Superannuation Schemes Information Session for TUI Members 1

Agenda Promote a better understanding of superannuation Explain main benefits of superannuation Highlight differences between the 4 types of superannuation schemes. Schemes membership is dependent on start date. 2

Main Benefits Only Pensionable Staff At retirement – Tax Free Lump Sum & Taxable Pension Death-in-service – Death Gratuity (Spouses & Children’s Pension) 3

PENSION Pension paid for your lifetime Paid fortnightly/monthly from Paymaster General into your bank account Pensions currently linked to teachers salary increases/decreases! Tax and USC levied at rate applicable depending on your income 4

LUMP SUM PAYMENT LUMP SUMS PAID TAX FREE max of € 200, 000) (currently up to a DEDUCTIONS FROM LUMP SUM Any strike days, service to be paid, Spouse and children deductions due. Paid directly into bank account after retirement 5

Spouse and Children’s Scheme All Males since 1968 and Females since 1981 in Scheme (1986 VS scheme) A pension entitlement is due to the spouse and the children of a member who dies in service/retirement Children up 22 in full time education(max 3) 6

Spouse and Children’s Scheme Benefits Death Gratuity is 1 yrs salary or gratuity payable at time of death Spouse pension is a max of ¼ salary Children’s pension is a max of 1/6 salary 7

FACTORS DETERMINING BENEFITS SERVICE - Maximum service for Superannuation Benefits is 40 years PENSIONABLE REMUNERATION SALARY PLUS AVERAGED PRSI Class – D 1 or A 1 Date of Entry to Superannuation – Pre 1995, Post 2004, Post 2013. PENSIONABLE ALLOWANCES 8

SERVICE Eligibility Fully qualified in a position that is in a permanent or part time basis and have satisfied health requirements SERVICE All eligible permanent and/or eligible whole or part time service accumulate years of pensionable service towards superannuation. Only Public Sector service in the Republic of Ireland is reckonable for superannuation purposes 9

Pensionable Remuneration Total salary at year of retirement OR Average of best consecutive 3 years salary over last 10. In case of promotional posts must be held for 3 years(1/3 used for each year held) Equivalent whole time salary for job/sharers or Part-time 10

PRSI Contributions- D 1 PRSI - Class D 1 (0. 9%) Main Scheme 1. 5% of Salary and Allowances plus 3. 5% of Salary and Allowances Spouses & Children’s scheme 1. 5% of Salary and allowances 11

PRSI Contributions PRSI - Class A 1 (4%) Main Scheme 1. 5% of Salary and Allowances plus 3. 5% of Salary and Allowances less 2 XOAP*} Spouses & Children’s scheme 1. 5% of Salary and allowances *Contributory old age pension 12

Date of entry to Superannuation Pre 1995 and D 1 - Pre 2004 and A 1 - Post 2004 and A 1 Post 2012 - Career Averaging 13

Retirement Rules- Pre 1995 Normal Retirement age 60 Maximum retirement age 65/end of school year Optional “ 35 yr rule” from 55 ( credits for training) 1/80 of pensionable remuneration for every eligible year for pension to max 40 yrs ( ½ salary is max pension 40/80) 3/80 of pensionable remuneration for every year for gratuity to max 40 yrs (1. 5 times salary is max gratuity) 14

Example of pre 1995 Scheme € 65, 000 Salary 35 yrs @ 60 € 85, 313 Gratuity € 28, 438 Pension Missing 5 yrs Gratuity and Pension 15

Retirement rules- Pre April 2004 Normal Retirement age 60 Maximum retirement age 65 Optional “ 35 yr rule” from 55 ( credits for training) Salary – 2 OAP = Net Pensionable Remuneration 1/80 of net pensionable remuneration for every eligible year for pension to max 40 yrs 3/80 of net pensionable remuneration for every year for gratuity to max 40 yrs (1. 5 times salary is max gratuity) May be eligible for Supplementary Pension if retiring prior to OAP age(66 -68) 16

Example of Pre 2004 Scheme € 65, 000 Salary 35 yrs @ 60 € 85, 313 Gratuity € 16, 381 Pension (Supplementary may be available) Missing 5 yrs Gratuity and Pension 17

