UNIVERSITY OF LIMERICK Superannuation Scheme CLASS D PRSI Presented by Séamus O’Dwyer in association with Liam Mannion, Rockcourt Financial Services Ltd 1

 To provide adequate replacement income in retirement  To provide benefits to certain Survivors on Death of the Member during service or in retirement  To provide a Scheme which is stable and capable of meeting its liabilities e.g. not to pay benefits before a specified age  To have definite rules stating the basis on which benefits are paid e.g. Age, Salary, Service, Contributions, Investment Returns

1. LINKED TO EMPLOYMENT (Occupational Pension Schemes) ◦ Defined Benefit Scheme ◦ Defined Contribution Scheme 2. Private Pension Plan or Top-up to Occupational Pension. e.g. PRSA or AVC Not sponsored by the employer 3. Social Welfare Pension (CSP)

 Linked directly to employment ◦ Membership is compulsory for eligible staff ◦ Accrual of benefits stops when you leave but possibility to transfer within Public Sector  Defined Benefit ◦ A set of Rules ◦ You can calculate the pension for an individual if you have certain facts and know the rules 4

Main Features Occupational Scheme Defined Benefit  Benefits for the Member (Personal Benefits)  Benefits for Survivors (If also a member for Survivor Benefits) Contributions No Pension Fund – Pay As You Go 5

 University of Limerick Superannuation Scheme  Legislation: a new Statutory Instrument (S.I. 582 of 2014): Rules for Pre-existing Public Service Pensions Scheme Members Regulations 2014* - updates the current scheme provisions, subject to certain modifications * 6

 Pension Contributions  The main components and how a pension is calculated  Minimum Pension Age and Max. Retirement Age  Preserved Benefits and Cost Neutral Early Retirement  Retirement on Medical Grounds  Supplementary Pensions  Death in Service  Survivor’s & Children’s Scheme  Marriage Breakdown and Pension  FEMPI Acts– Impact on pension - recent changes  New Legislation – will it affect me?  Transferred Service  Adding to Service - Purchase of Notional Service and AVCs  U.K Pensions 7

 Class D PRSI members pay 5% of gross pensionable salary for personal pension benefits ◦ In addition there are contributions for Survivor’s and Children’s Benefits 8

 There are pro-rata contributions for part- time staff or worksharers: A x B/C where: A = the contributions payable by an equivalent whole time member B = the number of hours (excluding overtime) worked by the member C = the standard number of hours worked in the equivalent whole time post 9

Examining the Key Elements in more detail……… 10

 Have reached the Vesting Period?  Member of which Scheme or Scheme Category?  Service Reckonable for Pension?  Pensionable Salary?  PRSI Class?  Accrual Rate (formula to use)?  Minimum Pension Age?  Maximum Retirement Age?

 This is the qualifying period to have a pension paid to you  It is currently 2 years’ as an active Scheme Member  Death in Service benefits do not have a Vesting Period condition

 Class D members* recruited prior to 6 April 1995  All appointees to a pensionable post. * There are separate presentations for Class A PRSI members and members of the Single Public Service pension Scheme 13

1. Actual Service following admission to the Scheme

2.Service transferred from another Public Sector Pension Scheme via the Transfer Networks 3.‘Notional’ Added years for  Death in Service  Ill-health retirement  Professional Added Years 4.‘Buy-Back’ of earlier service, subject to conditions and where appropriate contributions have been paid

5.Service purchased under the purchase of service scheme 6.Service credited from a Transfer Value payment from outside the Transfer Network 7. Sick Pay at full and half pay is credited as full time service for whole-time Members Note: (1) unpaid leave is not pensionable (2) Temporary Rehabilitation is not pensionable (3) maximum pensionable service is 40 years 16

 Have reached the Vesting Period? √  Member of which Scheme? √  Service Reckonable for Pension? √  Pensionable Salary?  PRSI Class?  Accrual Rate (formula to use)?  Minimum Pension Age?  Maximum Retirement Age? 17

Some Pay may not be pensionable………… 18

 Pensionable Salary excludes: - overtime - special fees or bonus - travel and subsistence 19

 Averaging applies where the member changed grade or salary scale in the final 3 years ◦ Except where -  the member died before age 62 or  the member retired on ill-health grounds more than 3 years before age 60 20

 The calculation: ◦ The number of days in the former grade divided by 1095 multiplied by the salary of the former grade at retirement taking into account any increment which would have been if member remained in former grade plus…. ◦ The number of days in the current grade divided by 1095 multiplied by salary held at retirement example 21

