Non Employer Contribution

[ned official]

Hi,

I just started a new job and my new employer won't make pension contributions for another 2 years which will be 10%.I have a stale pension from previous employer of around 100k which I cant contribute to anymore. I expect my bonus to be 50-60% of my gross salary and want to make best tax use of this. Any ideas what I should do for the next 2 years. I can't contribute to my old pension and my new employer won't be paying into pension for another 2 years.

 

[fayf]

I assume you cannot contribute to your new employer scheme ? If so, you could commence a PRSA for the next 2 years, make use of up to 40 % tax relief on your contributions, then transfer it into the new employer scheme when you are enrolled, or, transfer it into a separate PRB.(Personal Retirement Bond), PRB’s, can be matured as early as 50.

For the previous employment, you could just leave it there, transfer that to a PRB, or, transfer it into your new employer scheme, but that is dependant on your circumstances, it can be convienient to have separate pension pots/ PRB’s which can be matured when the need arises, over time.

Having everything in one place is not always a good idea.

 

[ned official]

Thanks Fay. No I can't contribute to my employers pension. I don't even think they have pension, the company are a new US fin tech with only couple of employees in Ireland. I think I would have to source my own PRSA and go that route. I like the idea of cashing out PRB at 50. I presume people use this route for early retirement to cover any salary shortfall until pension kicks in. When you transfer it to PRB can you still invest it in markets and funds etc or does it just sit in cash until cash out. I'm young so wouldn't want it sitting earning nothing until I'm 50.

 

[fayf]

All PRB’s are invested in whatever funds you decide depending on your risk profile, so has the potential for strong cumulative growth over a long period. The only catch, is many of them have penalties if you move within X years, which is capped at 5, but looks like that won’t be an issue for you!

You’d really need to speak with an independant advisor to go through the details and options.

 

[Steven Barrett]

Employers hv

Hi,

I just started a new job and my new employer won't make pension contributions for another 2 years which will be 10%.I have a stale pension from previous employer of around 100k which I cant contribute to anymore. I expect my bonus to be 50-60% of my gross salary and want to make best tax use of this. Any ideas what I should do for the next 2 years. I can't contribute to my old pension and my new employer won't be paying into pension for another 2 years.

Thanks Fay. No I can't contribute to my employers pension. I don't even think they have pension, the company are a new US fin tech with only couple of employees in Ireland. I think I would have to source my own PRSA and go that route. I like the idea of cashing out PRB at 50. I presume people use this route for early retirement to cover any salary shortfall until pension kicks in. When you transfer it to PRB can you still invest it in markets and funds etc or does it just sit in cash until cash out. I'm young so wouldn't want it sitting earning nothing until I'm 50.

Do you have to be employed with them for 2 years to be eligible to join the scheme? That's a very long time.

They are legally obliged to provide staff with a PRSA facility to staff not eligible for the pension scheme. They must run payments to this PRSA from payroll.


Steven
www.bluewaterfp.ie

 

[fayf]

Good point Steven, as the Company are a startup, i assume there is some leeway, on setting up a PRSA scheme immediately.