Stay in Job for Pension Matching OR Leave For an Increase

AlmondButter

My current situation is that I am 30 years old in a job making €40k. I have a pension that I have been paying into that is matched up to 5%. To qualify for the matching you need to be paying in for 2 years, which will be in February for me.

Now it is possible that I will be getting a new job offer in the next 2 weeks or so that will be around the €47k - €48k mark. This will have 50% company matching up to 7%.

My question is; if I got the offer would I be crazy to even think about staying to qualify for the matching. My thought is that A) its free money, and even though it is only €2k, it will be worth €10k+ by the time I get to retirement age.

I am interested in any thoughts or opinions on this.

Thanks!

Atlantic Dawn

You would be crazy to stay, there's a €7k difference in salary, once you hit 30 you can put up to 20% of your salary in a pension sheme for full tax relief, it's a very tax efficient way of saving for retirement. You could put the entire €7k in to your pension and get full tax relief. You should also compare pension schemes, see what growth has been in your current scheme.

http://www.pensionsauthority.ie/en/LifeCycle/Tax/Tax_relief_on_contributions/

Henry Ford III

The job is the the most important thing here. Where are the medium term prospects better?

Pay and benefits are fine, but if the employer is ropey what future is there in it?

All things being the same, the 2nd remuneration package looks better by a distance.

AlmightyCushion

Even if the new job didn't contribute to your pension at all it would still work out better. In your current job the pension matching gives you at most an additional 2,000 a year. The remuneration package in the new job is way better.

AlmondButter

Thanks very much for the replies guys. It seems to be pretty unanimous, which is great.

What I had been thinking was that if I could just sit out another 5 months in the job I am in I would qualify for €4k "free money" into my pension fund before changing roles in early 2017. With some modest growth that €4k should be worth €20k by the time I come to retire. I just feel a little bad walking away from that as I know how important it is to build up my pension pot now.

There are some points in this thread about using that increase to put into my pension, and I would still be ahead. I guess I could potentially have that €4k built back up in 6 months if I maxed out my contributions.

Appreciate everyone taking the time to respond.

AlmondButter

Thanks very much for the replies guys. It seems to be pretty unanimous, which is great.

What I had been thinking was that if I could just sit out another 5 months in the job I am in I would qualify for €4k "free money" into my pension fund before changing roles in early 2017. With some modest growth that €4k should be worth €20k by the time I come to retire. I just feel a little bad walking away from that as I know how important it is to build up my pension pot now.

There are some good points in this thread about using that increase to put into my pension, and I would still be ahead. I guess I could potentially have that €4k built back up in 6 months if I maxed out my contributions.

Appreciate everyone taking the time to respond.

jimmycrackcorm

AlmondButter wrote:

What I had been thinking was that if I could just sit out another 5 months in the job I am in I would qualify for €4k "free money" into my pension fund before changing roles in early 2017. With some modest growth that €4k should be worth €20k by the time I come to retire. I just feel a little bad walking away from that as I know how important it is to build up my pension pot now.

I stand to be corrected but in your current job your pension matching will only kick in from the month following your two years service. I.e. I doubt you get it backdated from when you started.

So moving to a new job is better.

AlmondButter

jimmycrackcorm wrote: »

I stand to be corrected but in your current job your pension matching will only kick in from the month following your two years service. I.e. I doubt you get it backdated from when you started.

So moving to a new job is better.

No, the matching has been going on all the time. But if you leave within 2 years of starting the pension contributions you forfeit the companies 5%.

homer911

AlmondButter wrote: »

No, the matching has been going on all the time. But if you leave within 2 years of starting the pension contributions you forfeit the companies 5%.

But if you transfer your pension entitlement from another scheme, this can be included in assessing the 2 years

AlmondButter

homer911 wrote: »

But if you transfer your pension entitlement from another scheme, this can be included in assessing the 2 years

Can it? I think i will need to read the Ts & Cs over the weekend, but I will be pleasantly surprised if that is the case.