How to supplement a low defined benefit pension

[laila]

I am in a pre 1995 defined benefit scheme, semi state.

I have recently gone part time for child care reasons. I expect to remain part time until I reach retirement (I am 46).

Based on current salary my pension would only be 6-700 p.m. less than the gov contributory pension. I have been looking for ways to compensate the low value of my defined benefit pension scheme on retirment.

I have investigated AVC's and the in-house pension advisor believes that it would not be much to my advantage. I have a small supplementary income from a property investment and do have a tax liability.

I wanted to take out a prsa and perhaps transfer some of my SSIA into it however It seems that people on a defined benefit scheme are not allowed to take out a prsa?

Has anyone any suggestions as to how I can make up my future short fall in pension?

Thanks in advance

 

[ajapale]

Hi Laila,

You have raised a number of very interesting questions here.

Can I confirm are you in a commercial semi state (such as Bord Gas, ESB etc) or a non commercial semi state (Teagsc, Fas etc)?

Are you part time or job sharing? Do you have the possiblity to return to full time after a few years?

Are you a member of a trade union? They can be very helpfull in matters like this.

aj

 

[laila]

Hi aj.
Thanks for coming back to me.

I am in the non commercial sector 3rd level education.

I am working part time 20 hours per week.

There is potentially the option of going full time after a number of years which I know would boost my pension but knowing myself as I do when the time comes I wont want to go back full time. I am 46 now and if I was to remain part-time until my daughter gets through first year in secondary school I would be approaching 57.

I am a member of a trade union but I don't see how they could help me. It seems to be government policy re pensions to block people in my situation from tax relief of taking out an independent pension.

Thanks for even thinking about all this!

 

[Slim]

Hi Laila

There is no longer any impediment to someone in a defined benefit scheme taking out a PRSA. I would think carefully about the relative cost of a PRSA versus the cost of buying back the service through your work scheme. the tax reliefs are the same and you may prefer the security of the the DB scheme as opposed to the vagaries of the PRSA investment. Get advice through your union or contact an independent pension advisor. If you PM me I can forward you some info.

Slim

 

[ajapale]

Hi Laila,

I am a member of a trade union but I don't see how they could help me.

The TU's especially the teachers unions are really well versed in matters of pensions. You should make an effort to talk to them or at least look up their website. See here for a list of Trade Unions in Ireland.

It seems to be government policy re pensions to block people in my situation from tax relief of taking out an independent pension.

I dont that this is the situation any longer.

You should ask your HR section for a copy of the superannuation scheme booklet and you should also recieve an annual benefits statement from the scheme.

What is your superannuation deduction rate at present? and what renumeration is it based on?

And finally are you in an older institiution, a newer institution or in an IT?

2.13 Third Level Education
2.13.1 The academic, administrative, and technical staffs of third-level colleges are covered by a number of different schemes operated by the college or institution in which they are employed.


In general, the more recently established institutions (e.g. Limerick and Dublin City Universities) have pension scheme terms similar to those applying in the civil service.



However, in a number of the older institutions (e.g. Trinity, the NUI universities), some pension terms are quite different. These schemes are, in general, non-contributory and are funded by the Exchequer. The majority of staff contribute 1½% of pay for membership of the spouses' and children's contributory pension scheme. For new entrants taking up service on or after 6 April 1995, there is a 5% contribution for the main superannuation scheme (with consequent uprating of salaries by 1/19th).



Staff of the Regional Technical Colleges come within the Local Government Superannuation Scheme

aj