Teachers’ pensions in Ireland

Getting your head around teachers’ pensions in Ireland can be tricky. Teachers’ pensions are influenced by several different factors, such as years of service, your start date as a teacher, and decisions like early retirement, so it’s easy to feel overwhelmed.

With this page, we aim to bring some clarity to it all by addressing commonly asked questions, such as: how is the Irish teacher’s pension calculated, do teachers get two pensions, and what is the retirement lump sum?

As a teacher in Ireland, your pension is a retirement benefit provided by the government. It’s typically based on your years of service and salary, and is designed to provide a steady income during your retirement years.

There are various teacher’s pension schemes in Ireland, which determine how your pension is calculated and when you can retire:

1. Old entrant pension scheme: started teaching before 1st April 2004
2. New entrant pension scheme: started teaching on or after 1st April 2004
3. Single Public Service Pension: started teaching on or after 1st January 2013.

Due to increasing life expectancy, new rules were introduced for those who started, or came back to teaching, after 6th April 1995.

It is hard to say what an average teachers’ pension in Ireland is, as several factors play a role.

An Irish teacher’s pension mainly takes into account the following:

• When you started teaching, and how many years you have of what’s known as pensionable service
• Your salary on retirement, plus any allowances.

Pensionable service is essentially the time a teacher who is part of a teacher’s pension scheme spends in service, which counts towards their pension benefits. Pensionable service for teachers includes various types of teaching roles in primary, secondary, community, or comprehensive schools. Service can be in the form of permanent and temporary positions, job-sharing, some part-time roles, transferred service, and also those with approved leave, under certain conditions.

The way the Irish teacher’s pension and lump sum is calculated depends on whether you started teaching prior to 6th April 1995 or on or after that date.

The majority of current retirees started teaching prior to 6th April 1995.

Here’s how the teacher’s pension in Ireland is calculated for this group: For each year worked, you get 1/80th of your final salary as pension, up to a maximum of 40 years. So, if you retired after 40 years on a salary of €50,000, you’d get €25,000 per year as pension.

If you’re a teacher who started teaching after 6th April 1995, there’s a slightly more complex formula that incorporates the state pension. First, you get 1/200th of your pensionable salary, up to the maximum personal rate of the state pension, multiplied by 3.333333. Then, for any portion of your salary that exceeds that maximum rate, you receive an additional 1/80th of it for each year you’ve been paying into the teacher’s pension scheme. This system is called a coordinated pension.

If you retired before 1st January 2004, the calculation was slightly different. You received 1/80th of your net pensionable salary for each year you worked.

If you’re struggling to calculate your Irish teacher’s pension, a useful tool is the Department of Education Pensions Modeller. You enter your salary and some other details, and the modeller will give you an estimate of how much pension you’re likely to receive. This is divided into whether you choose to retire at normal retirement age, if you resign before retirement age, and if you take Cost Neutral Early Retirement.

When you retire as a teacher in Ireland, you’ll also receive a lump sum payment calculated based on your retiring salary and years of pensionable service. This equation involves multiplying three eightieths of your retiring salary by each year of pensionable service, capped at a maximum of 40 years. However, the lump sum cannot exceed 120/80ths of your salary at retirement.

To see this in practice, let’s say you retire with a salary of €60,000 after working for 30 years. Using the formula, your lump sum would be:

(3/80) x €60,000 x 30 = €67,500.

And 120/80ths of the final salary would be:

(120/80) x €60,000 = €90,000

So, because the calculated lump sum of €67,500 is less than €90,000, it does not exceed 120/80ths of the final salary, and therefore falls within the allowable limit.

This lump sum, which is tax-free unless it goes over €200,000, is a key part of your retirement benefits and is provided alongside your pension.

Yes, teachers do pay Pay Related Social Insurance (PRSI), and the amount you pay depends on when you started teaching.

If you began teaching before 6th April 1995, you’re in Class D and you contribute 5% of your annual salary and allowances to the scheme.

If you are on the higher Class A rate, the contribution is 1.5% of something known as “remuneration”. Remuneration isn’t just your salary; it also includes pension allowances and any extra payments for things like supervision or substitution work you’ve done in the year. You also contribute 3.5% of your net remuneration, calculated as the difference between your total remuneration and twice the rate of the contributory state pension.

This also depends on when you entered teaching. If you started teaching before 6th April 1995, you do not receive the state pension; instead, your pension is paid in full by the Department of Education. This is because you pay the lower D rate of PRSI, which doesn’t qualify for the state pension.

