You mean you don't plan to be a member of the scheme long enough (2 years) to vest and thus secure the employer contributions?I am 26 & thinking about setting up a pension. I already have a house so want to get saving in a pension scheme. My company has a contributary plan with BOI. I contribute 5% & they give 5%.
I am on 40k a year but have no intention of staying with my current employeer for another 2 years so what should I do??
Not availing of employer contributions is normally not a good idea but if you are sure that you won't be there long enough to vest then perhaps that changes matters. What charges apply on the occupational scheme?Go with BOI because I would be able to get the tax savings because its deducted from my salary.
If you are referring to the tax/PRSI relief limits then see here.Also, what is the story with the % of salary saved. What is the max amount that I can save if I am on 40k?
Within the limits mentioned above a high rate taxpayer gets 41% tax and 6% PRSI/health levy relief on each €1 contributed so in net salary terms you are only €0.53 out of pocket with the €0.47 made up by Revenue.Does it work something like this. If I save 4k a week, I really only pay 2.5k due to tax relief ???
What charges apply on the employer scheme? Even if you cannot take the employer's contributions with you (due to not having two years membership) if the charges are competitive then building up some membership vesting time that can be transferred into another occupational scheme later on could be beneficial. Even if you only do the minimum amount through the employer scheme and maybe use something else (e.g. a low charges PRSA) for AVCs if you want make further contributions in order to avail of more of your pension tax relief.I intend to move jobs in the coming year so I won't be able to take the employeer contributions with me so would it be better for me to shop around or go with the company scheme even though I can't take their contributions with me??
Yes - there are PRSAs and personal pension plans, different fund offerings, different charging structures.Is there any major differences in the packages offered??
It still may be useful to build up some occupational pension fund vesting time - e.g. if you are a member of this scheme for a year and then transfer into another employer's scheme further down the line then your vesting time will be halved to one year as far as I know. Worth at least checking that out.Since the employers contributions are not going to be beneficial if you and leaving within the two year period and cannot take your contributions with you ...
More flexible in what way? What sort of changes are imminent? Regulatory changes or just new products?If i were you i would hold off until later in the year when some more flexible PRSA options should come to the market ...
But why not just get a 0%/1% PRSA now and get started?If you have enough self control i would put aside contributions to a savings account for now ... then when a suitable PRSA option presents itself ... You could add all you funds to this to begin your pension ...
Don't forget to claim PRSI back separately on standalone pension contributions.You could also consider adding extra to avail of AVC tax relief back dated to last year ... this would give you a nice little starting amount in your fund ...
Yes - good point. See here:Also you may want to scrimp and save a little more and added extra this year and claim tax relief for last year!
Not just a lump sum - it is relevant even if you are making regular pension contributions out of net income. You can get tax relief at the year end or by having Revenue increase your tax credits but to get PRSI/health levy relief you will need to manually claim it as per the link posted above.If you are contributing in a lump sum check out the PRSI link Clubman has put up also.
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