Will State Pension ever go completely?

[EvenStevens]

I met with a Financial advisor recently to look at AVCs and investing some savings.
I am a public sector worker in my mid-40s and currently would get pension and state pension at 66 in retirement .The advisor mooted the idea that by the time I'm at retirement age the State Pension could be gone completely.
I know they are trying to sell you stuff but is there a real possibility that could happen? Is it likely? My income would significantly reduce in retirement if that was the case.

 

[Protocol]

Ageing is a challenge to State Pensions, yes.

But they have existed since pre-1900, after that in Ireland.

Will the real value of the payment fall over the future decades? Maybe.

Will the eligibilty criteria tighten? Yes, that is already happening.

PS pensions have already been made less generous.


Bear in mind that this "advisor" has an incentive to scare you into buying an AVC.

Instead, ask the advisor what is the allocation rate and the AMC on their AVCs.

 

[ClubMan]

I met with a Financial advisor

What kind of "financial advisor"?

I am a public sector worker in my mid-40s and currently would get pension and state pension at 66 in retirement

Are you sure that you'll qualify for both? I presume you mean a public service pension and the PRSI linked old age contributory pension?

Bear in mind that this "advisor" has an incentive to scare you into buying an AVC.

Instead, ask the advisor what is the allocation rate and the AMC on their AVCs.

Spot on.

 

[EvenStevens]

It was someone from Cornmarket.

I am a public sector worker in my mid-40s and currently would get pension and state pension at 66 in retirement

Are you sure that you'll qualify for both? I presume you mean a public service pension and the PRSI linked old age contributory pension?
Yes as I understand it. When I run my Pension report in work it gives me Pension from work, lump sum and what my state pension would be.

I will check again on the management fees for the AVCs. It's not ideal when you don't speak Finance but I figure it's better to get money working for me at this point then doing nothing elsewhere. Are AVCs in general considered worth it?

 

[ClubMan]

When I run my Pension report in work

What pension report is this? Are you absolutely sure that it's checking/validating your entitlement to the old age contributory pension based on your PRSI contribution records? You can request your PRSI contribution record from MyWelfare to sanity check this yourself.

Contribution Statement

<p>Request a statement of your history and record of contributions paid</p>

services.mywelfare.ie

 

[BlackandBlue]

I am a public sector worker in my mid-40s and currently would get pension and state pension at 66 in retirement

17 years service so most likely a post 1994 employee.
I suspect that you are then in a "coordinated" pension scheme.
Suppose when you are eligible to retire you will have accrued a pension benefit of X.
What this means is that your pension total will consist of 2 parts, the State OAP and your work pension contribution of x-OAP giving you a total of X.
It is very unlikely that you will be getting x + OAP

 

[ClubMan]

It was someone from Cornmarket.

If you read other threads on public service pensions and AVCs you'll see that the general consensus is that Cornmarket may not offer the best value for money (or advice). E.g.:

Google Search

 

[EvenStevens]

"What pension report is this? Are you absolutely sure that it's checking/validating your entitlement to the old age contributory pension based on your PRSI contribution records? You can request your PRSI contribution record from MyWelfare to sanity check this yourself."
It's Pension Calculator on our CORE Personnel system. The advisor also had sight of my contributions, start date etc and they mentioned the state pension part so I assumed so.

What pension report is this? Are you absolutely sure that it's checking/validating your entitlement to the old age contributory pension based on your PRSI contribution records? You can request your PRSI contribution record from MyWelfare to sanity check this yourself.

Thanks I will do that. It's a Pension Calculator report on our CORE Personnel system in work. The advisor also had sight of my contributions, start date etc and they mentioned the state pension without me sharing that report etc.

 

[ClubMan]

"What pension report is this? Are you absolutely sure that it's checking/validating your entitlement to the old age contributory pension based on your PRSI contribution records? You can request your PRSI contribution record from MyWelfare to sanity check this yourself."

