Is the Purchase of Notional Service viable?

Yorky

Having studied this at length recently for someone who will have an 11 year shortfall at retirement, I can't se how it's viable.

It would cost €523 per annum per year purchased. To break even (contributions paid = benefits received) they would have to be in receipt of their pension for 9 years, assuming tax relief on pensions remains at 41%. And this is not allowing for tax payable on the pension.

The calculation was as follows:

Net cost of PNS minus additional lump sum payment.
Balance divided by additional pension payment.

Has anyone any thoughts on this?

Also, does anyone have a link to the Spouses and Children's scheme rules, specifically in the event of divorce?

coylemj

What pension scheme are you taking about - who is your employer?

Before you answer by the way I would be 100% sure that you are in the public service because no private sector employer allows members to 'buy' service which probably means that without even looking at the numbers it is a spectacularly good deal and you should go for it.

Yorky

coylemj wrote: »

What pension scheme are you taking about - who is your employer?

Before you answer by the way I would be 100% sure that you are in the public service because no private sector employer allows members to 'buy' service which probably means that without even looking at the numbers it is a spectacularly good deal and you should go for it.

Yes, it's the public sector.
No, it's not necessarily a "spectacularly good deal"

coylemj

Can you give us a rough idea of how much additional pension that Eur 523 (per year of added service) will yield and at what age?

What does 'PNS' stand for?

Yorky

Yes, it's payable each year until retirement (20 years) and the additional benefits are:

€2170 additional tax free lump sum
€433 extra pension per annum


The €523 per annum per year is gross so the net cost would be €308 per annum per year.