# Calculating Pension & Lump Sum

##### How Is Your Lump Sum Calculated ?

Member  Of  ETB Teachers & Education  Sector  Superannuation Schemes

Your pension/lump sum is based mainly on:

Your total reckonable service (based on completed years and days of service)  & your pensionable remuneration (usually your salary and pensionable allowances at retirement

Lump Sum (retirement gratuity) of 3/80th  of retiring pensionable remuneration for each year (based on completed years and days) of your service – subject to a maximum of 40 years’ service.

Example: Based on a person retiring with 35 years and 30 days service with a pensionable salary of €45,000 p.a. at retirement: €45,000 x 35.0822 years x 3/80 = Lump Sum gratuity of €59,201.21

Pension: This depends on whether you pay Class A PRSI (usually staff employed after 6th April 1995) or Class D PRSI (usually staff employed before 6th April 1995). However, certain categories of staff pay Class A PRSI irrespective of these dates – e.g. caretakers, cleaners, etc.

Calculation of Pension for Class D PRSI contributors: at the rate of 1/80th of retiring pensionable remuneration multiplied by your total service (based on completed years and days) – subject to a maximum of 40 years’ service.

Example: Based on a person retiring with 35 years and 30 days service with a pensionable salary of €45,000 p.a. at retirement: €45,000 x 35.0822 years x 1/80 = pension of €19,733.74 p.a.

Calculation of Pension for Class A PRSI contributors: at the rate of (a) 1/200th of pensionable remuneration that does not exceed the maximum personal rate of State Pension (Contributory) – SPC – multiplied by 3.333333 and multiplied by your total service;

PLUS

(b) 1/80th of the pensionable remuneration which exceeds that figure multiplied by your total service (based on completed years and days) – subject to a maximum of 40 years’ service.

Example: Based on a person retiring with 35 years and 30 days service with a pensionable salary of €45,000 p.a. at retirement:

Current SPC for single person with no dependents

=  €243.30 weekly x 52.18 = €12,695.39  p.a.

For pension calculation purposes €12,695.39  x 3.333333 = €42,317.96

(a) 1/200 of €42,317.96 x 35.0822 years = €7,423.03

(b) 1/80 of balance of retiring salary (€2,682.04 x 35.0822 years = €1,176.15  Total Pension per annum (a + b) = €8,599.18

N.B. – As this employee would have paid class A PRSI during his/her employment then s/he should be entitled to a State Pension (Contributory) in addition to the ETB pension.

2. Members Of Single  Public  Service  Pension Scheme (SPSPS)

The Scheme provides a pension and retirement lump sum based on career-average pensionable remuneration. Pensions will be co-ordinated with the State Pension Contributory (SPC).

Accrual and Payment of Benefits :

Members accrue (i.e. build up over time)referable amounts (i.e. money amounts) for pension and lump sum for each year of work or part thereof based on pensionable remuneration at that time.

Pension :

Accrual rate of 0.58% of pensionable remuneration up to a ceiling of 3.74 x State Pension Contributory (SPC)(currently €45,000)

PLUS:

(where applicable) 1.25% of pensionable remuneration above that level.

Lump Sum:

Accrual rate of 3.75% of pensionable remuneration. Referable amounts are adjusted annually by reference to increases in CPI (Consumer Price Index) and aggregated referable amounts continue to u up-rated until retirement. Accrued and up-rated referable amounts over a complete career are added together to produce the pension and lump sum values on retirement. Members receive an annual benefit statement showing pension/lump sum amounts accrued to date. Scheme members ordinarily pay full social insurance contributions and are eligible to receive a State Pension Contributory (SPC) (subject to paying sufficient PRSI contributions and other criteria that may apply from time to time), in addition to occupational pension. Consequently, the SPC is taken into account when calculating pensions under the Scheme. This is known as integration.

Career  Average –

Members accrue money amounts(referable amounts) towards pension and lump sum, calculated annually by reference to the fixed percentages of pensionable remuneration and linked to CPI increases. These amounts accumulate over the span of a career to produce the pension and lump sum on retirement.

Example A:

In Year 1 a new recruit earns €25,000. This yields a referable amount (a sum-towards-pension) of €145 using a 0.58% accrual rate (up to €45,000 – i.e. 3.74 times SPC)2. Thereafter €145 is indexed to the CPI (All Items). Assuming 2% inflation annually and 40 years to pension age, the €145will grow to about €320 at retirement.

Example B:

In Year 1 anew recruit earns €50,000. This yields a referable amount (a sum-towards-pension) of €323.50 using a 0.58% accrual rate(up to €45,000 – i.e. 3.74 times SPC) of 1.25% for the balance.

Thereafter €323.50 is indexed to the CPI (All Items). Assuming 2% inflation annually and 40 years to pension age, the €323.50will grow to about €700 at retirement.

Amounts towards pension are likewise calculated for all subsequent years of service. These referable amounts accrue, accumulate and are up-rated throughout the member’s career in the public service. The total of these uprated annual amounts at pension age constitutes the pension paid in retirement; the lump sum paid on retirement is built up in a similar way based on a 3.75% accrual rate.

ILLUSTRATION OF PENSION ACCRUAL:

 Year  1 Year 2 Year 3 Final Year Pensionable Remuneration up to €45,000 x 0.58% + Pen Rem over €45,000 x 1.25% (1/80th) + Pensionable Remuneration up to €45,000 x 0.58% + Pen Rem over €45,000 x 1.25% (1/80th) + Pensionable Remuneration up to €45,000 x 0.58% + Pen Rem over €45,000 x 1.25% (1/80th) +Pensionable Remuneration up to €45,000 x 0.58% + Pen Rem over €45,000 x 1.25% (1/80th) Increased in line with CPI from the end of Year 1 until end-year prior to Retirement Date Increased in line with CPI from the end of Year 2 until end-year prior to Retirement Date Increased in line with CPI from the end of Year 3 until end-year prior to Retirement Date No increased in referable amount in Final Year ↓ ↓ ↓ ↓ Annual Pension on Retirement

###### Integration:

The Scheme is integrated with the social welfare State Pension Contributory (SPC) in two ways:

Pension accrual rates take account of the availability of the SPC at retirement;
Pension contribution rates take account of the fact that SPC benefits provide part of the retirement income.
The lump sum is not affected as no social welfare lump sum is paid on retirement (i.e. social welfare benefits are payable in pension form only).

Your Pension benefits and those of your Spouse / Civil Partner could be affected if a Court has granted a Pensions Adjustment Order in the case of Divorce or Judicial Separation Proceedings.

Quick Pension Calculator:

Need a facility to calculate your own Pension and Lump sum in a jiffy?

Why not visit:

Pension & Lump Sum Estimator Tool

Please note that the Pensions Modeller does not currently calculate pensions under the Single Public Service Pension Scheme (SPSPS).