Moneymakeover Mid 40s and struggling to understand my pensions and what they will look like in the future as I have a mix of pensions

M

Mikefromcork

Frequent Poster
Messages
58
Personal details

Your age: 45
Number and age of children: 0

Income and expenditure
civil servant 90k

Monthly take-home pay: 4k

Type of employment - e.g. Employee. public servant,

In general are you:
saving, I clear my credit card every month and save about 1k a month. I spend this every year, either house upgrades or car upgrades or a mix of each.

I have 30k of savings in a revolut account earning 1.5% interest


Summary of Assets and Liabilities

Family home value: 400k
Mortgage paid off recently

Cash: 30k as above

Company shares : none

Buy to Let Property value: none

Total net assets: 430k

Other borrowings – car loans/personal loans etc none. I use savings to cover these generally

Do you pay off your full credit card balance each month? Yes

Pension information

I have a mix of pensions

1st pension DB value €6,400, current value and goes up by inflation or a max of 4% a year
DC €336K which is invested in Zurich Passive Global Equity Unhedged

2nd pension public service post 2013 pension that I joined 3 years ago. My last statement showed I had a Pension of €1k and a Lump sum of €4.4k. I have asked for a statement for 2025 and they are due to send it out, so the pension and lump sum will have increased.

3rd pension is a PRSA AVC that has a value of 112k in Zurich in Dynamic Pension & Invest. I put €1000 into this monthly. I have had this 7 years now and my contributions have increased over the years to the level now.

Value of pension fund: as above, mix of DC and DB

Buy to let properties
Value: none

Other savings and investments:
30k as detailed above



Other information which might be relevant

Life insurance: income protection, health insurance €1,600 a year.

What specific question do you have or what issues are of concern to you?

I recently cleared my mortgage and I am lucky I am not under financial pressure. In terms of my pensions I am now in my mid 40s. I am looking at my pensions. I am not sure what I’ll have in the future or what I should do with my existing pensions and if my contributions to my avc is enough or too much. My pension schemes say they are until 65/66. My job is stressful and I’d like to be able to retire or go part time at 60 but will this eat into my pension or will I even be able to draw it down before 65 or how does my pension look like now for retiring at 60 or 65. Any advice or analysis would be appreciated as I have a mix of pensions and I can’t understand the future of what they will look like.

Thanks for your help.

Mike
 
Current role 3 years, and PRSA AVC 7 years? Is it linked to both the previous DC pension employment and the current public service employment?
 
The PRSA is 2 PRSAs, one I had for 4 years for a separate employment not linked to the DC scheme and the 2nd one I have now with the last 3 years. They are both with Zurich and invested in the same fund. That’s why I included them as 1 item.
 
You are in really good shape to retire at 60 if you wish, but you should certainly continue AVCs and try and max them out as you can put 5% more in tax effieceintly every 5 years. The more you put in the more you’ll get out and you are getting full top rate tax relief, so you are putting in little enough currently really.

You can do some simplistic calculations now to give you a feel for things 15 years out but you have to bear in mind it’s only a feel for it, not hard and fast numbers. Eg you have roughly 450k in DC pension, if you keep putting in 1k a month and they overall grow at 6% you will have ~ 1.365m at 60. Which if you took 200k tax fee lump sum, would give you an income of 46k taking 4% a year. Presumably at 66 you would get coap on top of that and most likely you would take a deferred benefit DB pension at 65 also, of probably 18/80ths or so of salary so ~20k a year. Plus a lump sum from the AVCs.

So from 66 on you would have 46k from dc, 15k from coap, 20k from DB. Which is very comfortable.

If you max out your AVCs now, you would increase your options quite a bit of retiring sooner than 60 for example,

There is some detail to consider around AvCs tied to your DB pensions and when you can draw down and take lump sums etc etc which is worth looking in to further, so that may be worth getting advice on. I.e which pot should you be putting current AVCs into.
 
Setforlife said:
Presumably at 66 you would get coap on top of that and most likely you would take a deferred benefit DB pension at 65 also, of probably 18/80ths or so of salary so ~20k a year
Click to expand...

If retiring at 60 and taking a deferred Single Scheme pension it becomes payable at State Pension age - currently 66. It would not be 18/80 of salary. A very rough indicator would be (18/80 * career average salary -18/40 * State Pension).

It is very difficult to predict career average salary (increments, promotions, etc) but if we assume it to be €95k in the OP's case this roughly gives a deferred pension of €14,350 at 66 or a CNER pension of €11,600 at 60. There would also be a lump sum of roughly €64k from the main scheme at 66 (slightly less at age 60).

These are only rough and ready indicators and not predictions - there are lots of variables in the Single Scheme. And, of course, the State Pension age may rise in in the interim.
 
