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Pension query

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  • 09-03-2012 1:57pm
    #1
    Mossess
    Registered Users Posts: 316 ✭✭


    This is a question about pensions, and yes it’s complicated.

    I work in the public sector, I’ve never really given pensions much thought as they are a million years away. That is until recently. I’m slight concerned as everyone seems to think that I have some sort of golden pension. From looking into it - it doesn’t seem to be at all. The long and short of it is that I’ll get the state pension and I’ll get a little top up on top of that to equal half my wage in total, which is then taxed. Believe me, that’s not a good position to be in. So I thought, ok, can I not just invest in another pension product. Apparently not. But my wife can, so we will do that.

    So, after all that. Can my wife still contribute to a pension fund even if she is not working. (e.g. off for maternity leave etc..) and how much would you need to be putting away each month, say starting from scratch at the ripe old age of 35.

    Cheers


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    #2
    Tow
    Registered Users Posts: 7,041 ✭✭✭Tow


    Mossess wrote: »
    I’m slight concerned as everyone seems to think that I have some sort of golden pension. From looking into it - it doesn’t seem to be at all. The long and short of it is that I’ll get the state pension and I’ll get a little top up on top of that to equal half my wage in total, which is then taxed. Believe me, that’s not a good position to be in.

    Believe me, that is a golden index linked pension. In simple terms, for a private sector worker to have the same pension they will need to put in almost 30% if their wage from the day they start working. What was before the economy collapsed.

    If your wife is not working she will not get PAYE relief on her pension contributions and I am not sure if her extra relief can be transferred to you.

    In any case off the top of my head 15% would be a good figure to start off with...

    Have a play with this calculator , but prepare for a shock.

    BTW don't forget that the state pension will kick in at 68 by the time you retire, but your contract may have a forced retirement have of 65 or earlier, this is going to become a big problem the government has yet to come to terms with.

    When is the money (including lost growth) Michael Noonan took in the Pension Levy going to be paid back?



  • Options
    #3
    Mossess
    Registered Users Posts: 316 ✭✭Mossess


    Ok, I’m a little depressed now. I checked out that calculator. If I had a private pension I’d be paying 55 euros a month less to come out with what I will be coming out with.
    What I never realised (or really thought about) was that the 50% is the final figure including the state pension. And in the next 30 years or so the odds are that the retirement age will raise up probably over the 70 mark and the state pension will probably drop too.
    I suppose we could always move to a country with a low cost of living and survive there.


  • Options
    #4
    coylemj
    Registered Users Posts: 25,394 ✭✭✭✭coylemj


    OP, does your employer allow you to contribute to an AVC scheme? That is where you make Additional Voluntary Contributions to a parallel pension fund which you can then use when you retire to top-up your pension or to take a lump sum, though as you are in the public sector you'll probably use most of your allowance (to take a tax-free lump sum) with the standard 1.5 years salary lump sum that most public sector employees get on retirement.

    If you make AVC contributions you will get the tax relief at source i.e. through the payroll so you won't have to claim after the event and you'll get the benefit immediately.

    Ask your HR department about AVCs


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