Notional Service Purchase offer - query about previous pension

[dbyrne12]

I have just received a Notional Service offer from the Dept of Education.
I would have only 25 years service at retirement so I really need to buy back years.
Before public service, I worked in the private sector and was told to move my old pension into a Pension Bond (which earns 4% a year or the rate of inflation, whichever is less).
The form for the Notional Service purchase asks
"If you gave pensionable service under any superannuation scheme other than the secondary teachers superannuation scheme, please give the following details:
1. Name of scheme: _________
2. Have you received or are you entitled to retained benefits under the above occupational pension scheme, e.g. pension continutaion benefits, lump sums, gratuities and refunds of superannuation contributions (please give details and indicate if reward has been repaid)."

It is difficult to get through to them to clarify this. Is there a chance that having had a pension in the past will exclude me from buying back years the way that I want to?
If anyone has been through this process, it would be great to hear what you did.
Thanks in advance

 

[LDFerguson]

I would imagine that they are asking these questions to establish that your total pension benefits from all sources won't exceed Revenue limits, before they permit you to buy back years.

 

[Complainer]

You also need to consider the risk of Govt default. If you put all your pension eggs into one basket, and the Govt defaults, as happened in Greece, your retirement years will be pretty grim.

For the record, I'm still paying for NSP myself, but I'm having serious doubts about continuing this.

 

[dbyrne12]

Thanks for the replies.
LDFerguson - how could they assess this? My pension bond may be worthless or not at the time of my retirement. Do they do some sort of actuarial projection?
Complainer - I share your worries, but where I am coming from is this. If things get so bad that it comes to a scenario where govt is reneging on pension payouts, surely it'll be even worse for private pensions. I think I'll go ahead with the NSP, but maybe look at other more diverse investments for any other savings I may have.
Thanks both of you for your help!

 

[LDFerguson]

LDFerguson - how could they assess this? My pension bond may be worthless or not at the time of my retirement. Do they do some sort of actuarial projection?

They would take its current value and make an assumption as to what it may be worth at retirement.

 

[Tentman]

But if the OP has a private pension fund, , would that not be of no interest to DOE? The DOE is part of the Public Service Superannuation Scheme and purchasing added years should not impact on any private pension the OP may have.

 

[Complainer]

Complainer - I share your worries, but where I am coming from is this. If things get so bad that it comes to a scenario where govt is reneging on pension payouts, surely it'll be even worse for private pensions.

Not necessarily. Private pensions will be largely dictated by what happens on the international stock markets.

 

[Squaremile]

dbyrne12, you only need to answer that question if you have completed any other years of service in the Irish state superannuation scheme. If for example you had 3 years service in the civil service then these can be 'transferred' to the secondary teachers superannuation scheme and thus would reduce the maximum number of years that you could purchase under the NSP scheme.

As your previous employment is in the private sector then you can simply put down N/A for this.

Regards,
Andrew
Squaremile Financial Consultants

 

[Squaremile]

Also just one other point in relation to your comment "I think I'll go ahead with the NSP, but maybe look at other more diverse investments for any other savings I may have."

Contributions to NSPs and AVCs are not mutually exclusive - you can do both at the same time if you have scope and if it is tax efficient (i.e. based on your service including NSPs, that you are able to draw down from the AVC tax free and/or would drawing down from an Approved Retirement Fund at the lower rate of tax having received tax relief at the higher rate. This would be determined by pension, standard rate cut off points, spouse's income etc).