Update - Supplementary Pension, 25.06.14
Further to a number of queries to Head Office in respect of Psychiatric Nurses who can retire earlier than the 60 years qualifying age outlined in the Legislation (Article 71 the Local Government Superannuation Scheme), clarification in respect of this matter issued to Pensions Managers for Dept. of Health on 31st March 2008 (Circular 4/2008) as follows:
"I write to clarify that Article 71 of the Local Government Superannuation Scheme- Determination of allowance granted to registered officer, sub section 3 (b) relating to a fully registered officer who has attained the minimum retirement age for his post applies to fully insured psychiatric nurses whose minimum retirement age is 55.
The Supplementary allowance is payable where the person is unemployed , fails to qualify, or, qualifies for less than the maximum rate of social welfare benefit set out in Article 71 (3) dues to causes outside his/her control. The conditions specified in Article 71 (3) of the scheme must be set in all such cases".
ENDS
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Supplementary Pension Article 24.03.11
A Number of queries have been received by the PNA and the INO Head Offices recently regarding payment of a Supplementary Pension. This information sheet has been prepared jointly by the PNA and INO for the information of members.
Who can benefit?
Payment of a supplementary pension can arise where the person has retired from a Public Service position and was paying full PRSI i.e. be a Class A PRSI contributor and is only eligible for what is known as a co-ordinated pension, retires before reaching 65 years of age and who has no entitlement to any social welfare benefit or qualifies for a reduced level of benefit only.
What is a coordinated pension?
The Principle underpinning a coordinated pension is that the person would work to age 65 when they would become entitled to a Social Welfare Retirement Pension now known as State Pension (Transition) for one year until they reach 66 when they become entitled to a Contributory Old Age Pension (C.O.A.P). The Pension payable from the employer is co-ordinated to take account of these social welfare benefits, at their maximum rates, to ensure that those insured under Class A PRSI do not have a greater benefit, when the service pension and social welfare pension are combined, than those paying Class D PRSI. Up to April 95’ most public servants superannuated under the Local Government Superannuation Scheme paid Class D PRSI but then Government introduced legislation that all persons recruited to the Public Service from that date would be fully insured class A PRSI contributors. Most Nurses superannuated under the Nominated Health Agencies Superannuation Scheme (N.H.A.S.S.) and Voluntary Hospitals Superannuated Scheme (V.H.S.S.) have always been P.R.S.I. Class A contributors.
What is the difference in calculation of a service pension for Class D and Class A PRSI contributors?
-Class D PRSI contributor retires with entitlement to full pension on pensionable pay of €50,000. Annual pension is €25,000
[i.e. €50,000 x 40 ÷ 80.]
Class D PRSI Contributor has no entitlement to State Pension (Transition) or to Contributory Old Age Pension.
- Class A Contributor retires on their 65th Birthday with entitlement to full pension on pensionable pay of €50,000. Their pension is coordinated i.e. double the maximum rate of contributory old age pension (C.O.A.P) is taken from pensionable pay before the calculations are made.
Pension therefore is €13000
[ i.e. €50,000 – €24,000 (double maximum rate of C.O.A.P at Jan '10) x 40 ÷ 80].
This annual pension of €13000 together with the State Pension (Transition) of €12000 (maximum rate the same rate as C.O.A.P) brings the total to €25000 exactly the same as that of the PRSI Class D employee.
Circumstances in which supplementary pension can be paid.
The Problem arises for the Class A PRSI contributor if they retire earlier than age 65 with no entitlement to any social welfare benefit which would make them substantially worse off than their Class D counterpart. An equal principle also applies that while they should be no better off neither should they be any worse off and this is provided for in legislation. Payment of a Supplementary Pension to rectify any anomaly is provided for under several sections of The Local Government (Superannuation,) (Consolidation) Scheme 1998
Extract from Department of Environment Circular letter S.10/99 which gives effect to this legislation.
