Pension queries

Bananaleaf

Hi all

Wondering if it's still possible to 'buy back years' of pensionable service in teaching?

Is this what AVCs are?

I'm 34, began teaching at 26. To have the full 40yrs I need, I would be 66 leaving.

I would prefer not to be 66 leaving and would be looking to get out at at least aged 60.

How can I make this happen and who do I have to talk to?

Can you only buy back hrs if you won't have enough years, rather than just if you are looking to escape a little earlier

Have googled 'pension calculators' but they want to know details of how much my pension currently is, but I don't know anything about This. I just pay my whatever the standard is, I've not yet been paying extra contributions. Cornmarket not open on a Friday so can't call them.

If I contribute to an AVC and I die before retirement, can that money be recouped by my spouse?

Any help or advice on how to achieve my plan would be amazing.

dingding

There are two ways to buy service,

The first is to purchase added years which will give you the additional service that you require .

AVC's are different, you are investing money into a fund with no gurantee of a return. It is as well to shop around as some of the teachers schemes would have higher charges, so less money is being invested.

I have posted some links to an ask about money thread on this.

https://www.askaboutmoney.com/forums/public-sector-pensions.61/

This post addressed the original question.

https://www.askaboutmoney.com/threads/should-i-buy-years-or-contribute-to-an-avc-prsa.60842/

Also there are tax implications to consider on the lump sum.

https://www.askaboutmoney.com/threads/avcs-lecturers-teachers-nurses-gardai-civil-servants-etc-wake-up.79665/

This thread talks about the AVC's organsied by some of the unions. Have a good read.

Bananaleaf

dingding wrote: »

There are two ways to buy service,

The first is to purchase added years which will give you the additional service that you require .

AVC's are different, you are investing money into a fund with no gurantee of a return. It is as well to shop around as some of the teachers schemes would have higher charges, so less money is being invested.

I have posted some links to an ask about money thread on this.

https://www.askaboutmoney.com/forums/public-sector-pensions.61/

This post addressed the original question.

https://www.askaboutmoney.com/threads/should-i-buy-years-or-contribute-to-an-avc-prsa.60842/

Also there are tax implications to consider on the lump sum.

https://www.askaboutmoney.com/threads/avcs-lecturers-teachers-nurses-gardai-civil-servants-etc-wake-up.79665/

This thread talks about the AVC's organsied by some of the unions. Have a good read.

Thank you very much - some nice Friday night reading for me there.

dingding

It might be worth registering on askaboutmoney of you have specific advice that you require.

It is a very complicated area and it is worth getting advice. Be careful with advice from companies that the union promote. One of the threads I linked to goes into details on that.

https://www.pensionsauthority.ie/en/LifeCycle/Welcome.html

Another site that might be worth a look.

rainbowtrout

One thing to bear in mind Bananaleaf is that you started in 2010 or thereabouts. Teachers that started after 2004 have to work to 65 before they can retire/get pension. Now you can retire before 65 but you won't be paid your pension before 65. So consider this if you start an AVC. So if you are planning to leave at 60, what are you going to live on before your teacher pension kicks in?

Teachers who started before 2004 had the option of leaving from 60 onwards, and can also leave at 55 once they have 33 years service completed. They are considered to have 35 years service done as two years of college counts towards service for this, but pension in calculated on 33 years of actual teaching.

You are not in this category.

The AVC is a top up on your pension if you don't have enough years completed at retirement or have the option (as above) of retiring early. The other option is Notional Service Purchase (NSP), which is available through Dept/ETB whichever is relevant. This is where you are eligible to buy back a maximum of 5 years of service to make up a shortfall in years at retirement.

Again as you went in at 26, you will have 39 years service at 65, so my guess is that you would only be eligible for 1 year of NSP to give you 40 years. To avail of NSP, you contact your payroll dept and they calculate what you are entitled to in terms of NSP and they quote you a price and it's deducted from your pay. Obviously the more years you buy back the more expensive it is, and the longer you leave it to buy it back the higher the repayments are, as you are paying for it over a shorter period of time.

I also don't know if there are any specific pros and cons to NSP regarding what happens to it if you leave teaching? Can you opt out of it after you've started paying it? etc Although from a peace of mind point of view, you are getting the guaranteed value of the pension from it.


