Public service pension plans explained

A public sector pension, often regarded as one of the most generous retirement packages available, serves as a fitting reward for years of public service.

On this page, we’ll outline everything you need to know about public service pension plans in Ireland, covering key topics such as eligibility, benefits, recent changes, and how to maximise your pension savings.

Public service pensions are retirement plans established by the Government for employees working in the public sector. Most of these occupational pensions are structured as defined-benefit schemes, ensuring retirees receive guaranteed benefits based on factors like salary and length of service.

When we talk about public service, we’re referring to anyone employed in the health and education sectors, the civil service, local authorities, and non-commercial state bodies in Ireland. This includes teachers, members of the defence forces, healthcare workers, and other public sector employees. 

There have been several changes to public service pension plans in Ireland in recent decades, with the first major changes introduced in 1995. Public servants are typically part of a pension scheme tailored to the sector they are employed in, and each scheme comes with its own set of rules and guidelines.

Recent entrants to public service professions will have a different pension to those who have already reached retirement age. The single public service pension scheme, often called the “single scheme”, is the retirement plan for all public servants in Ireland who started their public service post after January 2013.

Under this scheme, pension benefits are calculated based on your career-average pay, meaning a portion of earnings throughout your membership of the scheme. These benefits, which include the pension and lump sum, accrue annually depending on your salary level. Put simply, the single scheme ensures that your pension reflects your average career earnings, with benefits increasing each year based on your salary.

Broadly speaking, public sector pensions in Ireland are based on salary and length of service. 

There are four different public sector pension schemes based on when you started your career, and each is calculated slightly differently:

1. For public servants who joined before 6 April 1995, the public service pension is calculated as 1/80th of their final earnings for each year of service. So, if you are employed for 40 years, you’ll receive a pension of half your pensionable salary. 

2. If you joined a public service pension plan between April 1995 and April 2004, your pension benefits are similar to those of the previous scheme, but with a key difference: you’ll pay a different PRSI class (A) and your employer pension will be reduced because it is combined with the Contributory State Pension.

3. For those who joined between April 2004 and December 2012, pensions are also coordinated with the State Pension and follow the same calculations as those in the previous group. If you’re in any of these first three categories, or you have a civil service pension, you can use the government modeller to estimate your pension benefits.

4. For those starting after 1 January 2013, your annual pension accrues at either 0.58% or 1.25% of your salary per year, with quicker accrual rates for specific professions like Garda, fire service, and prison service.

There has been some debate about the fairness of this new single pension scheme. Because retirees from the pre-2013 era receive a pension based on what is likely to be the highest salary of their careers, some say the public service pension system benefits pre-2013 entrants over newer recruits.

The lump sum you receive also depends on whether you started your public service career before or after January 2013.

• Pre-2013 entrants: You’ll receive a tax-free lump sum equivalent to 3/80ths of your final earnings. So, if you complete 40 years of service and reach normal retirement age (the age at which you can retire without any penalties), you’ll be entitled to a lump sum equal to 1.5 times your pensionable salary.

• Post-2013 entrants: Your tax-free lump sum is calculated at a rate of 3.75% of your salary per year.

Because of the gradual introduction of new rules for public service pensions in Ireland, the age at which public servants can retire also depends on when they entered their role. 

• Before April 2004: There is a compulsory retirement age of 70, which has increased from 65.

• 1 April 2004–31 December 2012: This group has no compulsory retirement age.

• From 1 January 2013: The earliest retirement age is 66, which is the same as that for the Contributory State Pension. You can also choose to continue working until 70, which is the mandatory retirement age for this group.

There are some instances where you may access your public service pension before your standard retirement age. In addition to retiring early due to ill health, there are two main ways to take early retirement:

1. If you entered the profession before January 2013, you can take advantage of cost neutral early retirement (CNER), which allows access to pension benefits from either age 50 or 55. 

2. Public servants joining after January 2013 have the option to take voluntary early retirement before State Pension age. You must be at least 55 years old and have contributed to the scheme for at least two years. For more information, visit the Single Public Service Pension Scheme website.

Yes. Whether you’re part of a private or public sector pension scheme, you can increase your retirement benefits through two main routes: additional voluntary contributions (AVCs), or purchasing notional service. 

AVCs allow you to make extra contributions to your employer’s AVC scheme, if available, or set up a personal retirement savings account (PRSA). 

Another option is to purchase notional service, or “added years”, which can be particularly beneficial for civil and public servants who are unlikely to achieve 40 years of service at retirement. Notional service allows you to make additional contributions to purchase additional years of service, otherwise known as ‘buying back’ years. This way, you’re guaranteed a more substantial retirement income, even if you started a public service job later in life.

It can help to check with those in charge of your public service pension scheme to make sure these options are available to you.

These days, many people seek extra sources of income for retirement. A high-interest savings account can help to boost your pension pot. At Raisin Bank, you can choose from a variety of access options and features to suit your needs. Simply compare savings accounts, choose one that suits you, and sign up for a free Raisin Account.