SUPERANNUATION SCHEME

Transcription

1 SUPERANNUATION SCHEME GENERAL The Superannuation Schemes existing in the University are: (a) The Dublin City University Superannuation Scheme 1984 OR The Dublin City University Superannuation Scheme 2005 (The Model Scheme) and (b) The Dublin City University Spouses' and Children's Pension Scheme 1984 OR the Dublin City University Revised Spouses & Childrens Scheme The above schemes are legal entities and form a very important part of the employment of all eligible staff members. Given their statutory existence, both schemes are legalistic and rather complex in nature. Therefore, this document is being prepared as a guide to all staff members. The contents should be construed as a guide only, and are subject to the detail contained in the main documents. The Schemes may be viewed on application to the Human Resources Department. Commencement The Superannuation Scheme commenced on 1 January 1980 and The Model Superannuation Scheme commence on 1st January The Spouses' and Children's Scheme commenced on 1 January 1980, and from 1 July 1985 included female members. The Revised Spouses & Childrens Scheme commenced on 29th September Membership The Superannuation Scheme is compulsory for all eligible staff members and is conditional on a satisfactory medical report being received by the University. Members of the Superannuation Scheme are categorised as either old entrants or new entrants which are defined as follows: Old Entrants are staff members who joined the DCU Superannuation Scheme prior to 1st April Old Entrants have a normal retirement age of 65 but are eligible to draw upon their benefits from age 60 upon application and subject to approval from the University Governing Authority. Old Entrants can draw upon their benefits from age 50 with an actuarial reduction New Entrants are staff members who joined the DCU Superannuation Scheme after 1st April New Entrants can draw upon their retirement benefits from age 65 and there is no upper retirement age. New Entrants can draw upon their benefits from age 55 with an actuarial reduction Old Entrants will include staff who were in temporary employment within DCU prior to 1st April 2004 or who transferred in from another employer who participates in the Public Service Transfer Network. Members who are unsure as to which category they fall into, should contact the Human Resources Department. The Spouses' and Children's Scheme is compulsory for all members of the Main Scheme, except female members of staff who joined the University prior to 1 July 1985 and who did not opt to become members of the Scheme by 30 September Members who join after 29 September 2003 will automatically be included in the Revised Spouses & Childrens Scheme The main differences between the 1984 and 2003 Spouses & Childrens Scheme are as follows: - the 2003 scheme provides for the payment of

2 benefits to all children of the scheme member (including non-marital children). It also provides benefits for the spouses of marriages after retirement or resignation. The 1984 scheme does not. The 1984 scheme allows a refund of actual contributions to the scheme member at resignation or retirement, but only if they remained unmarried for the duration of their membership to the scheme. This does not apply to the members of the 2003 scheme. Contributions All eligible staff members shall pay a contribution to both the Main Superannuation Scheme and the Spouses' and Children's Scheme (for the latter effective from 1 July see Membership). Employee contributions shall be at the following rate:- 5%of pensionable pay- Superannuation Scheme 1.5% of pensionable pay - Spouses' and Children's Pension Scheme. Contributions will commence from the date of eligibility to the scheme and will be deducted automatically from gross salary. If a staff member is liable for income tax, contributions qualify for full relief for tax purposes. It should be noted that new members of the DCU Superannuation Scheme are not entitled to receive tax relief on existing Personal Pension Plans, PRSAs or any other form of private pensions presently in place. If you are currently a member of such a scheme it is recommenced that you review your circumstances with a professional financial consultant. We have asked Cornmarket (previously Gregan Mc Guinness), the administrators of the DCU AVC (Additional Voluntary Contribution) Scheme to make themselves available to all new members. Benefits The benefits of the Superannuation Schemes can broadly be analysed under two headings - (1) Retirement Benefits and (2) Death Benefits. 1A. Retirement benefits Provided an employee has completed 2 years pensionable service, benefits shall be as follows - (a) Pension: pension will be paid equivalent to 1/80th of retiring salary for each year of pensionable service, subject to a maximum of 40/80ths (i.e. maximum annual pension of 50% of retiring salary). Full PRSI rate contributors (ie. A Rate contributors) should note that the pension element of the retirement benefits is integrated with the Contributory State Pension Scheme which is paid by the Department of Social and Family Affairs. However, as this only becomes payable at age 66 or 65 if the member qualifies for State Pension (Transition) (subject to the criteria as set by the Department of Social and Family Affairs), an old entrant who opts to retire anytime between age 60 and 65 may be eligible to receive a supplementary pension from DCU. Payment of the Supplementary Pension will be made provided they do not take up any other insurable employment or are not eligible for any other social welfare benefit, e.g. Jobseeker s Benefit (formerly known as Unemployment Benefit). The amount of the supplementary pension is calculated as follows: A (B+C), where: A is the amount of the pension which would be payable to the member if he/she were a Class D Rate PRSI contributor