 Have reached the Vesting Period? √  Member of which Scheme? √  Service Reckonable for Pension? √  Pensionable Salary? √  PRSI Class?  Accrual Rate (formula to use)?  Minimum Pension Age?  Maximum Retirement Age? 22

 Class D (Modified) PRSI or  Class A (full) PRSI Key date: 5 th April 1995 You must know this when calculating your pension as it will dictate which accrual rate formula you use in calculating the pension - see next slide 23

 This is the rate of pension credit (or lump sum credit) a member gets for each year of service. It is expressed as a fraction which is applied to the pensionable salary  Class D PRSI: ◦ It is 1/80 th for pension; and 3/80 th for Lump Sum 24

Pre-1995 and Modified PRSI …Accrual Rate 1/80th Orla is age 60 and retiring with Retiring Salary of €80,000 and no pensionable allowances. Her Pensionable Service is 40 years (the maximum) Annual Pension = Salary x Service/80 €80,000 x 40/80 = €40,000 25

 Lump Sum Accrual rate is 3/80 th Mary is 60 and retiring with Retiring Salary of €80,000 and no pensionable allowances. Her Pensionable Service is 20 years Retirement Lump Sum €80,000 x 20 x 3/80 = €60,000 This is the same accrual rate and the same calculation regardless of PRSI Class 26

 Have reached the Vesting Period? √  Member of which Scheme? √  Service Reckonable for Pension? √  Pensionable Salary? √  PRSI Class? √  Accrual Rate (formula to use)? √  Minimum Pension Age?  Maximum Retirement Age? 27

 This is the earliest age at which you may retire and receive an immediate lump sum and pension without actuarial reduction (except Ill-health)  Age 60 for those who commenced service before 1 April 2004  Age 65 for “New Entrants” as defined in the Public Service Superannuation (Misc. Provisions) Act Includes all recruits from that date unless they had been in the Public Sector within the last 6 months and were not “new entrants” in that earlier post  For members of the New Single Scheme it is the same as the Social Welfare pension age – now 68 for most new recruits 28

 For those who are not “new entrants” or members of the New Single Scheme, the 30 th September after reaching age 65 is the compulsory retirement age  For “new entrants” (2004 Act) there is no compulsory retirement age  For members of the New Single Scheme 70 is the compulsory retirement age 29

 Have reached the Vesting Period? √  Member of which Scheme? √  Service Reckonable for Pension? √  Pensionable Salary? √  PRSI Class? √  Accrual Rate (formula to use)? √  Minimum Pension Age? √  Maximum Retirement Age? √ 30

Staff Recruited Before 6 April 1995 paying Class D PRSI Formula for Pension Calculation Salary * Service/80 31

Pre and Class D PRSI As we saw earlier……… Orla is 60 and retiring with Retiring Salary of €80,000 and no pensionable allowances. Her Pensionable Service is 40 years (the Maximum) Annual Pension = Salary x Service/80 €80,000 x 40/80 = €40,000 Retirement Lump Sum €80,000 x 40 x 3/80 = €120,000 32

 Where a member resigns before minimum pension age, pension and lump sum benefits are Preserved  Must have completed the vesting period  If the member has not completed the vesting period, the member gets a refund of contributions unless he or she is transferring the service  Member has the option of applying for Cost Neutral Early Retirement if within 10 years of min. pension age 33

 This allows a member who is resigning and who has completed the vesting period and who is within 10 years of the minimum pension age to apply for an immediate lump sum and pension instead of Preserved Benefits.  The benefits will be actuarially reduced to reflect the early draw-down. The pension will be subject to the reduction because it will now be paid over a longer period  Must be applied for before resignation, otherwise the benefits are preserved 34

If Minimum Pension Age is 60 35

36  If Minimum Pension Age is 65

Formula: [A + ((B/365) x (C-A))] x Preserved Benefit Where A = Actuarial reduction in the table based on age last birthday B = No of days since last birthday C = Actuarial reduction factor based on age next birthday

If approved: with more than 5 years actual pensionable service: 1. Pension is payable immediately and 2. Added years may be awarded If vesting period completed, but less than 5 years actual service, immediate pension but no added years 38

Added years calculation: Service between 5 and 10 years: The service is doubled but capped at potential service to age 65 Service between 10 and 20 years: Service is topped up to the better of 20 (capped at potential to age 65) or 6 and 2/3rds years (capped at potential to age 60) Service above 20 years: 6 and 2/3rds years added capped at potential to age

 When Payable ◦ To whom? ◦ In what circumstances?  How is it calculated?  How is it Reviewed? 40

