Public service pension

[settlement]

Hi,

I'm 25 and work in the HSE. I try to save a large amount (50%) of my payslip every month. Recently a friend told me I would be better off putting this money into a pension scheme as the tax benefits are superior. This seems superficially plausible. But when I thought about it there were several issues:

1. Is my PRSI not already paying for a pension for me?
2. I will at some stage leave the country and work abroad. Will money earned in another country contribute towards a pension in Ireland or will it just be swallowed up by the foreign government? Does this mean I should set up a private pension?
3. How long do I have to work in this country to set myself up with a pension? How is this calculated and could I get the full sum on retirement or would it be doled out piecemeal.

As you can see I am very confused. I was quite happy with my savings until I was told I'd be better off putting it in a pension. The issue of working abroad seems to complicate matters.

Any help is appreciated.

 

[Gerry Canning]

Good few issues here.
1.Most Government schemes (PRSI type) require 10 years+ overall contributions before you get any pension.That might be 5 years now and 5 more years in twenty years time.
2. Again if you work 10+ years eg in UK , you will get another part pension from them.

Both 1&2 are State Pensions.
Example most Irish Workers will get State Pension from working in Ireland.
A lot of Irish workers may also have 10+ years working in UK , they get a part pension as well from UK.

A lot of workers have their own pension set up , they can get yet another pension from those contributions.



You will get minimum 20% tax relief on a large proportion of money you put into pension.
It would be very wise to maximise that.
There are good pension advisors out there , so get one that is recommended.

 

[settlement]

Thanks Gerry for advice.

It's a complex issue for me. Do you think paying money into a private pension would yield a superior dividend than me saving money in deposit and monthly savings accounts, like I do now?

 

[Protocol]

As you work in Ireland, you are paying PRSI, and so building up an entitlement to an Irish State Pension.

What hasn't been mentioned is that you are also very likely a member of an HSE occupational pension scheme.

So you can't just go and get a private personal pension, as there are rules restricting that if you are already a member of a work pension scheme.

 

[suzie]

they may not have reached the age related limit and could utilise a PRSA AVC

 

[thedaddyman]

Firstly in relation to working overseas, there is no definitive answer, it will depend where you work and for how long, For example, I worked in the UK for 10 years and that may entitle me to some portion of a UK state pension. I also have a pension with my employer in the UK which I've never transferred back to Ireland as I can take it when I hit 60. Had I worked in another country and a different employer, my pension entitlements could be very different

I think though you are missing one key question here, why are you saving 50% of your salary, what are you aiming to do? Is it to travel, emigrate, a deposit on a house etc. How much of your savings can you assign to that and then how much can become pension related?