"Education is the passport to the future, for tomorrow belongs to those who prepare for it today."
Malcolm X Human Rights Activist
Teachers Pensions, everything you need to know about your pension.
Bottom Line the Department of Education or ETB want 40 years’ service from you, it is also capped at 40 years!
WHEN CAN I RETIRE?
It all depends on when you started your career. The first thing to do is establish what type of pension you are in. If you are not sure which pension scheme you are in, your pay- slip will be a good guide.
What else should you know about your pension?
You’ll still get the State Pension on top of anything you get from the Teachers’ Pension Scheme except for pre '95 entrants, your pension is designed to take care of you when you retire. That doesn’t just mean when you reach normal retirement age you do not have to teach until you’re using a Zimmer frame
If you have to stop working through ill-health you may get your pension early. And should the unthinkable happen and you die before you retire, your family may be paid your pension benefits.
In Ireland there are 4 distinct pension schemes for Teachers
Pre 5th April 1995
This is the golden goose of pensions
Your normal retirement age (NRA) is 60 for this one, however you can retire from 50 on Cost Neutral scheme. You must retire though by 70! If you reach 55 years of age and you have 35 years' services (inclusive of training years) you can retire without been cost neutralized. This is called the 35-year rule
Teachers on this pension are Not entitled to state pension
6th April 1995 to 31st March 2004
Your normal retirement age (NRA) is 60 for this one, however you can retire from 50 on Cost Neutral scheme. You must retire though by 70! If you reach 55 years of age and you have 35 years' service (inclusive of training years) you can retire without cost neutralisation.
This group of teachers are entitled to a supplementary pension at age 60 and state pension* at 66
1st April 2004 to 31st Dec 2012
NRA 65, but you leave from 55 on Cost Neutral Early Retirement, No 35/55 Rule here! Will get supplementary pension from age 65 and at 66 this is replaced by the state pension*
After 1st January 2013 ‘Single Public Service Pension Scheme
This one is terrible genuinely its God awful
NRA is State Pension Age but can leave at 55 on Cost Neutral Early Retirement, compulsory retirement at 70. No supplementary pension here. You do get the State Pension.
It’s the worst of pensions and even with a full 40 years you’re going to need an Avc or maybe win the lotto for retirement although that prob isn’t good financial advice! Top tip here start planning for retirement as soon as you start teaching this is a marathon not a sprint.
*State pension replaces the supplementary pension its one or the other.
BUT I HAD A BREAK!
If you are out of pensionable employment for more than 26 weeks in a year it can have an impact on the benefits you can receive.
It may mean when you come back to teaching you enter a different pension scheme to the one you left (i.e. you may return to career average(post 2013) as opposed to the final salary arrangement)
If your break is as a result of you working elsewhere in the Public Sector, then you might not lose the benefits , and you might return back to the final salary arrangement.
Planning for Retirement
We all have different financial goals and objectives depending on their lifestyle and whatever goals you might have, the success of achieving them depends upon a viable financial plan and ideally you will start this process the very first day you start teaching! Don’t worry if your reading this and your in the middle of your career or almost heading out the door there are always things you can do!
When we start the process of Financial Planning for Retirement we look at lots of areas but the main ones are
- How your pension scheme works.
- How do you make up any shortfall
- What to do if you fall ill or die before you reach your retirement age.
What's an AVC?
An Additional Voluntary Contribution (AVC) is a tax-efficient way to fund for extra income when you retire. At retirement, you can use the money invested in an AVC to buy the additional pension benefits you want, subject to Revenue rules.
With an AVC you are investing in your future, to enhance your lifestyle and the financial security you enjoy in retirement. The earlier you start your pension pot the better. Starting early is a smart move as your money will have more time to work hard for you (higher returns). Remember Compound Interest from School well this is the same the longer your money is building up in your pension pot the higher the return. Score!
Ok so these two are two different scenarios, First lets look at job sharing, every year you job share counts for half a years’ service so if you have 40 years’ service but job shared for 20 of those years then you only have 30 years’ service. We then use those 30 years to calculate your pension and your tax free lump sum. Job sharing does not affect salary scale. If you have an Avc and are job sharing it doesn’t affect your Avc as you can choose how much you want to contribute within your budget.
Career breaks once sanctioned just reduce your years of service and your point on salary scale because your on a break you can make these up with Avc’s.
This is individual for everyone and is based on your budget and how much of a shortfall you need to make up.
The main reasons civil servants should pay into an AVC is to fund for the maximum tax free lump sum available. If you have less than 40 years’ service on retirement, you will have a tax free lump sum shortfall and may have a AVC requirement. Individual Calculations are needed here to find out the right amount of money needed in your AVC.
Teachers may retire from 55 years of age without penalty providing they have a minimum of 35 years of “actual teaching service” at their date of retirement.
The first three schemes are a Final Salary Defined Benefit Scheme which gives a pension based on service and final pensionable remuneration. Post 2013 is also a defined benefit scheme but it is calculated on a career averaging basis.
No. You must apply to the Pensions Section of the Department for your pension. This should be done at least 3 months before the date of your proposed retirement.