Spouses’ and Children’s pension scheme, a pension will also be payable to the surviving spouse/dependents.
    The preserved benefits will be based on Actual Pensionable Service and on the members retiring salary as increased by reference to increases granted between the date of resignation and age 60 or (65 for New Entrants).
  • Leaving with less than 2 years Pensionable Service and do not intend to take up further reckonable employment

If you are leaving St. Angela’s with less than 2 years reckonable service, you may apply to your pension section for a refund of contributions paid less a deduction for tax.

Retirement due to ill health
Where an officer retires early because of permanent infirmity (which has been supported by medical records) the officer may be awarded added years:

1)  If actual service given > 5 years but < 10 years:  the actual service is doubled but cannot exceed the potential service to age 65 years of age.
E.g. you are 60 years of age and have 8 years’ service – you would only be able to get another 5 years added to bring you to 65 and not the full additional 8 years.

2)  (a)  If actual service given is between 10 – 20 years:  increase the service up to a max of 20 years subject to the 65 years of age rule
OR
(b)  Increase by 6 2/3 (243 days) or by the years left to bring you up to age 60 whichever is the lesser.

Whichever is more favourable (a) or (b) is the one that is applicable.

3) If you have 20+ years:  The max you can get is 6 2/3 years to bring you to age 60.
E.g.  If you are 55 years of age and have 20 years’ service – you can get another 5 years to get a total of 25 years to age 60.
E.g. If you are 58 and have 20 years’ service you can add another 2 years to bring you to age 60.
E.g.  If you are 45 with 21 years’ service you can get another 5 and 2/3 years because the max you can get too using this rule is 26 2/3 years.

What do you pay for these additional years?
You only pay S&C for the added years.  As the payment is deducted from the Lump Sum - the rate is always going to be 1%.
In addition, S&C will also have to be paid on potential years to age of retirement (if applicable) also at 1%.

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