Couple, early 50s, some decisions to make

T

thedaddyman

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Personal details
My Age: 54
Spouse’s age: 52
Number and age of children: 2, eldest 16, youngest 12

Income and expenditure
My Annual gross income: €93K
Spouses gross income €18k – part time

Home
Family Home – Value €280k, Mortgage outstanding €56k Tracker +0.75%. Paying above what we need to pay at the minute €1100 pm,
No 2nd home and absolutely no interest in becoming a landlord

Home Life
Living in a country town and in our forever home for last 15 years and won’t be moving, needs around 20-30k updating, mainly insulation and also some other work done. Financially comfortable and not crazy lifestyle

Work
My job = Account Manager in a US tech multinational, 23 years service built up after various takeovers, TUPE etc

My Spouse’s job = Secretary

Savings & Investments
Investment fund: €32k, €200pm going into it
Cash: €65k in savings and CU accounts
Shares in employer and other small investments €2k

Pension & Retirement
Current employer pension pot: €210k. Currently adding 6.5 % from myself and 8.5% from employer per annum
Previous employer pension pot from UK: €73k
Previous employer pension pot in Ireland: €50k (see questions below)
Wife previous employer pension pot: €225k
Total in pension pots for both of us combined: €550k

I worked in the UK for a few years so I’m also entitled to a UK state pension which I have topped up via the NICS top up scheme and am awaiting a revised statement to confirm that but that should be worth an additional €8750 pa at current rates.

Loans
None

Credit Card
Cleared every month

Insurances
Me = 3 x salary through work
Death in Service: 25% of salary
Long term sickness scheme @ 66% of salary

Wife = 3 x salary through work

Health insurance
Family policy through employer via Irish Life

Other
Last few years have been focused on family issues which has required some money but all now resolved and looking to the future.

Will receive an inheiritence later in the year of approx. €140k. I’m executor and it is a reasonably straight forward will.

Questions
I’m not overly worried about our pension position but I do have some decisions to make. State pensions combined from Ireland and UK for both of us will come to around €35k. Work pensions should easily add another €25k-€30kpa to that and given we will be mortgage free, no commuting costs and the kids more or less through college, we should be ok, albeit ideally we’d like to be able to give them a head start on a deposit for a house or something. I’d like to retire early but not too early and have no issues taking a part time job for a few years if needed.

I have 2 questions on pensions

My previous Irish employer are looking to buy out their old DC members and are offering an enhancement to do so, in my case it is worth €14k and that enhanced pot (€64k) would be invested in an Irish Life matched fund PRB with an annual fee of 0.24%. It’s free money but I am wondering if that Irish life fund is the best option?

Secondly, if I was to move my previous UK employer pension back to Ireland, either into that Irish Life fund or another ARF or other product or directly into my current employers fund scheme, are there any tax implications of doing so?


1 question on future investment strategy

Intent is to use the inheiritance to clear the mortgage and then spend an additional €40k on the house (insulation and various other things that need doing) and also on the family holiday of a lifetime for a month or so

That will leave us with a minimum €110k in cash (current savings + remaining inheiritence) + the €1100pm we currently pay for the mortgage. Assuming we keep €20k in the rainy day fund, what's the best course of action for the remaining €90k + the €1100pm?. I’ve a reasonably conservative approach to risk.
 
I’d clear the mortgage now from savings. You’re planning to do it when the inheritance comes through anyway. Why wait. With the interest rates gone up you’ll save on that. Then wait til inheritance comes through to do the work on the house.
 
+1 on paying off the mortgage straight away - there’s no good reason to wait.

Also, you should dramatically increase your pension contributions - you could be contributing 30% of your salary to your pension, 35% the year you turn 55.

You haven’t really given us any details on the Irish Life fund so it’s difficult to comment.
 
You can also contribute to your pension by off setting the contributions against last year's taxable income.
 
The following must be done before 31st October.
When making a contribution contact the pension company directly. Tell them you want to make a contribution against last year's tax. Send them a cheque. Better still go to the insurance company, they will give you the receipt required on the spot. Confirm with the insurance company that the revenue will allow tax relief against previous years income. You do not need to forward the certificate to revenue. Make your submission to revenue. This I think can be done online. Ask for an amended statement of liability for last year (Its a few years since i did this so things may have changed.) You will get tax relief at your marginal relief up to maximum allowed by revenue against last year's tax. Hold on to the certificate from the insurance company as you may be asked by revenue for it.
 
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