Supplementary Pension, Learn if you qualify today?

Supplementary Pension, Learn if you qualify today?

Supplementary Pension, Do you Qualify?

Payment of a supplementary pension can arise where you retire, before turning 65 years old, from a public service position.

Where applicable, you must claim for your supplementary pension from the Department of Social Protection.  This stressful process should come with a health warning.

Supplementary pension may form part of the pension paid to retirees who paid full rate, Class A, PRSI contributions in respect of all or part of their pensionable service, and is also a possibility if you are buying back years or purchasing additional service.

The reason for the supplementary pension is that a Class A PRSI contributor retiring before age 65, would be significantly worse off than a Class D PRSI contributor.

In order to qualify you must first exhaust any entitlement to all other social welfare benefits such as job-seekers allowance.

Supplementary Pensions Explained

The supplementary pension payable, subject to certain T&C’s, is described as being ‘co-ordinated’. This means that the employer occupational pension is co-ordinated with either social welfare benefits or supplementary pension.

The purpose of the social welfare benefits, or supplementary benefit, is to provide equality for retirees with the same pensionable service regardless of PRSI status. Several sections of The Local Government (Superannuation)(Consolidation) Scheme 1998 have legislated for this.

Stress levels rise for the retiree applying for the supplementary pension. This is due to the fact that they must complete an intimidating and bureaucratic administration exercise. This process includes box ticking that you are currently available for gainful employment.

Requirements to qualify for supplementary pension

The Department of Social Protection may pay you supplementary pension where, you, as the retiree:

  1. Are not employed in any capacity which involves you payment of a PRSI contribution including self-employment.
  2. Fail to qualify for the following Social Welfare benefits or qualifies for such benefits at less than the maximum personal rate:
  • Jobseeker’s Benefit
  • Illness Benefit
  • Invalidity Pension
  • State Pension (Contributory)

In the case of Cost Neutral Retirement, generally Supplementary Pension is not payable before age 60 or 65 . This is dependant on what age Normal Retirement Age is under the employer pension scheme.

Supplementary Pension Application Process

The application process will require you to apply for Jobseekers Benefit. This is where you have retired and are not actively seeking employment yet you must indicate that you are seeking work.

Job seekers benefit will most likely be declined or may be payable for a period of nine months (or until your PRSI entitlements run out).  Should this benefit run out it will become means tested.

At this stage, there may be a requirement for you to get evidence in the form of a stamped letter, from the Department of Social Protection. This will outline whether you are not entitled to any payment, or are only entitled to payment at reduced rates of any social welfare benefit.

Therefore retirees can, on application to their employer, make up the shortfall in pension for the period between date of retirement and the age of eligibility for State Pension (Contributory).

This is the process that provides equality for retirees.

Individual cases will differ particularly in relation to social welfare entitlements. When dealing with our clients planning for retirement, we discuss your individual circumstances in detail.

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Pension Planning; Top Reasons Why you should start today?

Pension Planning; Top Reasons Why you should start today?

Pension Planning; Why?

The following article appears as written by Pat Leahy, Infinity Financial Planning Ltd, in the Irish Examiner on 16.10.2015. For further information email Pat Leahy:

So, the aim is clear, you want to build a savings account to fund your lifestyle in retirement. The AIM is to spend your later years enjoying the things that give you most pleasure in life. 

Build your Plan with our help

What is the PROCESS required? How am I going to BUILD A PLAN? The amounts required are scary, and the NEED is just so far away. Being thoughtful, and discussing your options, helps remove some personal blind spots, increase’s your awareness, and will help you be better prepared.

7 + 5 =

Sources of Income in Retirement

Old Age Contributory Pension 

There are potentially four sources of income in retirement. Firstly, the Old Age Contributory Pension will give you €230p.w, presently. The goalposts are moving out to 67 years old by 2020 and 68 years old by 2028 before you become entitled to that benefit. Even if this amount does hold its present value, relative to inflation over time, your AIM is for a better lifestyle in retirement than this €230p.w could provide.

Part Time Work

Secondly, you may choose to or need to work part-time for financial reasons in retirement. This option will not leave you the freedom you aim for, to prioritise the things in life you enjoy the most. More often than not this applies where there was NO PLAN for retirement.

Private Savings and Investments

The third option is to use private savings and investments accumulated while working. The fourth option is called a pension. What is a pension? “A savings account that has been designated to fund your lifestyle in retirement which has been accumulated through a combination of personal contributions, tax relief and investment growth”. This – pension – option is in the format of either personal pension funds or company pension funds or a combination of both.

The most important thing you can do when making money decisions is to get clear WHY you are doing it. These four options should leave you in no doubt that the total responsibility, and risk, for saving and investing (and withdrawing post retirement) lie completely with you the individual, the investor, the future retiree. Therefore, the PROCESS involved in making the decision to contribute, is as important as the outcome. The WHY has now been identified as, the NEED for income in retirement in excess of the OACP.