Enhancing Your Pension
It is advisable for teachers to examine the options available to them for pension enhancement while in service. The following options are tax efficient methods of improving pension benefits:
(a) Purchase of Previous Actual Service
As part of the PCW agreement the ASTI negotiated a pension "buy-back" scheme through which members of the superannuation scheme – the teachers’ pension scheme - can purchase pension benefit for years when they were in actual service but not yet a member of the superannuation scheme. Such purchase of pension benefit may be applied to years of part-time service. This option provides excellent value for teachers and costs less than the other options listed below.
Teachers in service in 1997/98
In 1997/98, details of the purchase scheme were notified to all serving teachers and to all teachers who had retired since 1 March 1996. The teachers and retired teachers in question were invited to apply to purchase service and were given until 30 October 1998 to make application.
Pre-October 1998 applicants
Those who applied before October 1998 were then requested to indicate whether they wished to purchase service "up-front" on the basis of pay at the date of receipt of their application or to purchase at retirement on the basis of pay at retirement.
Post –October 1998 applicants
Any teacher who applied after 30 October 1998 has the option to purchase service at retirement on the basis of pay at retirement. Such teachers do not have the option to purchase "up-front". The option to purchase service at retirement will, at retirement, be brought by the Department of Education and Science to the attention of any teacher who has purchasable service but has not applied to purchase.
Teachers not in service in 1997/98
The option to purchase service "up-front" under the buyback scheme is available on an ongoing basis to teachers who were not in pensionable service in 1997/98 but have since become members of the Superannuation Scheme. Such teachers must apply to purchase service within 12 months of the date of admission to membership. Application must be made to the Secondary Pension Section, Department of Education and Science, Athlone. The Department will supply details on the provisions and cost of this scheme.
(b) Purchase of Notional Service
A teacher who is a member of the Superannuation Scheme may purchase Notional Pension Service. In essence this scheme allows teachers to purchase pension benefit for years when they were not actually teaching, i.e. "notional years". Notional Service may be purchased by regular deduction from salary or by payment of lump sum. Full information on the operation of this scheme and on the cost is available from the Department of Education. Again, it should be noted that this is a tax efficient method of enhancing pension.
In Department Circular PEN 11/05 issued in May 2005 an increase in the contribution rates for the purchase of Notional Service by lump sum was announced.
(c) Additional Voluntary Contributions
Cornmarket Group Financial Services Limited, Christchurch Square, Dublin 8 provides an AVC scheme for ASTI members (telephone 01-4084025). This scheme allows members to enhance their retirement and / or death in service superannuation scheme benefits in a manner which is tax efficient. See the AVC section for more information.
(d) Cross Border Pensions (UK & Ireland)
Where a teacher has left one jurisdiction to take up a position in another it is possible to now transfer accrued pension service to their new pension scheme instead of just preserving their entitlement to their original pension scheme. This is achieved through QROPS, which facilitates the transferring of pensions between Ireland and the UK (including Northern Ireland). Through QROPS one can pay a transfer value in order to be credited for years in a pension scheme in Ireland or the UK. The new employer assigns a value in terms of service to that transfer and the person is credited with that amount of service regardless of the actual period of time it took to accrue that value in the original employment. It is extremely important that independent financial advice be sought if one is considering this scheme. For further details please click here.