Public Sector Superannuation is an occupational scheme set up by the Government for employees in the public sector, local authorities and semi-state companies. The majority of these pensions are defined benefit schemes – meaning your pension is based on your salary/pay at retirement (Public Sector Superannuation Pre 2013) while an average of your pay while you are in the scheme (or post 2013 entrants) and the number of years that you have in the scheme.
We know that understanding Public Sector Superannuation Pre 2013 can be challenging. Therefore, we have decided to lay down the difference between public sector superannuation pre and post-2013.
Difference Between Public Sector Superannuation Pre 2013 and Post Scheme
The Public Sector Superannuation Pre 2013 followed a defined benefit model (DB) where the retirement benefits are calculated based on various factors, including the average salary of the employee and their years of service. This pension scheme provided a sense of security and predictability to the employees since the amount was predetermined.
- Pension Calculation
The calculation of pension benefits under pre-2013 schemes was pretty straightforward. Typically, it involved multiplying the average salary by a percentage based on the number of years of service. This pension scheme provided employees a sense of security and predictability since the amount of the pension was predefined.
- Retirement Age and Service Requirements
Though the retirement age and service requirements varied across various public sector superannuation schemes, a full pension was usually allowed after 25 to 35 years of service.
POST-2013 PUBLIC SECTOR SUPERANNUATION SCHEMES
In response to the evolving economic and demographic factors, 2013 several changes were introduced to Public Sector Superannuation Post 2013. This was made with the intention to make the schemes more sustainable and align with broader pension reforms.
- Shift of Accumulation Schemes
The major shift was the transition from a defined benefit scheme to an accumulation scheme. Under accumulation pension schemes, employees and employers make contributions to an individual account, which is then invested into various financial instruments.
- Increased Employee Contributions
After the amendment of Public Sector Superannuation Post 2013, employees are typically required to contribute a higher percentage of their salary towards the superannuation fund. This helped distribute the cost of retirement benefits more evenly between the employer and the employee.
- Retirement Age and Service Requirements
Another significant change was the increase in minimum retirement age and service requirements.
Preservation of Annuation Funds
After 2013, stricter preservation rules were dictated to ensure that the accumulated superannuation funds remain untouched until retirement, preventing early access to funds for other reasons.
Final Thoughts
The transition from pre to post-2013 public sector superannuation pension schemes marked a significant change in the retirement landscape of government employees. To know more about Public Sector Superannuation Pre 2013, get in touch with our expert financial advisors and start your retirement planning today.
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