Mandatory insurance

• Any public servant who joined the public service for the first time on or after 01/01/2013 and is working in a pensionable position is covered by this scheme.

Exempted

• Public or civil servants who were already members of the public/civil service prior to 01/01/2013.

General finances

• The scheme is financed in a PAYG manner by employee contributions.

Contribution rates

• The standard employee contribution rates which apply to most members are 3% of pensionable remuneration and 3.5% of net pensionable remuneration (pensionable remuneration less twice the value (at the time) of the Contributory State Pension for a single adult without dependants).

Taxation of contribution payments

• No tax exemptions for contribution payments. Tax relief is provided at source.

• Each public sector employer is responsible for administering the scheme within their employment. Ultimately the scheme is administered by the Department of Employment Affairs and Social Protection.

• In order to qualify for retirement benefits under the Single Scheme the following conditions must be met (as stated below).
• Recruitment date: person must have joined the public service on or after 01/01/2013.
• Vesting period: person must have paid into the scheme for a minimum of 24 months.
• Age: person must have reached the statutory retirement age of 66 year or over.
• Early retirement/ill health: early retirement is possible under the Single Scheme as long as the vesting condition is met from the age of 55 years. This is known as Cost Neutral Early Retirement. The lump sum and pension will be permanently reduced to reflect early retirement depending on the age of retirement and the time remaining to normal retirement. Where early retirement is needed due to ill health there is no age limit applied.

Pension benefits

• This is a defined benefit scheme.
• Two main benefits arise on retirement: a retirement lump sum and a retirement pension.
• Benefits are calculated based on a career average model. This means that retirement benefits are based on a percentage of pensionable earnings throughout a public service career as a member of the scheme.
• Lump sum benefit: 3.75% x full time gross pensionable remuneration x % work pattern for each payment period.
• Pension benefits: 0.58% x full time gross pensionable remuneration up to a Contributory State Pension threshold* x percentage work pattern plus 1.25% x full time gross pensionable remuneration up to a Contributory State Pension threshold x percentage work pattern for each payment period. Members of the scheme may also be entitled to a State Pension (Contributory).

* Contributory State Pension threshold = 3.74 x current Contributory State Pension rate x person’s pay frequency.

Taxation and Social Security Contributions

• Pension lump sums under EUR 200,000 are tax-free. The next EUR 300,000 of pension lump sum taken from all pension arrangements since 07/12/2005 is taxable at the standard rate of income tax (currently 20%). Any lump sum over the EUR 500,000 limit will have Universal Social Charge deducted and will be taxed at the higher rate (40% in 2021). There is also a cap on the maximum value of retirement benefits that any individual can build up from 07/12/2005 onwards. This is called the Standard Fund Threshold (SFT) and is EUR 2 million.

Mandatory insurance

• Any public servant who joined the public service for the first time before 01/01/2013 and is working in a pensionable position is covered by one of these schemes (e.g. schemes for teachers, health service, defence forces, local government).

Exempted

• Public or civil servants who join the public or civil service for the first time on or after 01/01/2013.

General finances

• The scheme is financed in a PAYG manner by employee contributions. One exception to this is Commercial State Bodies which manage their own specific pension funds through contributions.

Contribution rates

• The personal contribution is 1.5% of pensionable remuneration plus 3.5% of net pensionable remuneration.

Taxation of contribution payments

• No tax exemptions are available. Tax relief is provided at source.

• Each public sector employer is responsible for administering the scheme within their employment. Ultimately the scheme is administered by the Department of Employment Affairs and Social Protection.

• While differing qualifying conditions will apply depending on the exact public service scheme applied under, the following common conditions must be met (as stated below).
• Recruitment date: employees in pensionable positions will have been recruited prior to 01/01/2013.
• Vesting period: must have paid into the scheme for a minimum of 24 months.
• Age: the minimum pension age varies depending on whether the employee is classed as a ‘new entrant’ to the public service.¹ If the employee is a ‘new entrant’ (they joined the public service on or after 01/04/2004) the minimum pension age is 65 years. For all other public servants the minimum retirement age is 60 years.
• Early retirement: early retirement is possible at age 55 for new entrants and age 50 for non-new entrants under the Cost Neutral Early Retirement Scheme. It is based on actuarially-reduced cost-neutral reduction of benefits.
• Ill health: where ill health occurs, immediate retirement can occur with added years of service.
• Remaining in employment: this is possible but there is no reckoning of service beyond age 65 except for post-2004 new entrants.
• Enhancement of pension: there are options available to individuals to enhance pension through the purchase of notional service at full actuarial cost or through additional voluntary contribution schemes (which trade unions may introduce and promote).

Pension benefits

• These are generally defined benefit schemes.
• Two retirement benefits accrue under these schemes: retirement lump sum and retirement pension.
• The benefits are calculated by reference to pensionable remuneration at the date of retirement (final salary model) and reckonable service. Pensionable remuneration is the aggregate of pensionable salary (the salary on the last day of service) and pensionable allowances (average of the variable pensionable allowances received in the best three consecutive years in the ten years preceding retirement). If the employee has recently been promoted, the average salary over the last three years of service is generally used.
• The maximum number of years of reckonable service allowed for the calculation of benefits is 40 years.
• Retirement lump sum: calculated at the rate of 3/80ths of pensionable remuneration for each year of pensionable service, subject to a maximum of 1.5 times pensionable remuneration.
• Retirement pension: the method of calculation will depend on the employee’s PRSI status (i.e. whether or not they are fully insured) and applicable pension terms. Generally, a pension of 1/80th of final earnings is payable for each year of service
• Retirement benefits are coordinated with the State Pension (Contributory) for those who joined the public service on or after 06/04/1995. This means that both the State Pension (Contributory) and the occupational pension can be claimed.

Taxation and social security contributions

• Pension lump sums under EUR 200,000 are tax-free. The next EUR 300,000 of pension lump sum taken from all pension arrangements since 7 December 2005 is taxable at the standard rate of income tax (currently 20%). Any lump sum over the EUR 500,000 limit will have Universal Social Charge deducted and will be taxed at the higher rate (currently 40%). There is also a cap on the maximum value of retirement benefits that any individual can build up from 07/12/2005 onwards. This is called the Standard Fund Threshold (SFT) and is EUR 2 million.