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NSPs - Notional Service Purchase

Notional Service Purchase (NSP) or Purchase of Notional Service (PNS)

NSPs is the mechanism built into Superannuation to allow members make up shortfalls in pension benefits at normal retirement age (NRA). It is only applicable to those that will have missing years at NRA. As it is part of Superannuation itself it is a defined benefit scheme. Through Notional Service Purchase you are buying actual 1/80this as opposed to building up a fund of money. This brings a number of valuable benefits. It does also bring with it a number of restrictions and can be inflexible in it's application.

Advantages

  • Defined Benefit scheme, benefits are guaranteed and certain
  • Contributions rates are set
  • Not subject to stock market performance
  • Not subject to fees and charges

Disadvantages

  • Useful only to those missing years at normal retirement age of 60 or 65. Cannot be geared for early retirement.
  • Must purchase all benefits, pension, lump sum and death benefits. Cannot target one benefit such as tax free lump sum
  • Inflexible benefits in retirement. Cannot access ARF, draw additional benefits early in retirement or easily pass value to next of kin.

Costs

The cost are determined by a number of factors which include

  • Number of 1/80ths being purchased
  • Salary
  • PRSI class
  • Normal Retirement Age
  • Members age next birthday
  • If member is in Spouses and Childrens Scheme
  • Payment by lump sum or regular payment

If you are interested in NSPs a PSRA advisor can assist you in producing a estimate as to cost and the benefits.   

 Speak to one of our expert advisors to get some clear advice. request a call 

 

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Robert Kelly & Evan Hughes t/a Public Sector Retirement Advisors are regulated by the Central Bank of Ireland.