University of Limerick Superannuation Schemes Brief Outline of Early Retirement Provisions

Minimum Retirement Age 2004 Public Sector Superannuation Act New entrant category (post 1 April 2004 appointees to public service) Minimum retirement age for new entrants is 65 Minimum retirement age for non new entrants is 60

Retirement at Age 60 Non new entrant may retire from age 60 and must retire at the end of the academic year in which he or she has attained the age of 65 In the event of early retirement (i.e. from age 60), pension and gratuity (lump sum) are based on service and pensionable pay on date of retirement

COMPARISON BETWEEN CLASS A and D PRSI Albert(a) has reached age 65 and is retiring after 40 years service. The retiring salary is €80,000. Joined the Superannuation and Spouse’s & Children’s Schemes on entry to the organisation. BENEFIT CALCULATIONS CLASS A PRSI Annual Pension €38, x 40 /200 = € 7, €41, x 40/80 = €20, Plus State Pension = €11, €40, Gratuity €80,000 x 40/80 x 3 = €120,000 BENEFIT CALCULATIONS CLASS D PRSI Annual Pension €80,000 x 40 /80 = €40,000 Gratuity €80,000 x 40/80 x 3 = €120,000

Normal Retirement – Example 1 Person retires at age 60 Pays Class D PRSI (i.e. entered public service before 6 April 1995) Pensionable Pay on leaving is €80,000 Service on leaving is 30 years Benefits are as follows: –Gross Lump Sum = €80,000 x 30 x 3/80 = €90,000 –Pension = €80,000 x 30 x 1/80 = €30,000

Normal Retirement – Example 2 Person retires at age 60 Pays Class A PRSI (i.e. entered public service after 6 April 1995) Pensionable Pay on leaving is €80,000 Service on leaving is 30 years Benefits are as follows: –Gross Lump Sum = €80,000 x 30 x 3/80 = €90,000 –Pension = €38, x 30 x 1/200 = € 5, plus €41, x 30 x 1/80 = €15, Total Pension = €21, SW pension/benefits? Supplementary Pension

Resignation before Age 60 Non new entrants who resign before age 60 are entitled to preserve their pension entitlements This means that benefits are not paid immediately but are preserved until the person reaches age 60 The benefits are indexed in line with pay increases between date of resignation and age 60 Preserved Pension and Lump Sum are based on actual service on resignation Cost Neutral Early Retirement is an option for those over 50

Resignation before Age 65 New entrants who resign before age 65 are entitled to preserve their pension entitlements This means that benefits are not paid immediately but are preserved until the person reaches age 65 The benefits are indexed in line with pay increases between date of resignation and age 65 Preserved Pension and Lump Sum are based on actual service on resignation Cost Neutral Early Retirement is an option for those over 55

Preserved Benefits – Example 1 Person (non new entrant) resigns at age 58 Pays Class D PRSI (i.e. entered public service before 6 April 1995) Pensionable Pay on leaving is €80,000 Pensionable Pay when the person reaches age 60 is €84,000 Service on leaving is 28 years Benefits are as follows: –Gross Lump Sum = €84,000 x 28 x 3/80 = €88,200 –Pension = €84,000 x 28 x 1/80 = €29,400

Preserved Benefits – Example 2 Person (non new entrant) resigns at age 58 Pays Class A PRSI (i.e. entered public service after 6 April 1995) Pensionable Pay on leaving is €80,000 Pensionable Pay when the person reaches age 60 is €84,000 Service on leaving is 28 years Benefits are as follows: –Gross Lump Sum = €84,000 x 28 x 3/80 = €88,200 –Pension = €38, x 28 x 1/200 = € 5, plus €45, x 28 x 1/80 = €15, Total Pension = €21, SW pension/benefits? Supplementary Pension

Cost Neutral Early Retirement (CNER) Non New Entrants Available to non new entrants aged 50 or over as an alternative to preserved benefits Pension and Lump Sum are actuarially reduced to take account of the fact that they are being paid earlier than would otherwise be the case Level of actuarial reduction depends on the age of the person at retirement Different tables for Lump Sum and Pension