3 B is the amount of the pension actually payable to the former member C is the annual amount of the Social Welfare benefit or reduced rate thereof, if any which is payable to the former member In order to assess your eligibility to the supplementary pension and the final amount that should be paid, we will require the following information from you: 1.Confirmation whether you are taking up further insurable employment and if so, full details of said employment. 2. Confirmation if you are entitled to Social Welfare benefit and if so, confirmation of the amount. This includes Unemployment Benefit (which is now called Jobseeker s Benefit) which you should be eligible for up to 15 months after your retirement. Payment of the supplementary pension will be conditional upon written confirmation in respect of 1 and 2 above. (b) Gratuity: A gratuity will be paid equal to 3/80ths of retiring salary for each year of pensionable service, subject to a maximum of 120/80ths (i.e. subject to a maximum gratuity of 1.5 times retiring salary). Pension Payment Pensions payable under this scheme shall be paid monthly in arrears, and shall continue throughout the life of the member. Pension Increase The Governing Authority may grant increases in pension under this scheme in line with Increases in Public Service pensions approved from time to time by the Minister for Education, and the Minister for the Public Service. 1B Ill Health Retirement Early retirement may take place in the event of serious illness, provided a staff member has completed a minimum of 5 years pensionable service. Pensionable service for an employee who retires due to ill health will, subject to a maximum of 40 years, be the aggregate of (1) and (2) as follows:- (1) Pensionable service completed to date of retirement PLUS (2) A period of added service calculated on the following basis - (a) members with between 5 and 10 years of actual service at retirement will be allowed an equivalent amount of added service, such amount of added service not to exceed the difference between the member's age at retirement and age 65; (b) members with between 10 and 20 years of actual service at retirement will be allowed the more favourable of - (i) an amount of service equal to the difference between actual reckonable service and 20 years, the added service not to exceed the difference between the member's age at retirement and age 65; (ii) 6 years and 243 days, the added service not to exceed the difference between the member's age at retirement and age 60. Members over 60 at retirement cannot therefore benefit from this section.

4 (c )members with more than 20 years of actual service at retirement will be allowed to add whichever is the lesser of 6 years and 243 days, and the difference between their age at retirement and age 60.Members over age 60 at retirement cannot, therefore, benefit under this section. 2. Death benefits In the event of death in service, a staff member's legal personal representative shall receive a death gratuity which will the greater of (a) retiring annual salary (b) 3/80ths of retiring salary for each year of pensionable service, subject to a maximum of 1.5 times retiring salary. In addition, if a staff member is married, he/she will receive - (i) A pension for the spouse of an amount equal to 50% of the annual pension the staff member would have received at age 65, based on retiring salary at the date of death and on the pensionable service the member would have completed had he/she survived to age 65, subject to a maximum of 40 years service. This pension commences one month after the date of death. Full salary would be paid for one month after death if the spouses pension is payable. A spouses' pension may be paid for the whole period, beginning on the death of the deceased and ending with the death of the spouse. (ii) A pension for the staff member's eligible children. The amount of pension will vary according to whether or not a Spouses' Pension is being paid, and also according to the number of children who are, at any time, eligible for benefit. Children are eligible for benefit so long as they are under age 18, or under 22 years if receiving full-time education. Where a Spouses' Pension is not being paid, the total amount of the Children's Pension will be as follows (a) where there is only one child, 4/12ths of the deceased pension (b) where there are two or more children, an amount equal to the total Spouses' Pension which would have been payable (i.e. 50% of deceased pension). Where a Spouses' Pension is being paid, the total amount of the Children's Pension will be as follows (a) where there are not more than 3 children,2/12ths of the deceased pension for the first child, plus two-twelfths for each additional child (b) where there are more than 3 children, an amount equal to the total Spouses' Pension which would have been payable (i.e. 50% of the deceased pension). A children's pension may only be paid in relation to a period subsequent to the death of the deceased, and will be paid to the member's spouse if the eligible children are in his/her care. Pension Payment: Pensions payable to both the Spouse and Children shall be paid monthly in arrears.

