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PENSIONS | INVESTMENTS | FINANCIAL & RETIREMENT PLANNING
Get Public Sector advice
Contact us for assistance with:
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Superannuation & Single Scheme
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Improving your entitlements
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Buy back and AVCs
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Clarity on retirement outcomes
Page Author: Christina Kearney QFA RPA
Understand what you're entitled to. Then make the most of it.
If you're starting to think more seriously about retirement from the Irish public sector, the first thing you need is clarity.
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When can you retire?
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What pension will you actually receive?
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How much will your retirement lump sum be?
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And, perhaps most importantly: What will actually arrive in your bank account every fortnight or month after tax?
At Ethico, we specialise in public sector pensions, Superannuation and the Single Public Service Pension Scheme, helping public and civil service employees understand their benefits and build a proper financial plan for retirement.
Public sector pensions can be complicated
Public sector pension benefits can vary considerably depending on when you joined, your service, salary, PRSI class, career history and the pension scheme that applies to you. Someone who joined the public service many years ago may have very different benefits from somebody who joined after 2013 under the Single Scheme. That's why generic pension calculators and rules of thumb can only tell you so much. Before you can properly plan for retirement, you need to understand exactly what you have.
When can I retire?
This is often the first question. But there can be an important difference between when you're allowed to retire and when you can afford to retire. We look at the rules of your particular public sector pension scheme, your service and your circumstances to establish your retirement options. We can then model the financial consequences of retiring at different ages. That means you can see what happens if you retire earlier, work another year or two, or continue to your normal retirement age.
What will my pension and lump sum actually be?
Your public sector pension can be one of your most valuable financial assets. Yet many people approaching retirement aren't completely sure what they're going to receive.
We calculate your expected:
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Annual pension
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Retirement lump sum or gratuity
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State Pension entitlement, where applicable
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AVC and other pension benefits
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Other retirement income
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We can also explain when each source of income is expected to begin and how they fit together.
What will I actually have to live on after tax?
Knowing your gross pension is useful. Knowing your take-home retirement income is much more important.
We estimate the tax applying to your different retirement income sources so that you can see approximately what should actually arrive in your bank account every fortnight or month.
We then compare this with your expected expenditure. The objective is to answer the question that really matters:
Will I have enough to comfortably live on in retirement?
Can I improve my public sector pension?
Understanding your existing benefits is only the beginning. Depending on your scheme and circumstances, there may be opportunities to improve your retirement position. These can include:
Buying back service
If you have a shortfall in your recognised service, you may have options to purchase or restore additional service. Where available, we can help you understand the cost, potential benefit and whether it represents good value for you. Transfers of service in other departments is also possible in most cases.
Purchasing additional benefits
Some public sector employees may have options to purchase additional retirement benefits through their scheme. We'll help you understand what's available and compare the cost and potential benefit with the alternatives.
AVCs
Additional Voluntary Contributions can be one of the most effective ways of increasing your retirement benefits. AVCs can potentially allow you to use pension tax relief while building an additional fund alongside your public sector pension.
AVCs are not for everyone but they can be a useful tool. We calculate your existing benefits first and then determine whether AVCs are appropriate and how they can best fit into your retirement plan.
Making the right decisions with your AVCs
Building an AVC fund creates another important decision when you retire:
What should you actually do with it? Depending on your circumstances and the applicable pension and tax rules, your options may include
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taking some/all as tax free cash
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purchasing an annuity
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transferring benefits to an Approved Retirement Fund (ARF).
Different options can have very different tax and long-term financial consequences. We'll help you understand the choices available and determine how your AVC should work alongside your main public sector pension.
What about the State Pension?
Not every public sector employee has the same State Pension entitlement. Your position will depend on your PRSI history and the pension arrangements applying throughout your career. We can help establish whether you're likely to qualify for the State Pension (Contributory) and how this interacts with your occupational pension. This is particularly important where your State Pension doesn't begin at the same time as your occupational retirement benefits. There is an interplay between social welfare entitlements and potential supplementary pension which should be understood. Also, in some instances, Pre-1995 members can aim to generate a partial state pension if the minimums can be achieved by state pension age.
Your lump sum: spend, invest or clear the mortgage?
Retirement can mean receiving one of the largest lump sums you've ever had. So what should you do with it?
Should you:
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Pay off your mortgage?
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Clear other loans?
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Keep money in cash?
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Invest some of it?
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Help children or family?
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Keep a larger emergency reserve?
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Spend some of it and enjoy your retirement?
There isn't one answer that's right for everyone. We look at your entire financial position before helping you decide how your retirement lump sum should be used.
Financial planning for public sector employees
Your pension is only one part of your retirement. A proper financial plan brings everything together. We can look at your public sector pension alongside your partner's pension, State Pension entitlements, AVCs, private pensions, savings, investments, mortgage, other debts and future expenditure. If your spouse or partner is self-employed or works in the private sector, we can incorporate their pensions and finances too. The result is a retirement plan for the household rather than simply one individual pension scheme.
Planning for your family
Retirement planning should also consider what happens when you're no longer here. Public sector pensions, AVCs, ARFs, investments and other assets can all be treated differently on death. We can help you understand the benefits available to a surviving spouse or dependants and consider how your other pension and investment assets can be passed to your family as efficiently as possible.
The questions we help answer
If you're approaching retirement from the public sector, we'll help you get clear answers to questions such as:
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When can I retire?
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What will my pension be?
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What will my lump sum or gratuity be?
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What will my take-home income be after tax?
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Can I improve my pension before retirement?
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Should I buy back service or purchase additional benefits?
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Should I make AVCs?
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Do I qualify for the State Pension?
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What should I do with my retirement lump sum?
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How should I access my AVCs?
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How long will my savings and investments last?
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How can I provide for my spouse or family?
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Can I actually afford to retire when I want to?
Know your numbers before you make the decision.
Retiring from the public sector is a major financial decision. Before deciding when to retire, how much to contribute to AVCs or what to do with your retirement lump sum, you need to understand exactly where you stand.
At Ethico, we specialise in Irish public sector pensions, Superannuation, the Single Public Service Pension Scheme, AVCs and retirement planning. We'll calculate your benefits, explain your options in plain English and help you build a financial plan around the retirement you want.