 Death Gratuity payable when a member dies in service ◦ the more favourable of:  One year’s actual salary  Lump sum payable as if member had retired due to ill health (including added years, if applicable)  Spouses and Children’s* Pension (with additional notional service) *incl. Civil Partner 41

 Impact of Finance Circular 11/2012 on: ◦ Death in Service Benefits ◦ Benefits on retirement on medical grounds  Where the member is working at less than wholetime hours 42

The Scheme originally covered Spouses* and Children but now covers a Civil Partner in a Civil Partnership recognised under the 2010 Civil Partnership Act. * Includes same sex marriages under the Marriage Act 2015, following the Referendum 43

 The S&Cs scheme applies to all male members of the Scheme from1 January 1980 and from 1 September 1984 for female members  Membership is now compulsory for all members recruited who are members of the Superannuation Scheme 44

 The Spouse is the legal spouse as recognised in the Irish State.  The legal status of the spouse is not affected by: ◦ A Church annulment ◦ A legal or judicial separation under the 1995 Family Law Act.  Since the enactment of the 2010 Civil Partnership Act where the word “widow” or “spouse” is used in the scheme it also includes a “Civil Partner” 45

 A Person under 16 or under 22 if in full time education or training and ◦ is unmarried and ◦ is dependent on the Member. There is no age limit if a person has a permanent disability and the disability occurred before age 16, or 22 if in full-time education or training.

 Calculate “the deceased’s” pension The Spouse’s Pension is one-half of the “deceased’s pension 47

John dies while in receipt of a pension of €30,000: - the spouse’s pension is one-half of John’s pension = €15,000 The “deceased’s pension” is in some case a notional pension used for calculation of a spouses pension – see the next example………… 48

 Mary who was a Class D PRSI member, dies in service. Her pensionable at date of death was €60,000. She died on her 45 th birthday and had 22 years and 53 days service.  “deceased Pension” €60k x 40/80 = €30,000*  Spouse’ Pension is €30,000/2 = €15,000 *Note 1: potential service to age 65, capped at 40 years Note 2: the calculation of the deceased’s pension following an ill-health retirement is the same 49

Calculate “the deceased pension” Spouse If 1 Child: 1/6 th of “deceased’s pension” If 2 Children: 1/3 rd of “deceased’s pension” If 3 or more Children: ½ of the “deceased’s pension” divided equally among the children No Spouse: If 1 Child: 1/3 rd of “deceased’s pension” If 2 or 2+ Children ½ of “deceased’s pension” divided equally among the children 50

 Deducted from salary  Class D PRSI:  1.5% of pensionable salary  Periodic contribution continue beyond 40 years but excess is refunded beginning with the earliest 51

 Where all periodic contributions have not been paid e.g. for pre-scheme service, a member has option of paying additional periodic contributions in multiples of 1.5% to clear the arrears or part of the arrears. ◦ e.g. I had 2 years pensionable service in another organisation before I joined UL. I can clear the arrears by paying an addition 1.5% deducted by payroll for a period of 2 years Alternatively………………………….. 52

 Deduction from retirement Lump Sum ((or Death 1% of pensionable salary  Payable only if the Member was married (or in a Civil Partnership) during Scheme membership  Payable in respect of periods of service for which contribution have not been paid (e.g. pre-scheme service)  Payable also in respect of potential service to age 65 (capped at 40) in cases of ill-health retirement or death in service 53

 Public Sector Transfer Network -Service may be transferred from a Body which is a member of the Network to another member Body. -Usually on a ‘knock-for knock’ basis but may be on the basis of transfer value or “16c” -Service is transferred but the terms of the receiving scheme apply -Outstanding contributions plus interest on the service being transferred must be paid for -The preserved service in the former scheme is cancelled 54

 A member may add to their pension by: ◦ Purchasing additional years in the scheme within certain limits – this is part of the superannuation scheme ◦ Buying back earlier service where pension contributions had not been paid ◦ Making Additional Voluntary Contributions (AVCs) – this is not part of the superannuation scheme 55

 Limits on Purchase (Revenue Rules)  Cannot purchase to be over-pensioned (40yrs)  May purchase by a single lump sum payment or by periodic deductions from salary  May purchase by reference to age 60* or 65  Purchase Tables have the rates. Different rates for purchase to 60 and 65, whether a member of S&Cs Scheme and whether Class A or Class D PRSI  *2004 New Entrants may purchase to 65 only 56

 Reductions in the amount purchased if: ◦ Leaving earlier than the target date ◦ Taking periods of unpaid leave ◦ Taking Pension before the target date 57

