Purchase and Transfer of Retirement Benefits under the Single Public Service Pension Scheme
Circular 15/2019 provides for the introduction of a purchase/transfer facility to enable Single Scheme members to purchase retirement benefits in the Single Scheme and to transfer retirement benefits accrued in certain other Revenue approved Schemes and PRSAs into the Single Scheme.
The Purchase and Transfer Facility will operate on the basis of the purchase of additional referable amounts for pension and/or lump-sum, operating on a cost-neutral basis, with the pricing of purchased benefits being based on the actuarially calculated cost of paying out those benefits at retirement.
Purchased benefits will rank on a par with benefits ordinarily earned, and are inclusive of dependants’ benefits in line with existing benefit provisions under the Single Scheme.
The arrangements as outlined in this correspondence come into force on 1 October 2019.
Eligibility to Purchase
- Scheme members must have completed the vesting period (a member of the Single Public Service Pensions Scheme for24 months or more);
- Scheme members must have the potential to complete a period of 9 FTE years as a member of the Single Scheme by the time they reach their normal retirement age (including membership before purchase). For part-time members, it is assumed the member’s current work pattern would continue to NRA;
- While the facility to purchase is available to both contract and permanent employees, for a Scheme member on contract, the term of the contract must be such that along with membership of the Single Scheme in the past, the Scheme member would have the potential to complete a period of 9 FTE years as a member of the Single Scheme by the time they reach their normal retirement age;
- Eligible members can choose to purchase additional pension only, additional lump sum only or a combination of additional pension and additional lump sum;
- Purchase agreements will operate on a twelve month basis; a Scheme member can enter into one contract in any period of 12 months from November to October each year;
- Subject to the limits provided for in this Circular, a Scheme member can enter into any number of 12 month purchase contracts over his/her period of membership of the Single Scheme, although no two contracts can overlap;
- Referable amounts may be purchased by way of one lump sum payment only;
- Scheme members must have the capacity to become vested members of the Single Scheme before they reach their normal retirement age;
- The transfer facility will operate in a similar fashion to the purchase facility, in that the transfer will be effected by way of the purchase of referable amounts. Eligible members can choose to purchase additional pension only, additional lump sum only or a combination of additional pension and additional lump sum;
- The transfer will be effected directly between Pension Trustees i.e. between the Scheme member’s current Relevant Authority and the Trustees of the Scheme, PRSA provider or BoB/PRB provider where the retirement benefits are originating;
- All transfer values relating to a previous employment, PRSA or BoB/PRB must always be included in the purchase of referable amounts by way of transfer. No split transfers are permitted. For this reason, Scheme members should be aware that in cases where the transfer value exceeds the cost of purchasing the maximum amount of pension/lump sum referable amounts permitted for the individual member under this Circular, this would result in the balance of the transfer value being lost to the member;
- The transfer of retirement benefits accrued under pre-existing public service pension schemes is not permitted under this transfer facility
Limits for Purchase/Transfer
- The Purchase and Transfer facility for the Single Scheme places limits on the value of referable amounts that are available to a Scheme member to purchase by way of actual purchase and to purchase by way of transfer;
- These limits must be re-calculated in respect of each individual contract;
- The formula in the case of both pension and lump sum purchase is designed to ensure that, on retirement, the expected pension of the Scheme member will not exceed 50% of his/her final FTE salary and that the lump sum will not exceed 150% of his/her final FTE salary.
Taxation of benefits on retirement:
The Revenue Commissioners are responsible for taxation rules in relation to retirement benefits. The Purchase and Transfer facility for the Single Scheme has been devised to ensure, as far as possible, that referable amounts purchased as part of this Scheme will be available to Scheme members on retirement on a tax-free basis, in accordance with the Revenue rules applying on the date of Circular 15/2019.
It is, however, the Scheme member’s responsibility to ensure that their own purchase arrangements are in compliance with Revenue rules, with the assistance of independent professional advice if necessary. This is particularly important in a situation where a Scheme member has retained superannuation benefits (pension and lump sum benefits from previous employments, PRSAs etc).
Tax relief on superannuation contributions:
The maximum amount of pension contributions, including purchase payments, in any one year in respect of which a person is currently entitled to tax relief is related to age and is expressed as a percentage of gross income as follows:
|Highest Age in Year of Pension Contribution||% of gross income for which tax relief available|
|30 to 39||20%|
|40 to 49||25%|
|50 to 54||30%|
|55 to 59||35%|
|60 and over||40%|
There is also a maximum annual level of earnings in respect of which tax relief is given. That earnings limit is currently set at €115,000 and is adjusted by the Minister for Finance from time to time. On that basis, higher earners, in particular, should ensure that their tax-free limits are not exceeded.
Scheme members using the purchase facility should satisfy themselves as to the level of tax relief that will be available to them, with the assistance of independent professional advice if necessary.
Tax relief for qualifying pension contributions must be claimed from the Revenue Commissioners by the Scheme member concerned.
The Department of Public Expenditure and Reform provide a Single Scheme Member Calculation tool, which is designed to give active Single Scheme members an indication of the cost of purchasing additional benefits as set out in Circular 15 of 2019.
The calculation tool can also be used to calculate the value of benefits transferable into the Single Scheme from another Revenue approved occupational pension scheme.
Formal Purchase/Transfer Requests:
Please initially directed all requests for estimate costings to the Single Scheme Member Calculation tool.
Should you wish to formally initiate the purchase of additional benefits under the Single Scheme or make formal arrangements to transfer benefits from another Revenue approved occupational pension scheme into the Single Scheme, please contact the Pensions Office (email@example.com).
Further information on the Single Public Service Pension Scheme can be found on the Single Public Service Pension Scheme Website.