Financial dilemma

J

Joe Nonety

Registered User
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I am switching jobs and I plan to buy a house. I'm 28 and have €3000 saved (along with maximum SSIA)

Choice A
Continue to save in the Credit Union until I've around €10,000 so that I could borrow around €25,000 for the deposit of a house.
This would mean I would probably be renting for around a year to achieve this.

Choice B
While changing jobs I can cash in the pension with my old company which is €12,000 (which would be €7,200 after paying 40% tax), I would then have the €10,000 which should give me the deposit and I could buy a house straight away. In my new job's pension I would change my AVC to 15% which would mean I'd have made up the difference within 3 or 4 years.

I feel a pension should never be touched, but at the same time buying a house is very important plus it saves me renting for a year, so I'm in a bit of a dilemma.
Any advice would be gratefully received.
 
Hiya, I'm no expert but I'd imagine that a house will earn you more in the long run than any pension fund ever would.
I'd say go an buy the house, especially if your pension is going to recover in a few years. And you're only 28. Loads of people don't really worry about pensions until about now, so you've lost nothing.
Go for it!
Go on, you're itching to do it anyway!
 
Are you certain that you meet the strict criteria required to allow you to cash in a pension, i.e. member of a scheme for less than the vesting period (usually 2 years)?
 
has your employer made contributions also ? I think that you would lose all these. I had thought about doing something similar as I have a "pension" in Ireland from when I worked there. In the U.S. I have a 401K i.e. member of a defined contributions plan and if I were to cash this out I'd have to pay tax and a penalty, but I'm fully vested so would get to keep the remainder. For the money in the Irish pension I was informed that I would lose the employers contributions if I tried to cash it out, so it really wasn't worth it.. Remember as well that the money is growing tax deferred.. definitely not a thing to do lightly .. you could possibly reduce payments into the pension from now on but withdrawing the money seems drastic.. I'd be interested in hearing feedback from others on this !
 
You said originally that you feel a pension should never be touched-I would agree with you (until you retire of course!).

I think that both Rainyday and Dublinamerica are spot on, I would be surprised if you can simply cash in your pension with the only 'loss' being the 42% tax.

Another thing to bear in mind, once you buy your house, interest rates are more than likely only going to go one way-up. There are also plenty of other 'hidden' costs to consider for the first few years, and you may not actually have scope to conribute up to 15% of salary to your pension.

Give it a year, it's not that long. Hopefully you will still be able to buy before the flood of SSIA cash hits the market.
 
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