Except this is pretty much gone in the public sector too.
All new entrants since 2013 face career-average rather than final-value salaries.
It may surprise people that the monastic model of early entry to the public service, no gaps, and a 40-year career is largely gone too. Barring certain sectors like defence forces, prison service and the guards, people now enter at all ages and levels. Some have spent time abroad. Many now hit retirement age without having reached the maximum of the scale never mind 40 years service.
I looked at joining the CS at one point in my career. I would have taken a fairly hefty salary cut - about 30% - but wondered if the pension would compensate. I would have had an 18 year career but the calculations didn’t look strong enough - I might possibly have got promoted into the higher echelons but as this is service-based I would have been at a considerable disadvantage. The earlier retirement that I would have had looks pretty attractive now but I wouldn’t have earned as much as I have and my own DC plan should end up better than the half pension I would have got. At the time I was contemplating it I had very little in my DC pension. As you say you need to be in it for the long haul and you need to be in at a professional grade. Based on my parents (and their peers) experience (not civil servants but a good DB pension from a company) you actually only spend a lot of your pension in the period between retirement and about 80 years of age - after that you don’t/can’t travel as much and the state pension pretty much covers you. You might get a better class of nursing home though!
Compare Eschatologist’s hypothetical private sector worker joining up at 45 for 20 years on an 80k salary.
She pays 10k in pension-type contributions per year. With the hypothetical tax relief that is about 17k per year. Over 20 years her contributions are 340k. At 65 she gets an 8k entitlement above the state pension.
She would want to live for another 42 years to make that back - and that assumes 0% investment growth.
If similar-paying private sector employment was available she would be better off staying and contributing to a DC pension.
Don’t forget the lump sum of approx 60k in that scenario.
Also, if you had joined pre-2013, you would be able to retire at retirement age and receive your full pension, including the state pension element. The age at which people qualify for the state element is moving and will surely hit 70 at some stage.
Not to mention the fact that the pension levy is a recent phenomenon and not necessarily there for good.
As of now, this is not the case. The age for receipt of the state pension element has been moved up while mandatory retirement ages have not. Meaning that currently there is a year or perhaps more during which new pensioners, even those who joined post 1994 but pre-2013, do not get the state pension part of their pension.
It is calculated as follows (Note that the annual rate of the SCP is incorrect on that site):
Weekly SCP: €238.30
Annual SCP: €12,391.60
3.333333 times annual SCP: €41,305.33
1/200th of salary below 3.333333 SCP for 20 years: 41,305.33/200*20 = €4,130.53
1/80 of salary above 3.333333 SCP for 20 years: (80000 - 40438.66) / 80 * 20 = €9,673.66
The worker in that example “may” be entitled to a state pension at 66 now (67 in 2021 and 68 in 2028) that all depends on his PRSI contributions and whether he has enough contributions, but if he retires at 65 (and in a lot of cases this is compulsory), then he will have to sign on the dole and exhaust those entitlements before putting in for a supplementary pension as was brought up by Clare Daly in 2015 when the increase of the state pension age caused a problem with PS workers who have to retire at 65:
You could swing it if you were a Garda or Prison Officer who can retire at 50 and 55 providing they have full service.
A friend of mine (prison officer) retired about 2 years ago (pre 1995), he worked for 10 years in the private sector before he joined so he had a PRSI history, he then worked for 30 years paying the modified stamp. He went to the Social Welfare and they were able to tell him if he worked and paid PRSI for 26 months then at age 67 he would qualifiy for the minimum state pension which is about 95 euro a week.
The thing about this is that he will pay full tax on it because his work pension is about 600 a week.