Introduction of ASC in January 2019

Reduction in current overall pension contribution as PRD ends

The DES has issued Circular 0084/2018 (pdf) providing for the introduction of the Additional Superannuation Contribution (ASC) from 1 January 2019. The ASC replaces PRD (the “pension levy”) and reduces the current overall contribution.

The revised ASC thresholds (below which no ASC is paid) are common to all, whereas the ASC rate is lower for a member of the Single Public Service Pension Scheme (“Single Scheme”) – in general, Single Scheme members entered the public service on or after 1 January 2013.

Examples of Change from January 2019

1. Teacher in the pre-2013 Pension Scheme

For a person in the pre-2013 public service pension scheme, s/he currently pays no PRD on income up to €28,750. With the introduction of the ASC this threshold is raised to €32,000, reducing liability by €325. There is no change to previous rates, i.e. on income between €32,000 and €60,000 ASC Is charged at 10%, and at 10.5% on amounts over €60,000.

For example, a pre-2013 scheme member who earns €58,000 will pay €2,600 (or 4.5% of earnings) in ASC, compared with a current liability of €2,925 (just over 5% of earnings). As mentioned above, the liability is reduced by a standard €325 for 2019.

Reduction in liability (2019) for all pre-2013 scheme teachers = €325.

2. Teacher in the Single Scheme

For this teacher (generally a post-1 January 2013 entrant), the same change to the threshold applies.

There is also a reduction in the ASC rate compared to the current PRD. The earnings band (€28,000) between €32,000 and €60,000 is no longer charged at 10% but at 6.66%, with the balance over €60,000 charged at 7%.

For a teacher on €40,000, for example, this will mean an ASC of €533 (1.3% of earnings) compared with a current PRD of €1,125 (2.8% of earnings). This is a reduction in liability of €592 for 2019 (€325 due to the threshold change plus €267 due to the lower rate).

Reduction in liability for example of Single Scheme teacher = €592.

Other Issues in Circular

The DES Circular stresses the importance of a teacher being correctly identified on the DES system as being a member of the appropriate pension scheme. In addition, it attaches at Appendix A the full Circular from the Department of Public Expenditure and Reform (DPER) providing for changes in PRD/ASC. The annual thresholds and rates are set out at DPER’s Appendix 1 for the years 2019, 2020 and 2021 in respect of public servants who are covered by the Public Service Stability Agreement (PSSA) and those who are not covered.

The introduction of a permanent ASC, to replace the PRD but with a reduced liability, is linked to retention of public service pension terms including pension parity (i.e. pensions in payment move in line with salaries). The recommendation to introduce an ASC arises from the Report of the Public Service Pay Commission (PSPC) of May 2017. The detail of their analysis may be read in that Report on the PSPC website – see chapter 4  Comparisons of Public Service and Private Sector Pensions”, pp.29-37.