5 Increase in Pensions: The Governing Authority may grant increases in pensions under this scheme as may be authorised from time to time by the Minister for Education after consulting with the Minister for the Public Service. Allocation of pension A staff member may allocate portion of the pension, as from its commencement, in order to provide a pension for the spouse or other dependent. Any such allocation shall be subject to the provision of the Superannuation Act Deferred pension A staff member who resigns voluntarily after at least 2 years service will have an option of benefiting from a deferred pension. Pension and lump sum may be paid from age 60 for old entrants and from age 65 for new entrants upon application. The preserved benefits will be based on actual reckonable service only. Return of contributions Where a staff member does not have an option of (a) Transferring Pension right or Deferring Pension, contributions plus compound interest at 4% per annum will be repaid less an amount equal to any income tax liability by the Governing Authority in respect of such benefit. Under certain terminatory circumstances (eg fraud or misconduct) contributions may be withheld. Contributions will not be returned to a staff member who resigns to take up a position, service in which is capable of being reckoned under the Local Government (Superannuation) Act Options Available in Order to Maximise Pensions Benefits at Retirement: Recognising Dublin City University as a young organisation, and also the recruitment pattern that has taken place since 1980, and is likely to continue, it will not be possible for many employees to attain the maximum of 40 years service. Given that the benefits under the Superannuation Schemes relate to length of service, many employees may not, through actual service, attain reasonable benefits. Therefore, staff members may increase benefit entitlement in one or more of the following ways: (a) Transfer of Service Where an employee is coming to DCU from another organisation, which is participating in the Public Service Pension Transfer Network, arrangements can generally be made to have pension rights transferred to Dublin City University. (b) Purchase of Added Years Employees maybe permitted to purchase added years to facilitate retirement at age 65(and/or age 60 if the member is an "old entrant") if they fulfill certain criteria. The cost of purchasing added years is determined by actuarial tables approved by the Minister for the Public Service. ( c) Additional Voluntary Contributions (AVCs) Employees can opt to pay additional contributions in order to increase benefits or facilitate retirement at age 60 or 65. Cornmarket (previously Gregan McGuinness Life & Pensions Ltd) manage the Dublin City University approved AVC scheme through Irish Life. (d) Previous Temporary Service Where an employee has had previous temporary service with Dublin City University, which was non-pensionable, there maybe an opportunity to reckon this service for pension purposes by paying appropriate contributions. Contributions are levied upon current salary at the time the option is exercised. Equally, where an

6 employee has had previous temporary service with another company which participates in the public service transfer network, the University can investigate the possibility of this service being reckoned for pension purposes also. (e) Re-Instating Previous Service Where an employee received a refund of contributions in respect of a marriage gratuity or upon resignation, there maybe an opportunity to reinstate this service and have it reckoned for pension purposes by paying appropriate contributions. This normal repayment terms is the original refund plus interest, however the employee maybe required to pay contributions based upon current and up rated salary. (f) Transfer Value Where an employee has retained pension benefits with a previous employer, DCU can investigate the possibility of converting the Transfer Value into DCU pension years and transferring same into the DCU Superannuation Scheme. (g) Professional Added Years Employees maybe eligible to an award under the Professional Added Years Scheme where the criteria for appointment were of such a nature as to preclude the employee from acquiring full superannuation entitlements by maximum retirement age. Because of the nature of the scheme, an award of added years can only be formally made at the time of retirement. For staff who were employed prior to 1 st January 2005, the following scheme applies. DCU Superannuation (amendment) Scheme 1996 For all new entrants on or after 1 st January 2005, the following scheme applies The costs involved with any of the above options will be carried in full by the employee. The costs will normally attract full tax relief in line with Inland Revenue limits. Staff who wish to consider any of the above options should contact the Human Resources Office. Cost Neutral Early Retirement The option of voluntary early retirement is available to staff who resign on or after 1 st April 2004 with an entitlement to preserved superannuation benefits. This option permits members to retire early with immediate payment of superannuation benefits, subject to actuarial reduction to take account of the early payment of the lump sum and the longer period over which pension would be paid. Old Entrants with a preserved pension age of 60 are eligible to retire early from age 50 with an actuarial reduction and New Entrants with a preserved age of 65 are eligible to retire early from age 55 with an actuarial reduction. Full details of the early retirement scheme can be viewed at: &m=c If you have any queries regarding pensions you should contact the your designated HR Officer in the first instance.