Supplementary Pension, Do you Qualify?

Payment of a supplementary pension can arise where you retire, before turning 65 years old, from a public service position.

Where applicable, you must claim for your supplementary pension from the Department of Social Protection.  This may be a stressful process that should come with a health warning.

Supplementary pension may form part of the pension paid to retirees who paid full rate, Class A, PRSI contributions in respect of all or part of their pensionable service, and is also a possibility if you are buying back years or purchasing additional service.

The reason for the supplementary pension is that a Class A PRSI contributor retiring before age 65, would be significantly worse off than a Class D PRSI contributor.

In order to qualify you must first exhaust any entitlement to all other social welfare benefits such as job-seekers allowance.

Supplementary Pensions Explained

The supplementary pension payable, subject to certain T&C’s, is described as being ‘co-ordinated’. This means that the employer occupational pension is co-ordinated with either social welfare benefits or supplementary pension.

The purpose of the social welfare benefits, or supplementary benefit, is to provide equality for retirees with the same pensionable service regardless of PRSI status. Several sections of The Local Government (Superannuation)(Consolidation) Scheme 1998 have legislated for this.

Stress levels rise for the retiree applying for the supplementary pension. This is due to the fact that they must complete an intimidating and bureaucratic administration exercise. This process includes box ticking that you are currently available for gainful employment.

Requirements to qualify for supplementary pension

The Department of Social Protection may pay you supplementary pension where, you, as the retiree:

  1. Are not employed in any capacity which involves you payment of a PRSI contribution including self-employment, and
  2. Fail to qualify for the following Social Welfare benefits or qualifies for such benefits at less than the maximum personal rate:
  • Jobseeker’s Benefit
  • Illness Benefit
  • Invalidity Pension
  • State Pension (Contributory)

In the case of Cost Neutral Retirement, generally Supplementary Pension is not payable before age 60 or 65 . This is dependant on what age Normal Retirement Age is under the employer pension scheme.

Supplementary Pension Application Process

The application process will require you to apply for Jobseekers Benefit. This is where you have retired and are not actively seeking employment yet you must indicate that you are seeking work.

Job seekers benefit will most likely be declined or may be payable for a period of nine months (or until your PRSI entitlements run out).  Should this benefit run out it will become means tested.

At this stage, there may be a requirement for you to get evidence in the form of a stamped letter, from the Department of Social Protection. This will outline whether you are not entitled to any payment, or are only entitled to payment at reduced rates of any social welfare benefit.

Therefore retirees can, on application to their employer, make up the shortfall in pension for the period between date of retirement and the age of eligibility for State Pension (Contributory).

This is the process that provides equality for retirees.

Individual cases will differ particularly in relation to social welfare entitlements. When dealing with our clients planning for retirement, we discuss your individual circumstances in detail.

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