The situation is slightly different for more recent entrants, that is, those who started teaching from 6th April 1995. Because teachers in this group pay the higher class A rate of PRSI, they might be eligible for the contributory state pension. However, it’s important to note that this state pension doesn’t add to your teacher’s pension, but rather complements it. You receive a slightly lower occupational pension from the Department of Education, but the state pension makes up the difference.

Teachers qualify for this coordinated pension at 66, but you may receive additional payments from the Department of Education if you retire before reaching 66.

On top of a lump sum and a pension on retirement, a teacher’s pension in Ireland gives you access to a range of benefits, including:

• Death benefits: A lump sum payment to the teacher’s beneficiaries if they pass away while still in service.
• Spouse’s/children’s pension: Financial support to the spouse or children of a deceased teacher after retirement, usually in the form of half the pension they were receiving.
• Disability benefits: A disability pension and lump sum if you have to retire early due to poor health.
• Early retirement options: Some teachers’ pension schemes may allow for early retirement with deferred benefits, providing flexibility for teachers coming to the end of their careers.

ASC stands for “Additional Superannuation Contribution”, and it applies to anyone who is a member of a public service pension scheme, including teachers. The ASC deduction is an extra contribution on top of your existing teacher’s pension contributions, but the good news is, it qualifies for tax relief at the marginal rate.

The rates for ASC if you started teaching before 2013 are as follows:

• Up to €34,500: 0%
• €34,500 - €60,000: 10%
• Greater than €60,000: 10.5%

The rates for ASC if you started teaching after January 2013 are as follows:

• €0 - €34,500: 0%
• €34,500 – €60,000: 3.33%
• €60,000: 3.5%

The teacher retirement age in Ireland varies depending on when you started teaching, but the basic idea is that, the longer you stay in pensionable service, the bigger your pension pot will be. However, you cannot work beyond 70 years of age, as 70 is the compulsory retirement age for teachers. Regardless of when you started working as a teacher, you’ll need to have completed at least two years of pensionable service to receive your pension.

For teachers who started teaching from January 2013, the retirement age is aligned with the state pension age, which is currently 66. If you started teaching from 1st April 2004, retirement benefits are payable at 65 years of age.

If you started working earlier than April 2004, you have a few more choices. You’ll either get pension benefits at 60 years of age, or you can take advantage of the “35-55 year rule” for teacher retirement.

One of the benefits of a teacher’s pension in Ireland is the opportunity to retire earlier than the average, at 55 years of age. Under the 35-55 year rule, which is part of the teacher retirement system in Ireland, you can retire at 55 if you have completed at least 35 years of pensionable service as a teacher.

This pensionable service requirement may be lowered if you have completed a certain level of teacher training prior to starting work. For example, if you’re 55 and completed four years of training before entering the profession, you can retire with 33 years of service. Similarly, you can retire at 55 with 34 years of service if you have completed three years of pre-service training.

If you are retiring early on medical grounds or under the Cost Neutral Early Retirement arrangement, you may receive your teacher’s pension even earlier than this age.

The teacher’s pension calculator for Ireland can be helpful if you have a set retirement date in mind, as it will tell you if you have been working as a teacher long enough to retire on that date.

As a teacher, you can use the Notional Service Purchase Scheme (NSP) to “buy back” extra years of service through your employer. This scheme can be particularly helpful if you changed careers and entered teaching later in life, meaning you probably don’t have enough years of service or teacher’s pension contributions to claim the teacher’s pension. Notional service can be purchased either through salary deductions or by way of a lump sum.

Alternatively, you may be able to make additional voluntary contributions (AVCs) to top up your retirement benefits. Like everything associated with Irish teachers’ pensions, these options come with conditions based on your individual circumstances, so it can be a good idea to contact the Department for Education to check if you’re entitled to them.

Once you’re ready to retire, you need to apply for your pension payments. Contact the Department of Education pensions unit at least three months before your planned retirement date. They will take you through the application process. Once you enter retirement, your pension payments will be deposited into your bank account once a fortnight, starting from the day after your last paid service day.

While a teacher’s pension is an important aspect of your retirement planning, it can be helpful to explore other ways to maximise your savings. With a range of savings accounts available from across Europe with competitive interest rates, the Raisin Bank marketplace could have something to suit you. All you have to do is open a Raisin Account (for free), choose an account, deposit your money, and watch your savings grow!