EDIT: Recent circular on NSP from Dept of Ed, as I suspected you are only eligible under this route to buy back one year as it's based on your eligibility for pension/retirement at 65.

https://www.education.ie/en/Education-Staff/Services/Retirement-Pensions/notional-service-purchase-scheme-for-teachers-general-information-nsq10-.pdf

mirrorwall14

Just a quick aside to this one, if you work for an ETB who do you talk to about NSP?

dingding

I would imagine the ETB, are they your employer, do they process your salary.

rainbowtrout

mirrorwall14 wrote: »

Just a quick aside to this one, if you work for an ETB who do you talk to about NSP?

I presume payroll would be your first port of call. If they don’t deal with it they’ll know who does.

Bananaleaf

rainbowtrout wrote: »

One thing to bear in mind Bananaleaf is that you started in 2010 or thereabouts. Teachers that started after 2004 have to work to 65 before they can retire/get pension. Now you can retire before 65 but you won't be paid your pension before 65. So consider this if you start an AVC. So if you are planning to leave at 60, what are you going to live on before your teacher pension kicks in?

Teachers who started before 2004 had the option of leaving from 60 onwards, and can also leave at 55 once they have 33 years service completed. They are considered to have 35 years service done as two years of college counts towards service for this, but pension in calculated on 33 years of actual teaching.

You are not in this category.

The AVC is a top up on your pension if you don't have enough years completed at retirement or have the option (as above) of retiring early. The other option is Notional Service Purchase (NSP), which is available through Dept/ETB whichever is relevant. This is where you are eligible to buy back a maximum of 5 years of service to make up a shortfall in years at retirement.

Again as you went in at 26, you will have 39 years service at 65, so my guess is that you would only be eligible for 1 year of NSP to give you 40 years. To avail of NSP, you contact your payroll dept and they calculate what you are entitled to in terms of NSP and they quote you a price and it's deducted from your pay. Obviously the more years you buy back the more expensive it is, and the longer you leave it to buy it back the higher the repayments are, as you are paying for it over a shorter period of time.

I also don't know if there are any specific pros and cons to NSP regarding what happens to it if you leave teaching? Can you opt out of it after you've started paying it? etc Although from a peace of mind point of view, you are getting the guaranteed value of the pension from it.


EDIT: Recent circular on NSP from Dept of Ed, as I suspected you are only eligible under this route to buy back one year as it's based on your eligibility for pension/retirement at 65.

https://www.education.ie/en/Education-Staff/Services/Retirement-Pensions/notional-service-purchase-scheme-for-teachers-general-information-nsq10-.pdf

Thanks for this info, really appreciate it.

I don't yet know what I would do at 60. I am thinking about that and trying to form a plan at the moment. I'd imagine that by that age I won't have the energy required for the job, so I'd nearly work in a shop instead by that point I'd say. Then there's the question, 'who would employ a 60yr old?' to think about.

It may be possible to save enough while working to keep me going for 2 of those years, but that still leaves 4. Need to start doing the lotto Then again,
There are 312 weeks in 6 years
There are 308 months until I turn 60.
If I can save 500 a month from now til 60, I will have 500 a week from 60 to 66,except for those 4weeks I'm missing.
Is it as straightforward as that? Provided I can afford to put 500 away each month of course. Or am I missing something huge?

august12

You are missing inflation, what will 500 be worth in 30 years, maybe invest it, would need good financial advise here,

Kristopherus

august12 wrote: »

You are missing inflation, what will 500 be worth in 30 years, maybe invest it, would need good financial advise here,

AVCs and investment plans are poor value nowadays. To me the only ones making quick money on those are the fund administrators. And no way will interest on €500.00 saved a week keep up with inflation. And a punitive rate of DIRT has to be paid on the interest.

Bananaleaf

august12 wrote: »

You are missing inflation, what will 500 be worth in 30 years, maybe invest it, would need good financial advise here,

Kristopherus wrote: »

AVCs and investment plans are poor value nowadays. To me the only ones making quick money on those are the fund administrators. And no way will interest on €500.00 saved a week keep up with inflation. And a punitive rate of DIRT has to be paid on the interest.

Thank you - I hadn't considered inflation, that is a good point.

I wouldn't be factoring in the interest at all, so the DIRT won't bother me (anymore than it already bothers me having to pay it)