Notional Service

[CluelessDublin]

Hello

I hope someone can advise me. I am a 45 year old teacher. I would like to retire at 60 i.e. when I have completed 33 years. I have a quote form DES for seven years notional service €200 per fortnight for the next 14 years. My question is ..is It worth it or would I be better off considering an AVC . I very confused by the tax relief of 25% - what precisely does this mean.

Cheers


Clueless

 

[jpd]

I can't answer the first part of your query but because you are in the age bracket 40-49 you are get tax relief on your pension contributions, up to a limit of 25% of your earnings ie any contributions above this limit will not attract tax relief

Assuming that the extra € 200 per fortnight does not bring your total contributions above the limit, then you will contribute € 200 to your pension every fortnight and this will only cost you a deduction of € 160 (if your marginal tax rate is 20%) or € 120 (if your marginal rate is 40%) from your pay

 

[Early Riser]

I am a 45 year old teacher. I would like to retire at 60 i.e. when I have completed 33 years. I have a quote form DES for seven years notional service €200 per fortnight for the next 14 years. My question is ..is It worth it or would I be better off considering an AVC .

The Pensions Authority have a booklet on AVCs and Notional Years. It might be a good starting place as an overview:

[broken link removed]

Also, you might find playing with the Dept Of Ed. Pension modeller helpful. Based on your current salary and retiring at 60, get a calculation for a pension with 33 years service. Then do a calculation based on 40 years service (as a teacher do you need 40 years service for a full pension?). This should give an indication of how much (in today's terms) the buy-back will gain for you:

 

[lledlledlled]

I tried calculating this for my wife last year and became bamboozled.
She's still a couple of decades from retirement so went with a 'cross that bridge when we come closer to it' approach. Hopefully it doesn't backfire.

AP, Would a phone call to your union be of any benefit? They might have someone who can run the numbers for you.

 

[Early Riser]

I tried calculating this for my wife last year and became bamboozled

Here's an example. I don't know the all the OPs circumstances but taking these assumptions instead - secondary teacher, 3 years pre-service training, pre-2004 entrant, Class A PRSI, salary of €50k.

If retiring at 60 with 33 years service the Modeller gives a lump sum of €62K, an Occ Pension of €10K and a Supplementary Pension of €10.7K.

However, with 40 years service the figures are for a lump sum of €75K, an Occ Pension of €12.1K and a Supplementary of €12.9K.

This is a better link to the Modeller: