In 2022, the accrual rate of your pension will be cut back. This article provides several sample calculations to show you how this will affect your pension. And also the effect of the reduced accrual rate in three consecutive years.

Cutting back the accrual rate of your pension will have a direct impact on your pension. More information on the reasons for the decision is available here. The sample calculations in this article will help you estimate how the cutback will affect you.

Firstly, you should be aware that:

• Your pensionable salary comprises 12x your gross personal monthly salary plus your personal allowance for retention of salary, your personal allowance with indexation, holiday allowance and 13th month.
• The maximum amount of pensionable salary for 2021 is € 9,349 per month. (The maximum amount for 2022 has not yet been announced.) Any salary you earn in excess of this amount does not qualify for pension accrual.
• The minimum amount of salary which does not qualify for pension accrual is called the ‘franchise’ (€ 14,544 in 2021; the amount for 2022 has not yet been announced).
• Your pensionable salary net of the franchise is your pension base.
• The accrual rate targeted for 2022 was 1.784% of your pension base. This will be reduced to 1.254%.
  
  

Three years reduction
In 2020, 2021 and 2022, your pension accrued at a lower rate. As a result, the amount of gross pension benefits you’ll eventually get will be lower as well. In 2022 your pension will accrue at 1.254% instead of 1.784%. In 2021 your pension accrued at 1.196% instead of the targeted 1.784%. And in 2020 your pension accrued at 1.328% instead of the targeted 1.780%.

To give you an idea of the amounts involved, we have worked out an example below. Based on your pensionable annual salary and pension base (i.e. your pensionable salary net of the state pension offset (franchise)) you can make a rough estimate. 

Grip on your pension
Would you like to find out how to get a grip on your pension? Visit the website for an overview of what you can do. For instance, by setting aside additional retirement savings.