CNER Actuarial Reduction Tables For Persons with Preserved Age 60 Age Last BirthdayPensionLump Sum %82.2% %83.9% %85.5% %87.2% %88.9% %90.7% %92.4% %94.3% %96.1% %98.0%

Cost Neutral Early Retirement (CNER) New Entrants Available to new entrants aged 55 or over as an alternative to preserved benefits Pension and Lump Sum are actuarially reduced to take account of the fact that they are being paid earlier than would otherwise be the case Level of actuarial reduction depends on the age of the person at retirement Different tables for Lump Sum and Pension

CNER Actuarial Reduction Tables For Persons with Preserved Age 65 Age Last BirthdayPensionLump Sum %82.4% %84.0% %85.6% %87.3% %89.0% %90.7% %92.5% %94.3% %96.1% %98.0%

CNER – Example 1 Person (non new entrant) resigns at age 58 Pays Class D PRSI (i.e. entered public service before 6 April 1995) Pensionable Pay on leaving is €80,000 Service on leaving is 28 years CNER benefits are as follows: –Gross Lump Sum = €80,000 x 28 x 3/80 = €84,000 x 96.1% = €80,724 –Pension = €80,000 x 28 x 1/80 = €28,000 x 90.1% = €25,228

CNER – Example 2 Person (non new entrant) resigns at age 58 Pays Class A PRSI (i.e. entered public service after 6 April 1995) Pensionable Pay on leaving is €80,000 Service on leaving is 28 years Benefits are as follows: –Gross Lump Sum = €80,000 x 28 x 3/80 = €84,000 x 96.1% = €80,724 –Pension = €38, x 28 x 1/200 = € 5, plus €41, x 28 x 1/80 = €14, Total Pension = €19, x 90.1% = €17, SW pension/benefits? Supplementary Pension only payable for new entrants from age 65 and for non new entrants from age 60

CNER and Professional Added Years Where a person who has been awarded Professional Added Years opts for CNER two reductions will apply –the appropriate reduction arrangements which apply in the case of leaving service below minimum pension age will apply –the resultant service (if any) will then be added to actual service and the relevant cost neutral early retirement factor will be applied to the preserved benefits derived from the aggregate service

CNER – Example 3 Person (non new entrant) resigns at age 56 Pays Class D PRSI (i.e. entered public service before 6 April 1995) Pensionable Pay on leaving is €80,000 Actual service on leaving is 28 years (would be 32 years at age 60) Awarded 4 professional added years but this falls to be reduced as follows = 4 x 28/32 = 3.5 years. This gives a total of 31.5 years CNER benefits are as follows: –Gross Lump Sum = €80,000 x 31.5 x 3/80 = €94,500 x 92.4% = €87,318 –Pension = €80,000 x 31.5 x 1/80 = €31,500 x 81.6% = €25,704

CNER – Example 4 Person (new entrant) resigns at age 57 Pays Class A PRSI Pensionable Pay on leaving is €80,000 Actual service on leaving is 24 years (would be 32 years at age 65) Awarded 4 professional added years but this falls to be reduced as follows = 4 x 24/32 = 3 years. This gives a total of 27 years CNER benefits are as follows: –Gross Lump Sum = €80,000 x 27 x 3/80 = €81,000 x 85.6% = €69,336 –Pension = €38, x 27 x 1/200 = € 5, plus €41, x 27 x 1/80 = €13, Total Pension = €19, x 64.1% = €12,265.56

CNER – Other Points If a person retires between birthdays, actuarial reduction factors will reflect this, i.e. the rates will fall between last birthday and next birthday rates Reductions apply for lifetime of pension payment S&C pension benefits not affected by CNER – they will be the same as if person had opted for preserved benefits Supplementary pension (if any) payable from age 60/65 only Deductions for unpaid S&C contributions made from preserved lump sum before actuarial reduction factors are applied All applications for CNER will be considered on the basis of the business needs of the University

Contact Information Copies of this presentation will be available on the University’s intranet. If you would like to discuss any specific questions please contact Pension Contacts: Dympna Healy, HR Officer Jennie Gale, Pensions Administrator