 It is the only way you can guarantee actual added years in pension and lump sum  Rules can be rigid. You may have to set up multiple contracts if taking breaks in service  Can be “winners” and losers” – Cross-subsidy.  Cannot buy lump sum only, separate from pension 58

 Church annulment  State Decree of Nullity  Divorce abroad  Marriage abroad  Legal Separation  Judicial Separation Family Law Act  Divorce Family Law (Divorce) Act  Civil Partnership Act

 A member’s Pension, Lump Sum and Death in Service entitlements along with an actuarial valuation of the pension entitlement may be used by the Courts to make a Pension Adjustment Order for the spouse or dependants  A PAO can be made against the Death Gratuity, Retirement Lump Sum, Member’s Pension or Spouse’s Pension 60

 PAOs – made by a Court under the Family Law Acts  These bind the Scheme to pay to the non- member spouse a specified part of the pension which would normally be paid to the member or the member’s current spouse  Can be varied in some circumstances  PAOs override the Scheme rules 61

 Shifting sands ◦ Pay restoration ◦ PRD (Pension Levy) reductions ◦ PSPR (Pension reductions being restored)  Thinking of retiring? 62

Original Reductions for Retirement between 1 July 2013 and within the Grace Period*  Pension Cut only for those on pension above €32,500:  Up to €12K- exempt  €12K - €24K- 2%  €24K - €60K - 3%  €60K - €100K- 5%  €100K+- 8% Lump Sum not affected. *Rates amended by the 2015 FEMPI Act – see next slides 63

 Grace Period Extended to 1 April 2019  Restoration of PSPR (Pension Cuts)  The next table covers pensions which come onto payment anytime after 29 February 2012 but only where the pension is over €32.5K 64

PSPR on pensions (retired after March 2012) above €32, BandRateBandRateBandRateBandRate Up to €12K0%Up to €29.3K0%Up to €39K0%Up to €60K0% €12K — €24K 2% €24K — €60K 3% €29.3K — €60K 3% €39K — €60K 2% €60K — €100K 5% €60K — €100K 5% €60K — €100K 5% €60K — €100K 5% €100K +8%€100K +8%€100K +8%€100K +8%

 Internal Disputes Resolution Procedures  Refer to the Pensions Department in the first instance  Further steps if not resolved: ◦ Appeal to the Minister for Education & Skills (and Minister for Public Expenditure and Reform) 66

 Pensions Ombudsman – Procedures and time limits 67

 2012 Act Requirements  Pension Act Requirements  Data Protection  Family Law Information Requirements 68

 Added to service where the essential educational qualification or experience required for the post could not be gained before age 25. Subject to rules set out in Circulars and in the entry competition. 69

 CPI Pension increases (Subject to Ministerial order) (S.47)  Abatement across the Public Service (S.52)  Cap of 40 years’ service across P.S. Schemes(S.52)  Duty to give information (S.49)  Use of PPSN (S.50)  Duty to make declarations (S.51)  One Survivors’ Pension(S.54) 70

[Section 52, subsections (1) to (5), of the Public Service Pensions (Single Scheme and Other Provisions) Act 2012] ◦ Key innovation in 2012 law: risk of pension abatement where pensioner returns to any public service job ◦ For any new hire: (1) Determine in principle if pension abatement could apply  Pensioner must be “appointed to a [remunerated] position”  … on or after 1 November 2012 (2) Then calculate by how much the pension is abated  Range of outcomes: zero to 100% of pension abated  Calculation basis unchanged in 2012 law, so …  3 parameters: pension (€), new salary (€), old salary (updated) (€)  Abate pension to the extent that [Pension + new salary] > old salary

Have you ever worked in the UK? You may have a pension entitlement there. What are your options?

 Superannuation Advice  Non Union affiliated  Independent Advice on: Income Protection Additional Death in Service Cover Investments  Transfer of UK Pensions 73 Regulated by the Central Bank Reg. No. C134810

74 Rockcourt Financial Services Ltd, 6-9 Trinity Street, Dublin 2. Rockcourt Financial Services Ltd, Main street, Glenamaddy, via Castlerea, Co. Galway. Tel: / Rockcourt Financial Services Ltd, trading as Rockcourt, is regulated by the Central Bank of Ireland C

 The University of Limerick is pleased to facilitate this presentation but it does not endorse Rockcourt or any Financial Services Company.  This Presentation is intended as a guide only. It is not a legal interpretation of the Scheme. Benefits will only be payable on the basis on the rules, relevant legislation and circulars in force at the time of payment  Rockcourt Financial Services Ltd is regulated by the Central Bank ref. C