Retirement options for late entrant to teaching

paddington

Registered User
Messages
2
I am 51 and started teaching in 2010 i.e. post 2004 so retirement age is set at 65 (but can take cost neutral retirement from 55 but won't be able to access the state pension part of that until 65 I believe (as supplementary pension)). So I suppose I am concerned about the years between retirement (60-62) and state pension age (65 hopefully or possibly 68 if I am wrong about accessing the supplementary pension at 65? Post http://www.askaboutmoney.com/threads/public-service-pension-advice.190760/#post-1411175 seems to indicate 65 is correct.)

I have pension funds from previous private sector work which currently hold about 300k.
I would probably aim to retire sometime between 9 and 12 years from now and would like to put more into my pension pot. I am not currently entitled to purchase Notional Service as my employment is not permanent and in any case this might not be the best option for me given the previous paragraph.

Q1: I presume topping up my PRSA (from previous private sector fund) would not be the best as I would not get tax relief?

Therefore I am considering
Option a: an execution only AVC PRSA (possibly with LABROKERS) . I do know I would have to claim back tax relief myself in this case.
OR
Option b: or just regular savings with a possible view to a last minute AVC/PRSA.

Q2: Any advice on options a. vs b.?

Q3: If I choose the AVC PRSA option, is the lump sum allowed the higher of 25% of the AVC value or 150% of final salary.

This would be a big difference for me as my normal gratutity would only be about 20K as I won't have built up much service. If I had 50K in my AVC and if the limit was 150% of final salary I might be able to take all of it tax free. If the limit was 25% and I would only get a 12.5k tax free lump sum. In the latter case I might be better off just having immediate access to my 50K through regular saving (with no tax relief possible).

One further concern:
Q4: I became worried when reading about AMRFs. As I am particularly concerned about the years between my cost neutral retirement age and state pension age I want to avoid having to tie up my limited pension in order to pay an AMRF which I can't touch until I'm 75. Am I correct in saying this can be avoided by simply buying an annuity when I retire? Or having a vested PRSA.

(Note: this post supersedes my previous post "top up existing PRSA vs open a PRSA AVC" which no one has replied to but which unfortunately I can't see how to delete. Perhaps a kind moderator would do so).
 
Hi paddington

As you are not entitled to buy back service, then this is a much simpler question. Any pensions advisor or Authorised Advisor should be able to answer the questions.

Option a: an execution only AVC PRSA (possibly with LABROKERS) .

Execution only is fine, when you know exactly what you want. But your situation is complicated and you should pay a fee for it. Ask to pay an hourly fee and then take out an execution only policy. Or the advisor might get a commission and refund you the fee.
 
Hi Paddington

There are a number of parts to your query.

1. State pension. Anyone born after 1 January 1961 doesn't qualify for the State Old Age Pension until age 68, so you won't get that at retirement.
2. Private pensions - if they were from jobs where you were an employee, you can draw them down from age 50 onwards. If they are personal pensions (as opposed to pensions where your employer also contributed), you have to wait until you are 60.
3. You are correct in saying that you cannot claim tax relief on contributions to a PRSA from old employment. You can set up a PRSA AVC or just a plain old AVC plan. These can be made by monthly contributions or once off lump sums. I do not see the point in paying into a plan and not getting tax relief, especially if the opportunity is there to claim relief in a different structure. It's up to yourself on which structure you prefer for cash flow purposes.
4. As the PRSA AVC is linked to your employment, the tax free lump sum is under the 150% final salary method.
5. The tax free lump sum under the private pension PRSA's are 25% of fund value.
6. The AMRF applies if you do not have a guaranteed income of €12,700 per annum when you mature your pensions. This income must come from guaranteed pensions. If you do not have that, you either put €63,500 away until you are 75 or use that amount to purchase an annuity. If you go the AMRF route, you can draw down 4% of the fund each year. At age 75, the AMRF becomes an ARF.

If you need anything else, let me know

Steven
www.bluewaterfp.ie
 
Back
Top