Please see here for how to quote properly:

How to reply to or quote a post

To reply to a post, you just start typing in box below the post and then press Post Reply.

www.askaboutmoney.com

The advisor also had sight of my contributions, start date etc and they mentioned the state pension without me sharing that report etc.

I suspect that @BlackandBlue may be on the right track here:

What this means is that your pension total will consist of 2 parts, the State OAP and your work pension contribution of x-OAP giving you a total of X.
It is very unlikely that you will be getting x + OAP

 

[Protocol]

dvisor recently to look at AVCs and investing some savings.

The key question to answer is whether or not you need to buy AVCs.

 

[EvenStevens]

The key question to answer is whether or not you need to buy AVCs.

Can I ask why you would say that? Are AVCs not considered a good idea? Is there a better alternative for the long term I should look at .

 

[ClubMan]

They are a good idea but whether or not they're the best use of someone's money depends on a more comprehensive understanding and analysis of their overall financial and personal circumstances. Such as would be available as part of a Money Makeover.

Key Post - Basic information required for the "Money Makeover" forum

It can be difficult, but please try to use a meaningful title in your thread For example "27 year old with mortgage arrears". You will get a much better and much more coherent answer if you give as much information as possible in your first post. For example, if you give your mortgage rate, it...

www.askaboutmoney.com

 

[Protocol]

Can I ask why you would say that?

If a public servant has long service, close to the 40 years, I often wonder the rationale for doing AVCs?

 

[redstar]

Using a scare tactic around the State Pension to sell AVCs is surely unprofessional from an 'advisor'.

Like "Quick buy now before its too late" as if its some quick sale at Aldi.

No Govt would survive abolishing the State Pension.

As others have said - calculate any shortfall you may have in your pension at retirement age and see if AVCs would help make up that shortfall.
If little or no shortfall, then no need for AVCs.

 

[ClubMan]

Using a scare tactic around the State Pension to sell AVCs is surely unprofessional from an 'advisor'.

I agree but, to be fair, maybe it just came up as a (likely remote) hypothetical possibility rather than deliberately being used as a scare tactic?

The advisor mooted the idea that by the time I'm at retirement age the State Pension could be gone completely.

 

[JohnFlory]

Can I ask why you would say that? Are AVCs not considered a good idea? Is there a better alternative for the long term I should look at .


Report

Cornmarket and IFI have very high "administration" charges that will take a big chunk of whatever you put in. If this is offset to an extent by tax benefit there is some justification but you will have close to full service by your early 60s. Use money to pay off mortgage instead.

 

[ClubMan]

Cornmarket and IFI have very high "administration" charges

Public Service AVCs can be done via other intermediaries with the possible (actual?) slight inconvenience of having to claim tax relief manually rather than getting it automatically at source via payroll.

 

[redstar]

I agree but, to be fair, maybe it just came up as a (likely remote) hypothetical possibility rather than deliberately being used as a scare tactic?

Thats true, of course, it could have been a throw-away comment during the conversation. But it seems to have triggered enough of a concern for the OP to post about it on AAM.

 

[ClubMan]

17 years service so most likely a post 1994 employee.

Can you explain where you're getting 17 years from? I can't seem to figure it out. Maybe I'm overlooking something obvious?

I am a public sector worker in my mid-40s

Have you always been a pubic sector worker?

 

[BIG-notorious]

If a public servant has long service, close to the 40 years, I often wonder the rationale for doing AVCs?

The OP has a normal retirement age of 66 which strongly suggests they're post 2013 and on the Single Scheme. The Single Scheme is complete crap compared to the previous schemes. 40 years on an older Scheme means 50% on your final salary for life, on the Single Scheme it's much less, and there's no such thing as a supplementary pension. If i stay until 66 I'll have around €13k pension in the Single Scheme as compared to around €20k on the post 2005 Scheme at 65. Lump sum is also much worse.

Also no realistic option for buying service, and no supplementary pension (worth maybe €14k a year) if you take early retirement.

40 years service means very very different things to two public servants whk started on 31/12/2012 vs 1/1/2013...hence AVCs...