There is advantages in making sure you have full years in the public service pension and paying for it now if you are short years.For the want of a better word public service pension are the best annuity with an escalation you would not be able to buy it in the private sector.lots of public service pensions allow you to take a pension of two thirds of final salary if employed before 2013 if you fore go lump sum.there is an option to have a avc built up to take your tax free lump sum from it and take the higher pension if it makes since at the time,Welcome to AAM
I doubt there will be any consensus on this point but I think you should prioritise your pension contributions ahead of paying down your mortgage ahead of schedule. I would expect that to give you the best return on your savings, on an after-tax basis, over the long term.
I certainly don't think you should invest elsewhere before maxing out your pension contributions and you look like you have adequate cash reserves to address any reasonably foreseeable emergencies that might arise.
I'm afraid I can't offer you any advice as to which pension scheme should be prioritised - public sector pension arrangements have always been a complete mystery to me!
Do you have any say in the investment allocation of your pension fund with your current employer? It's important to look at all your accounts (retirement, savings, mortgage, etc.) as one and at your age the large majority of your retirement savings should be invested in growth assets (equities).
Don't leave the €13k pension fund sitting in cash for too long...
Finally, are you comfortable that you have adequate life assurance/permanent health insurance in place? That really should be your number one financial priority with a young family.
Hope that helps.
I have done calculations for friends of mine who work in the public service about buying back years both up front and over 10 years .When they actually got there options from there employer calculations were correct within a few euro at the time.I also done the calculations on how much they would have saved if they had bought extra service when they first got the option to buy back years when they first started working .there are massive savings to be made by buying as soon as you can if you were employed between 1995 and 2013 on a A1 stamp.Hi Sarenco.
Thanks for the heads up on the pension ref equities as I have no idea what type of funds any of the pensions have been invested in.
Private health insurance for the family and income protection for myself is luckily covered by my employer. However, I have not taken out any life assurance.
These are items I will certainly look further at now that you have flagged them.
Thanks for your help and guidance.
....
The pension I have is guided by a pension manager.
"You are being guided by ****** Personal Lifestyle Strategy"
The growth fund when I drill down on the details is listed as having a volatility/risk level of 4 between a possible rating of 1 - 7.
The fund is decribed as being an Asset Mix of Equity, Bonds, Property and Cash.
Here is where I am confused and as a result cautious about paying additonal avc's into a pension fund as opposed to paying down against the mortgage.
When I login to the pension site it presents me with two graphs.
1. "What we think you will NEED based on OUR projections"
2. "What we think you will HAVE based on OUR projections"
Dealing with graph 1 first. This graph shows a target pension of 21,533 pa from the private pension and 12,391 pa from state pension giving a total of 33,924 pa.
Graph 2 being the more important of the two is saying 19,675 pa as the projected pension of which 12,391 pa is from the state and only 7,294 pa from the private pension itself (should I continue with my existing 13% of salary contributions consisting of 5% from me and 8% from employer).
Likewise it shows 14,248 pa as left of target i.e. what I will be short based on trying to get to a projected income of 33,924 pa from graph 1.
Hopefully not too confusing in the way I have described it above so far.
Ok, so here is my big concern.
There is a section called "Hit your target" it will compute if I enter a monthly pension increase amount what affect that will have on current pension.
If I enter 250e which is in addition to my existing contribution and employers contribution i.e. the 13% it only has the affect of moving my private pension from 7,294 pa to 10,529 pa an increase of 3,294 pa from a retirement age of 65.
What this means is that to get an extra 3,294 pa in pension from the age of 65 a back of the envelope calc tells me I would need to pay approx 78,000 pa between now and retirement at 65.
Putting it in those terms it does not seem like value for money to me to put additional AVC's into the pension.
Would love to hear your thoughts on this?
Thank you!
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