Moneymakeover 31 year old, recently moved into the public service, pension advice

J

jwof2006

Registered User
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Hello,

Hoping to get some opinions on my current financial position if possible.

31 year old male, recently started a public service job, earning 68,000euro roughly per annum. Partner(due to be married next year) earning 62,000 in the private sector.


Bought a house 1.5 years ago- 1980 bungalow in a commuter county, around 380,000-mortgage- house cost 440,000. Have not made any overpayments or anything yet.

Have been paying 800 euro a month into a PRSA with Zurich, and filing a tax return to get this acknowledged by Revenue- usually got a one off payment after I filed the tax return. Planning to stop this now after the swap to the public service. Partner also contributing to a PRSA, deducted through payroll.

We are getting married this coming year and have some money put aside for this.

We have savings of (20,000 euro-rainy day/pet/horse fund-[kept in a Trade Republic account, and DIRT declared annually], 160,000- to use towards a renovation- kept in degiro in ETF's, am aware of the tax implications of this [41% on gains once sold])- I tend to buy more ETFs from the same accumulating funds once a year to make it easy to keep a track of things, and save about 600 euro a month in a Revolut Savings account, which I transfer into Degiro ETFs then once a year.

We have not made any overpayments on the mortgage, as the house is going to need to be renovated soon, so want to keep that large some of money freely available. We have continued to contribute to the pensions, as we like the idea of getting this tax relief, and while we are saving for the house renovation we are not in any major panic to get it done. I do understand that paying off the mortgage would probably be the best way to save money though, and will start to work on this as well as the pension, once the renovation is over.

The main purpose of my post is to find out a little more about public service AVCs, I know 6% of my pay now will go into the single pension scheme, I would like to increase it so that I am at least matching the 800 euro I have been contributing up to now- to maximise my pension contribution tax relief- there seems to be 2 main options- go with Cornmarket who will deduct from my salary and see that the tax relief benefits are passed on through payroll or go with someone else and continue to file a tax return once a year indicating my AVC PRSA contributions for the previous year, with tax relief then paid back in a lump sum ( as I have been doing up to now). I might leave my pension contributions at 800euro a month, for now, but in time will increase this to maximise the amount of tax relief I can get.
I have emailed Irish ife to find out what AVC conditions I can get through Cornmarket.

No kids, but maybe looking to have kids in the years to come.

Looking forward to getting your opinions on this, my knowledge on this stuff is not great so am concious that I may be making a number of foolish mistakes.

Thanks,

Jack
 
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There are several contribtions to the PS pension schemes

(1) Main superannuation contribution rate is 6.5%, although it is not as simple as 6.5% of you wage

(2) ASC starts at 34,500

Exempt to 34,500
3.33% from 34,500 to 60k.
3.5% after 60k

NB: very important: there is no link between contributions made and future benefits in PS pensions.



Trying to equate the previous €800 pension cont with the PS pension conts is not relevant in terms of future benefits.
 
I also recently started a civil service job. Have done a lot of research, including talking to people who have 10 years+ done with AVCs with the companies you can go with. The fees are high, and the attitude is - you get 40% tax relief, what more do you want? I've seen people get 1% return, 0.5% return. I sat in on a meeting with one of them and the financial advisor said - we put your AVC in very conservative funds as public sector workers tend to be very conservative people. I kid you not.

So I am doing it the way you're doing it. I put in every month, do a return in January. Would love to be able to pay from salary but I don't think it's good long term.

EDIT to add: You should read up on the 25% rule before deciding. I believe the separate AVC route you can only take out 25% tax free on retirement, whereas with the ones connected to your work you can take out up to your €200k cap (including lump sum your job will give you).
 
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Khublei said:
EDIT to add: You should read up on the 25% rule before deciding. I believe the separate AVC route you can only take out 25% tax free on retirement, whereas with the ones connected to your work you can take out up to your €200k cap (including lump sum your job will give you).
Click to expand...

With a public service pension you are limited to 1.5 times average salary lump sum tax free (leaving aside allowances etc) regardless of what is in your AVC pot. It doesn't matter if you do your AVC via payroll or pay it directly yourself. So if you average salary is 100k, your tax free lump sum max is 150k. You can't top this up further with more from your AVC to 200k tax free
 
There are several contribtions to the PS pension schemes

(1) Main superannuation contribution rate is 6.5%, although it is not as simple as 6.5% of you wage

(2) ASC starts at 34,500

Exempt to 34,500
3.33% from 34,500 to 60k.
3.5% after 60k

NB: very important: there is no link between contributions made and future benefits in PS pensions.



Trying to equate the previous €800 pension cont with the PS pension conts is not relevant in terms of future benefits.
Click to expand...
Thank you Protocol. This is good to know. So do the pension contributions tend to end up around 7 or 8% typically with the ASC included?

Khublei said:
I also recently started a civil service job. Have done a lot of research, including talking to people who have 10 years+ done with AVCs with the companies you can go with. The fees are high, and the attitude is - you get 40% tax relief, what more do you want? I've seen people get 1% return, 0.5% return. I sat in on a meeting with one of them and the financial advisor said - we put your AVC in very conservative funds as public sector workers tend to be very conservative people. I kid you not.

So I am doing it the way you're doing it. I put in every month, do a return in January. Would love to be able to pay from salary but I don't think it's good long term.
Click to expand...
Thanks Khublei, sounds like doing it myself is the way to go, will do a bit more research on the best option for me.

Thanks
 
Khublei said:
So as a person pre 2013 I can take more than 25?
Click to expand...
The pension lump sum paid is based on your salary and length of employment. The pension scheme has its own calculation for this which may work out less than the maximum allowed by Revenue. The difference between the two gives your scope to use your AVCs for a pension lump sum. The 25% option is not available to your AVCs as they must use the same option as the main scheme (salary and service).
 
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