Starting a pension early...

gavmcg92

Hi all,
Seriously considering starting a pension early. I'm 24 years old and have been in full time employment for the last 18 months.

We were having the conversation around the kitchen table the last few nights and it has me thinking. I'm quite comfortable at the moment as far as income is concerned and so I would like to start putting a little bit away every month just to get the ball rolling. I have a nice rainy day fund in the credit union and so savings are already being covered.

Taking a look at pension plans that are available, I would assume that a PRSA is the most suitable. I don't want to be tied into specific contribution requirements just yet and unfortunately because I am employed through an agency I am not able to join my employer's plan. As far as I am aware, by starting a PRSA I am entitled to transfer that over as soon as I get a permanent position with a pension plan available.

Do you guys have any advice or know of a good way to compare what is currently available? There doesn't seem to be a bonkers.ie type site available.

I know you may not be able to give any specific advice to me (not sure what rules apply to this forum) but any general advice would be helpful.

G.

Atlantic Dawn

Some companies will pay in their own contributions for you as part of their benefits package to a pension scheme but only the scheme they have previously set up. They do have to facilitate your salary going in to a PRSA but don't have to make their own contributions to it. A PRSA allows mobility from job to job.

If I was setting up a pension in the morning the most important factors would be the fund selection and past performance of these funds as this will determine your final pension amount based on this growth.

silent_spark

If the agency is your employer, are they not obligated to facilitate deductions from your payroll to a PRSA? I thought it was a requirement of all employers after a certain amount of time employed - are agencies exempt? Have you asked them? Great idea to start early - I wish I had.

GerardKeating

gavmcg92 wrote: »

Hi all,
Seriously considering starting a pension early.

24 is not early, as they say "The longer you leave it, the more you pay!"

Start with the Pension Board Site, and look at the pension calculator.

Eventually you should consult with a reputable broker/adviser or go to one of the top 5 companies directly.

Ask your colleagues what they think of thier pension plan, perhaps consider that provider if you hear good things about it.

2forjoy

I started at 25 have no idea how much it will be worth at retirement

Merowig

Comparison: https://drive.google.com/file/d/0Bwsxfnty94iTallwYUZuLVV1WHM/view

As of April 2016
No guarentee given.

Cheapest ones are Davys self directed PRSA and a PRSA via LA Brokers.

Check what your employer is offering - and also if they would match contributions.

Merowig

2forjoy wrote: »

I started at 25 have no idea how much it will be worth at retirement

You should get twice a year a statement with a projection what you should get when you retire.

gavmcg92

silent_spark wrote: »

If the agency is your employer, are they not obligated to facilitate deductions from your payroll to a PRSA? I thought it was a requirement of all employers after a certain amount of time employed - are agencies exempt? Have you asked them? Great idea to start early - I wish I had.

I did read that somewhere. I think 6months was the time frame. Isn't it up to me to organise the PRSA and then they do the deductions?

gavmcg92

GerardKeating wrote: »

gavmcg92 wrote: »

Hi all,
Seriously considering starting a pension early.

Ask your colleagues what they think of thier pension plan, perhaps consider that provider if you hear good things about it.

None of them have pensions. I'm first out of the trap.

Getting the number of a broker off of a relative. Going to see what he says first.

Thanks for that google doc.

Nody

Honestly I'll go out on a limb here but look at the alternative of a stock portfolio instead as done by for example this blogger; the point being most retirement plans are not available as early nor are they often managed as efficiently as a private portfolio. It has a second benefit that you're not tied into a specific provider.

Mrs OBumble

silent_spark wrote: »

If the agency is your employer, are they not obligated to facilitate deductions from your payroll to a PRSA? I thought it was a requirement of all employers after a certain amount of time employed - are agencies exempt?

Agencies are not exempt.

However they are only required to facilitate contributions to one PRSA (ie not the one of your choice), and they typically go with someone offering the "don't know any better" one that charges the maximum fees allowed by the government.

When I was working for an agency, I had one session with the shiny-suit-insurance-salesman who they bring on site every so often, thought about what he said, and then high-tailed it off to a private financial advisor who found me a plan with half the fees.

Agencies typically don't contribute.

OP, 24 is not early. In fact I think it's an ideal time - after you've got that nest egg, and before you've got too fond of having the cash. The real benefit kicks in once your salary is high enough that you're being taxed at the top rate, but starting little-and-early is wise.

daveharnett

No such thing as "too early" once youre out of debt and have an emergency fund.

PRSA sounds like the way to go in your situation. Aim for 100% allocation rate, no transaction fees, and 1%pa management fee. AFAIK that's the cheapest you'll get without having to manage it yourself.

You can fiddle with the details of where the fund is invested as you learn more, but the biggest factors are how much you put in, how much the fees eat your gains, and when you start. The best time is yesterday, and the second best is today.

ftse100

Atlantic Dawn wrote: »

Some companies will pay in their own contributions for you as part of their benefits package to a pension scheme but only the scheme they have previously set up. They do have to facilitate your salary going in to a PRSA but don't have to make their own contributions to it. A PRSA allows mobility from job to job.

If I was setting up a pension in the morning the most important factors would be the fund selection and past performance of these funds as this will determine your final pension amount based on this growth.

Fund Selection is Important, Past Performance is no indicator of future performance.