“In order to qualify for a supplementary pension, the pension in payment to the member or his/her spouse must be co-ordinated and must be, when taken together with any benefits’ payable by the Department of Social, Community and Family Affairs (DSCFA), less than the pension that would have been paid had the pension not been co-ordinated. In practice, staff retiring below the age at which Retirement Pension/Old Age Contributory Pension become payable, having paid full PRSI, will in most cases be entitled to the payment of unemployment Benefit following retirement and the payment of the supplementary pension will in most instances not become payable during this period. If a pensioner retired at age 60 and a Retirement Pension is payable at age 65 then any supplementary pension payable would cease at age 65 provided the combination of the pension under the Scheme and the Retirement Pension exceeds the value of the unco-ordinated pension.”
{This Circular was published on 12th November 1999}
In essence to qualify you must:
Be a Class A PRSI Contributor
Be age 60 (55 for those registered under Section 65 Mental Treatment Act 1945),
Not be employed in any gainful capacity
Not be in receipt of any social welfare payment, or, be in receipt of a reduced benefit only. You will be required to produce evidence from the Department of Social Welfare either that you are not entitled to any payment or only entitled to payment at reduced rates of any social welfare benefit.
Establish that you are not entitled to Disability /Disablement benefit/ Invalidity pension, if retiring on the grounds of ill health.
Establish that you are not entitled to jobseekers benefit (previously unemployment benefit). This will require you to apply but if you are retired and not actively seeking employment you must state that fact, in which case, job seekers benefit will most likely be declined.
An Example of how this would work.
In the example earlier on
•The Class D Nurse retiring would get a pension of €25,000 from the employer.
•The Class A Nurse if retiring at age 60 would only get €13,000 from the employer
•This nurse should apply for a supplementary pension and provided that she/he is not in any other gainful employment, and has established that they have no entitlement to any social welfare benefit (or to a reduced level of benefit only) they have an entitlement to benefit from a supplementary pension from the employer.
In this instance, where the nurse has, say, no entitlement to any social welfare benefit the supplementary pension will be €12000.
(The difference between what they would have received in pension from the employer had co-ordination not applied €25,000 and the pension that they are actually in receipt of €13000 from the employer)
Will supplementary pension cease at age 65.
•Supplementary Pension will cease at age 65 for most persons as they will qualify for a State Pension (Transition) and subsequently Contributory Old Age Pension from age 66.
Are there circumstances where supplementary pension can continue beyond age 65?
•Yes, let's suppose that this person in the foregoing example only had a yearly average of 14 PRSI Class A contributions at age 65. They would not qualify for any payment of State Pension (Transition). (They would need a yearly average of 24 PRSI Class A contributions paid of credited.) In this case, the supplementary pension should continue as before i.e. a payment of €12000 should be paid for the next year. It will be reviewed again at age 66 when the person becomes entitled to a Contributory Old Age Pension.
What happens at age 66?
In this same example of the person having a yearly average of 14 Contributions they would qualify for 50% of C.O.A.P. ( €6000 per annum.)
Payment of Supplementary Pension in this instance would continue in the amount of €6000 p.a.
[€25000 (the pension they would have got if no co-ordination applied)
minus €13000 (the pension that they are actually in receipt of from the employer)
minus €6000 (the amount of the contributory old age pension payable)]
Can a spouse benefit?
There is also provision to pay a supplementary Pension to the spouse in the event of the death of a person in receipt of a supplementary pension. However in reality this would only arise in most instances where the widow/er would not qualify for widow/ers pension, a situation which would be rare for person paying Class A PRSI. It would be likely only to occur early on in employment where the minimum contribution
conditions are not met.
Why is it that problems are arising regarding application of the pension?
It is the case that many employers are very reluctant to process claims for Supplementary Pensions either being unaware of the existence of this right or a belief that pensioners should not have any rights in this regard. Do not be fobbed off. If you meet the criteria outlined above you have an absolute right to benefit from Supplementary Pension and please use this Circular to establish this right. If refused, despite meeting the criteria, contact your union official who will process a case for you.
Further Information
This article can only provide a broad guide to entitlement to supplementary pensions and is not a legal interpretation of the Pension and/or Social Welfare Legislation. In addition to this each individual case will be different, particularly relating to entitlement to social welfare since rules on qualification for benefits can be complex. Also if a person has paid social insurance contributions in another E.U. member state they can be used to help qualify for many social welfare payments here. You can get more information on entitlement to social welfare by logging on to www.welfare.ie.
Any other queries please contact your Union Head Office. Contact info available on www.pna.ie or www.inmo.ie