Setforlife said:
You can do some simplistic calculations now to give you a feel for things 15 years out but you have to bear in mind it’s only a feel for it, not hard and fast numbers. Eg you have roughly 450k in DC pension, if you keep putting in 1k a month and they overall grow at 6% you will have ~ 1.365m at 60. Which if you took 200k tax fee lump sum, would give you an income of 46k taking 4% a year. Presumably at 66 you would get coap on top of that and most likely you would take a deferred benefit DB pension at 65 also, of probably 18/80ths or so of salary so ~20k a year. Plus a lump sum from the AVCs.
Click to expand...
Hi Setforlife
Thank you for your detailed response and reply. Please excuse my lack of knowledge here. I just wonder is there a website that provides the calculations you highlighted or how I can understand it a bit more, in particular the 1.365m and 46k
Yes. I should get the coap as well. I have roughly 1000 contributions currently.

What would maxing out my contributions look like, just wondering, between my avc and sps pension I am contributing about 18k so is that upping it to 22.5 k in total.
Thank you
Mike
 
Saturn said:
It is very difficult to predict career average salary (increments, promotions, etc) but if we assume it to be €95k in the OP's case this roughly gives a deferred pension of €14,350 at 66 or a CNER pension of €11,600 at 60. There would also be a lump sum of roughly €64k from the main scheme at 66 (slightly less at age 60).
Click to expand...
Thanks Saturn for the details
 
ClubMan said:
You need 2,080 for the full rate OACP.
You seem to be about 20 years short of that?
Click to expand...
After 20 years working I have about 1000 contributions currently. If I work for 15 years I’ll have another 780. If I work to 65, I’ll have the 2000 contributions. So I should get most of the coap with 1780 contributions, if I worked until 60, hopefully anyway. If I didn’t work from 60 to 65 would it have any other impact.
 
Mikefromcork said:
If I didn’t work from 60 to 65 would it have any other impact.
Click to expand...
There are ways to keep accumulating PRSI contributions/credits reckonable for OACP purposes even if you stop working.

Key Post - PRSI and planning retirement

This Key Post is in the form of a FAQ where I don't know many of the answers. I will update the post as I get answers. 1. PRSI payable on reaching state pension age Answer: 0 (Class M) 1a. Does this relate to the start of the tax year in which you become 66? Or to after your birthday? Answer...
www.askaboutmoney.com
 
Mikefromcork said:
Thank you for your detailed response and reply. Please excuse my lack of knowledge here. I just wonder is there a website that provides the calculations you highlighted or how I can understand it a bit more, in particular the 1.365m and 46k
Yes. I should get the coap as well. I have roughly 1000 contributions currently.
Click to expand...
You can do them on a calculator yourself or use something like calculator.net to do them, they have an investment calculator you can adjust figure with. Eg to get the 1.364m see image attached. Then if you take a 200k lump sum, the 4% of 1.165m a year is about 46k, which is a generally accepted rule of thumb for how much you could take and increase with inflation each year from your pot without running out of money for 30 year retirement. These are all guesstimates but give you a good feel for things. There are plenty of people who would use a 9% return and a 5.5% spending rate in their figures. Which would make your pot 2million at 60 and allow you to take 200k and have 100k a year income. So all you can do is estimate prudently and adjust plans as you come closer to retirement.

You are in really good shape currently, so just review every year.
 

Attachments

  • IMG_6506.webp
    IMG_6506.webp
    110.6 KB · Views: 28
Last edited:
Mikefromcork said:
After 20 years working I have about 1000 contributions currently. If I work for 15 years I’ll have another 780. If I work to 65, I’ll have the 2000 contributions. So I should get most of the coap with 1780 contributions, if I worked until 60, hopefully anyway. If I didn’t work from 60 to 65 would it have any other impact.
Click to expand...
You will be fine if you work until 60, then from 60-65 you would be taking income from most likely an approved retirement fund or vested prsa, if you took 5k or more a year you will pay prsi on that and get s class contributions bringing you up to full coap by 65. You can also just pay voluntary contributions but taking arf income is cheaper.
 
With a pot that size, you could also take an additional 300K (on top of the 200K tax free) at 20%, which might help with tax efficiency planning.
 
TRS30 said:
With a pot that size, you could also take an additional 300K (on top of the 200K tax free) at 20%,
Click to expand...
What size? The only way that one can tax a lump sum of €200K @ 0% + €300K @ 20% = €440K is if the pension pot is €2M+.
 
ClubMan said:
What size? The only way that one can tax a lump sum of €200K @ 0% + €300K @ 20% = €440K is if the pension pot is €2M+.
Click to expand...
In post #12 there was mention of a protentional post of €2m. Even if didn't reach that amount, there is scope to take an amount tax free and an additional lump sum at 20%, depending on final pot size. Which, depending on different factor, might be of use to the OP.
 
You must log in or register to reply here.
Back
Top