Pension plan for next 5 years when I retire at age 55.

E

EastCloud

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I am 50 years old and have been working in the public sector for the past 23 years. I plan to retire at 55 and would like to start setting aside €500 per month to support my future retirement as additional pension or investment. I understand I won't get the full pension and will lose the big sum of money if I retire early.

My financial advisor has recommended that I set up a Zurich pension fund. I would appreciate your opinion on whether this is a suitable option in terms of potential return and overall retirement planning.
 
Just to clarify.....
Is your normal retirement age 60?
Are you planning to take an actuarially reduced pension at 55?
Are you planning to start an AVC with the €500 per month?
 
What's the AMC (annual management charge ) of this pension fund?
What fund is he proposing? likely related to your appetite for risk
 
My normal retirement age is 60. Yes. I am planning to take an actuarially reduced pension at 55, and planning to start an AVC with the €500 per month
 
The AMC is 1.5%. It's Zurich default retirement fund based on my current age. The allocation rate is 100%. The pension lump-sum will be reduced due to my early retirement at age 55.
 
That's a very high AMC.
If you set up an AVC PRSA you will get an AMC of 1% or less.

You can use your AVCs to increase your tax free lump sum up to the revenue allowable maximum.

Read this thread for information about gaining extra Prsi contributions after you cease employment.

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
 
How to set up AVC PRSA? Is it through the broker (financial advisor)? My financial advisor said Zurich product will give me better returns. I don't know what's other options.
 
You can set up a Zurich AVC PRSA through any broker or advisor.

There is a list of advisors (brokers) on Zurich's pensions website.

Your advisor is adding an extra 0.5% on to the basic Zurich fee.
If you do not need major amounts of financial advice you should opt for a different broker. You can read various threads about pensions on this site.

If you then are happy to make your own financial decisions,, you could open an AVC PRSA through an execution only broker with an AMC of 0.75%.

You could if you are unsure about your financial plans, open the Zurich pension through your present advisor and get whatever advice you need. In the future if you are then more financially aware of your plans, you could cease or reduce payments into the expensive PRSA and open a second AVC PRSA for future payments.
 
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Better than what?

Zurich will give better returns than just setting the money aside as savings is how I read it.
 
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EastCloud said:
The pension lump-sum will be reduced due to my early retirement at age 55.
Click to expand...

Just so you are aware, the Revenue max tax free lump sum will also be reduced by a factor linked to your early retirement age.

With more than 20 years service Revenue would allow a tax free lump sum of 120/80 of pensionable remuneration at normal retirement age. But for CNER at 55 with 28 years service this is reduced by 28/33 (33 being your potential service to normal retirement age in your scheme).
 
Thank you for all your feedback and very helpful advice. Much appreciated. It's great to ask questions here to get second opinion from more experienced people.
 
If it were me I'd be shopping around to get lowest AMC possible.

LD ferguson is a broker who responded to this thread, perhaps start there.

There are others also on this site who also do similar.

I'd read as much as possible relating to AVCs on this site. A lot of great information to hand.
 
But bear in mind that revenue's definition of final remuneration will likely still give more scope to fund for a lump sum
 
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