Supplementary Pensions

Employees who pay Class A PRSI under the social insurance system operated by the Department of Social Protection may be entitled to a range of social insurance related payments from that department by virtue of their PRSI contributions. One such payment is the State Pension (Contributory) (‘SPC’), which is payable to eligible persons on reaching age 66.

A significant number of occupational pension schemes (in both the private and public sectors) take account of the SPC when providing a pension under the occupational pension scheme. This is known as ‘integration’, and is sometimes referred to as 'co-ordination'.

An integrated, or co-ordinated, pension scheme looks at the total pension entitlements available to employees on retirement, including the SPC and their occupational pension benefit. One reason for this is that both employers and employees make PRSI contributions which, in turn, entitle scheme members to certain social insurance benefits, including the SPC.

Occupational public service pension schemes use integration in order to account for an employee’s entitlement to the SPC, to determine:

• the amount of occupational pension payable from their pension scheme, such that the combined pension from both sources (occupational pension and SPC) is at the desired level under the scheme's design; and
• the level of contributions payable by the employee towards the cost of their occupational pension, reflecting the offset of the SPC from their occupational pension benefit.

This is normally achieved by a salary offset in respect of the SPC in the calculation of employee pension contributions and, in the calculation of a pension benefit under an integrated public service pension scheme, the SPC is usually accounted for through an offset built into the rate of pension accrual under the scheme.

In calculating pension benefits under an integrated public service pension scheme, it is assumed that the public servant concerned is entitled to social insurance benefits by virtue of their PRSI classification and is eligible for the maximum rate of those benefits. There are, however, circumstances where a person will not qualify for the SPC, or qualifies at a rate that is less than the maximum rate payable.

In the case of members of an integrated pre-existing public service pension scheme who retire and who do not qualify for the SPC, or qualify for a lower rate of SPC than the maximum payable, they may be entitled to an occupational supplementary pension, subject to certain conditions being met.

Some pre-existing public service pension schemes provide for the payment of an occupational supplementary pension to members whose pension benefits are integrated, subject to certain eligibility criteria being met, in order to make up a shortfall in their total pension benefits (occupational pension and SPC) in circumstances where the member does not qualify for the SPC or another social insurance benefit, or qualifies at a rate that is less than the maximum payable.

Where payable, the rate of supplementary pension under a pre-existing public service pension scheme is calculated as the difference between:

• the member’s actual occupational pension payable, plus the personal rate of any social insurance benefits payable, and
• the occupational pension that would have been payable to the member if integration had not applied

A supplementary pension is not intended to bridge the shortfall in pension up to the maximum rate of SPC. Instead, it will give eligible members pension benefits equivalent to those they would have received if integration had not applied to their occupational pension.

Payment of the occupational supplementary pension is not automatic. The following eligibility criteria and conditions must be met in order to qualify for payment of a supplementary pension:

• The individual must be retired and have reached minimum pension age, or retired on grounds of ill health,
• The individual must have been a member of a pre-existing public service pension scheme (i.e. not the Single Scheme) and the pension benefits payable in respect of such membership were integrated with the social insurance system,
• The individual must not be engaged in paid employment in any capacity,
• The individual must not qualify for social insurance benefits, or fail to qualify for social insurance benefits at the maximum rate, and
• The individual’s failure to qualify must be due to causes outside of their control

An occupational supplementary pension is not payable to the following public servants:

a) Persons recruited before 6 April 1995 paying a modified rate of PRSI (Class B, C or D) and whose pension benefits were not integrated with the social insurance system

b) Members of the Single Scheme

c) Persons who fail to claim a social insurance benefit to which they are entitled

Any public servant wishing to apply for a supplementary pension should direct their application to their pension administrator