Voluntary Pension Contributions

GemmaLouise

Hi. I recently had a meeting with a financial advisor from Cornmarket and he advised paying AVCs for my pension as I am a post 04 entrant. He said I need to be paying approx €120 per fortnight. It seems so high to me but I do understand the benefits. Anyone pay AVCs and what is your experience?

TheDriver

I changed thread title as voluntary contribution would relate to parental payment to school

rainbowtrout

Well why did he advise it? Will you have 40 years completed when you are 65? Your post doesn't really give any context. Are you part time? fulltime? Did you take a career break, unpaid leave? Or do you plan to?

GemmaLouise

rainbowtrout wrote: »

Well why did he advise it? Will you have 40 years completed when you are 65? Your post doesn't really give any context. Are you part time? fulltime? Did you take a career break, unpaid leave? Or do you plan to?

Sorry for not giving context. I trust his advice and was just interested in hearing people’s experiences with AVCs. i.e do people feel that it is worth it? Planning for your pension is obviously a smart thing to do but when it seems like so long away I wonder is it worth it at all

chocoholic999

I hope anyone doesn’t mind me hijacking this thread. I’m also post 2004 . I should just about have 40 years when I reach 65. However I really can’t imagine working until then. What are my options?

rainbowtrout

GemmaLouise wrote: »

Sorry for not giving context. I trust his advice and was just interested in hearing people’s experiences with AVCs. i.e do people feel that it is worth it? Planning for your pension is obviously a smart thing to do but when it seems like so long away I wonder is it worth it at all

It’s in his interest to sell you a pension product. He’s going to get commission from it and his company will make a profit.

You’ve still provided no context as to whether you need it or not.

rainbowtrout

chocoholic999 wrote: »

I hope anyone doesn’t mind me hijacking this thread. I’m also post 2004 . I should just about have 40 years when I reach 65. However I really can’t imagine working until then. What are my options?

Well making some broad assumptions. Let’s say you started at 25 so will have 40 years done at 65 but want to leave at 60. That gives you a shortfall of 5 years. An avc will make up that shortfall as your pension will only pay for 35 years of service if you leave at 60 and the Avc would make up for the other 5 years. But your pension will not be paid out until you’re 65 no matter what age you retire as you are post 2004, so the real question should be, what would you live on for say 5 years if you go at 60 and receive your pension at 65? Savings, get another job, rental from property owned? Spouse’s salary/pension?

AVC’s aren’t actually designed for early retirement, they’re designed for a person who won’t have 40 years done at retirement age

Avatar MIA

chocoholic999 wrote: »

I hope anyone doesn’t mind me hijacking this thread. I’m also post 2004 . I should just about have 40 years when I reach 65. However I really can’t imagine working until then. What are my options?

At least you're providing pertinent information.

However, my understanding is that you cannot fund additional benefits through AVC's in anticipation of early retirement. They're there primarily as an option for those that would not receive full benefit (late entrants) by reaching normal retirement age.

chocoholic999

Thanks for replies, I guess I’ll keep doing the lotto for now!

byhookorbycrook

Go to an independent financial adviser. Cornmarket have been less than straightforward in the past.

GemmaLouise

rainbowtrout wrote: »

It’s in his interest to sell you a pension product. He’s going to get commission from it and his company will make a profit.

You’ve still provided no context as to whether you need it or not.

I don’t feel like I need to give context as I am just asking for general opinions about AVCs. The aggressive tone is a bit much for me to be honest.

rainbowtrout

GemmaLouise wrote: »

I don’t feel like I need to give context as I am just asking for general opinions about AVCs. The aggressive tone is a bit much for me to be honest.

It's not aggressive. If you were asking advice about whether you should buy a car or not, and gave no further information, people would ask what your budget it and what you need it for.

No one can give you advice on whether an AVC is suitable in your situation if they know nothing of your situation. Personally I wouldn't trust the words out of the mouth of anyone who worked for Cornmarket.

Avatar MIA

GemmaLouise wrote: »

I don’t feel like I need to give context as I am just asking for general opinions about AVCs.

Of course you don't. But, if you want anyway useful advice...

You're asking about something you're not experienced in so trust that those people that have taken the time out to respond to you are genuine in thinking that you'd need to give more information to get an informed response. Nothing aggressive about it.

Not sure why anyone would be circumspect about giving more detail, especially on an anonymous website, but as you say yourself absolutely no need to give any information if you don't want.

Good luck.

dingding

https://www.boards.ie/vbulletin/showthread.php?t=2057866680

Some information here and also links to www.askaboutmoney.com

For the investment you are making I would get independent financial advice.

The charges on the cornmarket AVC's may be higher than other AVC's available.

There are two questions

1. Do I need an AVC or do I need to buy notional service.
2. If I need an AVC what is the best product. (Might not be cornmarket).

Also there is tax relief so is the Cornmarket net or gross of tax.

That level of investment is giving you 3,120 into your pension per year.

Have a look at cs-pensions.gov.ie and do the calculations for your pension.

evolving_doors

Or could you use that money to pay off a mortgage early, sell up when you retire and cash in (or rent out and move to Spain).

gaiscioch

OK. There is already a good number of very informative threads on this forum about teachers' pensions and the merits or otherwise of AVCs and 'Buying Back Years'/Notional Service Scheme.

It would probably do everybody a service if they were combined into one permanent "All your pension-financial-related teaching questions" thread. In the meantime it would be fruitful for you to search for them here.

Anyway, two things:

1. AVCs: I had a Cornmarket AVC [Irish Life] for years, bought from a Cornmarket salesperson who called to our school. I dropped it a couple of years ago after visiting an independent financial services advisors/brokers in Maynooth that specialises in public sector financial services. It cost me €150 for the advice. He put it thus: in terms of track record returns, Irish Life is a C student; do you expect A results from your C students? He went through the various companies and said Zurich is significantly better performing, and charges lower management fees than Irish Life does. So I moved.

2. Notional Service: the advice I was given on this was essentially that it's very good, if costly, to buy back years. However, it is significantly inflexible compared to AVCs and if you want to retire early there was some hefty financial cost to doing so. As I don't expect to have the energy to be teaching at 65 or 68 years of age, I'd rather not be penalised for leaving earlier. So, I opted for the AVCs (which are far from perfect).