Retirement rules- Post April 2004 Normal Retirement age 65 No maximum retirement age No “ 35 yr rule” for earlier than 65 retirement Salary – 2 OAP = Net Pensionable Remuneration 1/80 of net pensionable remuneration for every eligible year for pension to max 40 yrs 3/80 of net pensionable remuneration for every year for gratuity to max 40 yrs (1. 5 times salary is max gratuity) NO Supplementary Pension if retiring prior to OAP age(66 -68) 18

Example of Post 2004 Scheme € 65, 000 Salary 35 yrs @ 60 € 48, 672 Gratuity (Cost Neutral Retirement rules) € 13, 379 Pension (Cost Neutral Retirement Rules) Pension & Gratuity reduced by CNR rules 19

Cost Neutral Early Retirement Have an entitlement to a preserved pension at age 60 or 65 Immediate payment of actuarially reduced Lump Sum and Pension Different rates for Pre/post 2004 entrants Reduced rate applies throughout the lifetime of payment of pension 20

Cost Neutral Reduction 21

Resignation before Minimum Retirement Age Less than two years reckonable service – Refund of contributions (less tax – currently 20%) Two or more years reckonable service – Preserve benefits to age 60/65 If over age 50 (55 in the case of ‘new entrants’) may apply for cost neutral early retirement 22

DEDUCTIONS FROM SERVICE ANY PERIOD OF UNPAID LEAVE • Career Break • Special Leave without pay • Additional Maternity Leave • Industrial Action • Unpaid Sick Leave (Availing of Flexible Working Arrangements will also reduce service accordingly) 23

What if you don’t have 40 years service or retire before 60/68? Retire with reduced Gratuity & Pension May have to wait until Social Welfare starts Use the Notional Service Purchase Scheme Use the TUI Additional Voluntary Contributions Scheme Use a private PRSA or Savings scheme Keep working? 24

What to do to prepare for retirement Get all your statements of service from all public service employment. (Knock for Knock transfer network) Get a statement of all PRSI contributions Attend a pre retirement course Might need last 10 years P 60 s Get Financial advise 25

What is next The Decision When should I retire this is not just a financial decision. Is it the right time for me given personal circumstances. 26

Questions in Steps Can I buy back years under PCW Do I need AVC last minute/pay as you earn Can I Maximise Tax free lump sum Does notional service suit my needs Maximise all my tax reliefs Be aware of my PRSI entitlements Note no two people are the same All are individuals 27

Future Proofing Pension Parity with serving Colleagues Danger of link with CPI (2% Last year) 28

Single Public service pension scheme All new entrants to public Career average pension service since January 1 st 2013

Retirement – linked to state pension age 2021 – age 67 2028 – age 68

Pre 2013 benefits Pension and lump sum are calculated using your final salary and service

Single public service Pension scheme current calculation method: 0. 58% x gross pensionable salary up to 3. 74 times State pension x % work pattern PLUS 1. 43% x gross pensionable salary for any amount greater than 3. 74 times State pension x % work pattern.

Lump sum 4. 29% x Gross pensionable salary x % work pattern

Pension ‘banking’ The pension and lump sum are ‘banked’ into your account and may increase each year in line with CPI (inflation). All public servants pay for their pension 5% of salary. This is independent of the scheme you are a member of for pension purposes.

Single pension scheme affect in retirement Significantly lower pension than previous pension schemes Significantly lower lump sum than in previous pension schemes Must wait to 68 years of age for maximum (personal pension plus State pension)

Single Public service pension scheme could mean a 70% income cut May need a new job in retirement to maintain lifestyle Predicted 70% cut in income post retirement

Circular letter 0015/2019 Purchase and transfer of retirement benefits under the single public service pension scheme.

Addition pension charges PRD Pension related deduction ended 31/12/18. Replaced Paid by ASC – additional superannuation contribution 1/1/19 in addition to 5% pension contribution and 1. 5% spouses and children's Standard accrual group Single pension scheme group First € 32, 000 @ 0% Next € 28, 000 @10% Next € 28, 000 @ 6. 66% Balance @10. 5 % Balance @7%

Total deductions on extra income Deduction % PAYE 40% PRSI 4% USC 4. 5% PRD (permanent) 10% / 10. 5% or 6. 6% / 7% Pension 5% SP and children 1. 5% Salary protection 1. 7% Total 67. 2% Guide only as personal circumstances can vary

Single pension scheme – example of ‘banked’ monies Based on € 30, 000 salary Pension Lump sum 0. 58 x € 30, 000 x 100 = € 174 4. 29% x € 30, 000 x 100% = € 1, 287