- When can I retire from teaching?
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If you started pre-2004 and didn't break service Normal Retirement Age is 60. You can retire before 60 in a few different ways:
1. Cost Neutral Early Retirement - You can go from age 50, but there are penalties so it can be prohibitive for most people. It may be an option for people who are retiring closer to 60.
2. Early Retirement - You can retire from 55 onwards without penalty, provided you have the minimum service (this depends on years spent in college). 2 college = 35 years, 3 college = 34 years, 4 college = 33 years. Job-sharing years count as full years for eligibility for Early Retirement, and Notional years do not qualify for eligibility. Most teachers who wish to go early wait until they qualify for Early Retirement.
3. Resign and Defer your benefits - very few people go for this
4. Ill Health Early Retirement - may be an option if you are unable to work
If you are unsure which applies to you, you can contact your employer, or speak to your local PSRA advisor to get an estimate of your pension timeline
- How much will I get in pension and lump sum?
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You will get a tax free Lump Sum, and a taxable Pension. They are calculated using your final salary and years of service. There are lots of different rules, exceptions, and variables, so outcomes will be different for everybody.
Let's take a general example:
A 57-year-old teacher with 34 years done on a final salary of €66,000
Would get a Lump Sum of €84,000 and a Pension of €28,000 (that's €958 per fortnight after tax ) which is less than while working but not by a huge amount. This is because of lower tax and fewer deductions in retirement.
There will be mechanisms to keep your pension in line with inflation. Some people choose to take on new employment post-retirement.
If you paid A1 PRSI, some of your pension may come from Social Welfare.
It is worthwhile to research your situation in detail to project accurately. You can contact your local PSRA advisor to estimate your pension figures.
- What are the steps involved in retiring?
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Retirement can be straightforward or complicated depending on your situation.
Here are some broad steps that may help guide you through the process:
Figure out when you can retire, how much you'll get, and if you can afford to. Spend some time weighing your options and be comfortable with your decision.
Complete the relevant paperwork and submit it to your employer. Three months notice is required to avoid delays in payment of pension. Many teachers opt to retire at the end of the summer break but you can retire on any day of the year.
You may need to verify previous service to have it added for pension.
You may want to pay a Buy Back bill from your AVCs.
It may be in your interest to do a "Last Minute" AVC for tax back.
If you have AVCs saved, it is wise to start planning how to draw them down.
Post-retirement, it is a good idea to check your final statement for errors.
Apply for Welfare benefits, Supplementary pension, or tax back if relevant.
Finally, make a plan for long-term savings including your Lump Sum.
The process can be as long as 10 months from initial planning to final admin. To draw up a roadmap for your retirement please contact your local PSRA advisor.
- Should I do a Last Minute AVC?
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People benefit from Last Minute AVCs by receiving tax back. Generally, they are for people who don't already have AVCs. By using pension and tax rules you can gain a risk-free profit if you have scope. They can work for people with LESS than or MORE than 40 years' service or for people with previously higher salaries and/or non-pensionable income.
They are best explained with a simple example:
If a teacher's Lump Sum is €90,000 but their maximum potential is €100,000:
That person has "scope" for €10,000 in their Last Minute AVC
If they make an AVC contribution of €10,000 BEFORE they retire
They are entitled to €4,000 back in tax relief - presuming a high rate taxpayer
After retiring they will be allowed to take back their original €10,000 tax-free.
So they are up by the tax relief which was €4000 in this example.
Charges and fees apply.
"Scope" will be different for everyone because there are so many variables.
Last minute AVCs are beneficial but complicated to get right.
It is a good idea to work with a Financial Advisor if you plan to do one. To find out if you could benefit please contact your local PSRA advisor.
- How do I access my AVCs?
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When you retire from teaching you get access to your AVCs.
There are a few steps involved:
First, you'll top up your teachers' Lump Sum to the maximum allowable. The amount depends on your previous salaries, service, and other variables. Lump Sum top-ups are tax-free which is good.
If you have an AVC balance remaining after the top up you have 3 options for it:
1. Withdraw it all as "Taxable cash" straight away
2. Purchase an "Income for Life" from a Life Insurance Company
3. Invest in an ARF "Approved Retirement Fund"
All 3 have advantages and disadvantages, you should select the one that suits you. The proceeds of all 3 are taxable.
To find the best option for you contact your local PSRA advisor
- How do I manage my savings through retirement?
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Usually, your lump sum will land in your bank account with your first payslip. It's a good idea to have a plan in place beforehand.
Step one is to add up all your savings.
Step two is to set aside an Emergency or Rainy Day fund.
Step 3 is to pay off any debts you may have outstanding.
Step 4 is to budget for planned expenditure in the short term.
With all of those accounted for, the balance remaining is your long-term savings.
Retirement will span many years and you may not receive a cash windfall again. Inflation is a problem as it decreases the REAL value of your money over time. Historically, bank deposits have not kept pace with inflation. So you will find that your savings are worth less in the future.
Most people want to keep pace with inflation if not make their money work harder. There is a range of options available that aim to achieve this.
Step 5 is to find a savings plan that is appropriate to you:
You won't want all of your eggs in one basket, and you'll accept good and bad years to match inflation.
Not all providers perform equally or charge the same for products. So it makes sense to shop around to make the most of your retirement savings.
Contact your local PSRA advisor for impartial advice on your long-term savings.
- Why should I retire with PSRA?
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PSRA are impartial financial advisors. We are Expert in Public Sector pay, pensions, and entitlements.
Established in 2007 due to lack of competition for Public Sector workers, we have a nationwide team of senior experienced Financial Advisors - this means your advisor stays with you through your retirement.
Our primary role is to advise you impartially on your option and to help you shop around the entire market and access to the best products.
We are committed to standardised and transparent fees and charges. This means we get paid equally no matter which option you choose, so there is no bias in our recommendations.
We are passionate about excellence in customer service and we take pride in the positive referrals we receive from clients.
Our mission is to explain your options simply and clearly and to represent our clients' interests in all of our actions.
Retirement can be complicated and difficult - You may need financial advice for some aspects of it.
We invite you to meet with us once, so we can show you what we can do for you.
Contact your local PSRA advisor to arrange a meeting at your convenience