Public sector retirement query

heldel00

I am a long way off retirement but no harm in thinking ahead.
Qualified as primary school teacher in 2005. On a newer retirement scheme which involves working until 65 and claiming jobseekers allowance for the 3 years until pension kicks in at 68. I would be interested in purchasing AVCs/ notional service but need advice.
My question is - would people recommend speaking to Cormarket or an independent public sector specialist company like PSRA financial services? This company have been speaking at retirement seminars nationwide but have quite a considerable fee.
Maybe people have other suggestions of companies they have found helpful?
Thanks in advance.

Geuze

I would not pay anybody.

I would read up on it myself.

Compare the AVC with notional service, do a list of pros and cons.

Addle

If you'll have full service, why would you want to pay for extra?

I've never heard of anyone planning on retiring and claiming job seekers benefit.
Is that not a contradiction?

Remember Cornmarket are a business out to make money...

crossvilla

The social welfare system we have today will be completely different by the time you get to retirement so there's no point benchmarking it off today's system. You can currently get job seekers benefit for that period between 65 and 68 to supplement the gap but it can be a convoluted process.

If you were in the private sector and you could afford it you'd probably make AVC contributions. There's no real need for buying notional years off the department when your overexposed to them anyway through your actual years of service. AVCs are best done through salary for ease of tax relief and it will increase the likelihood of you sticking to a saving habit.

Generally the biggest cost or loss in these situations is time passing without actioning a contribution. You should ring the superannuation office in Athlone, find out who you can start AVCs with, pick any amount you can afford, start it and in a few years think about more seriously when your getting on.

Geuze

Addle wrote: »

I've never heard of anyone planning on retiring and claiming job seekers benefit.
Is that not a contradiction?
...

Very common these days since CSP age was increased to 66.

People retire at 65, and they claim JSB for 9 months.

http://www.welfare.ie/en/Pages/Jobseeker's-Benefit.aspx

The J Stands for Jay

You can do your AVC through whatever company you want. I wouldn't go near Cornmarket; I know some people who've had very bad experiences with them.

Atlantic Dawn

Your jobseekers allowance will be means tested and so you may qualify for nothing if certain assets were above the threshold.

Geuze

People who must retire at 65, and then wait until 66 for CSP, would receive JSB.

It is not means-tested.

Addle

Geuze wrote: »

People who must retire at 65, and then wait until 66 for CSP, would receive JSB.

It is not means-tested.

Must you retire at 65 when hired in 2005?

Geuze

Addle wrote: »

Must you retire at 65 when hired in 2005?

Sorry, I'm talking in general here, not about this specific case.

Sorry.

heldel00

I had pensionable service by the 1st April 2004 (I was subbing in my final year of college). This old scheme would have allowed my retire at 60y.o on full pension with 40 years service.
But because I got a part-time job and couldn't do as much sub work, I had a gap of 26 weeks in employment with Dept of Ed so I reverted to the post April 2004 scheme which requires teachers to work until age 65 or retire earlier on a "cost neutral" basis.
Although state retirement pension is now 68 I will still be able to retire at 65, claim job seekers benefit and when that is exhausted the DES will top up with a supplementary pension to fill gap where state pension should be. (Ie: at 65 I will get full value of whatever I have contributed to my pension, albeit integrated with the job seekers benefit and later with state pension.)
Basically by the time I get to 65 I will have spent 45 years in a classroom and that is not even a possibility for me. I am hoping to start planning now to retire at 60 and plan for the shortfall until 65. Notional service is not an option as I am not "missing years", I will have 40+ years done.
I have done my homework on this but I just need guidance on the financial implications. I'm sure the earlier I start the less the immediate cost will be.
All advice appreciated.

crossvilla

If you put 50 euro into an AVC it will cost you 30 euro after tax relief. All the investment growth is tax free, if you die all the money will pass to your spouse tax free and you will likely be able to draw it down in a very tax efficient manner.

You should only put in as much as you can afford and you can stop, start, increase or decrease at any time. You will have to invest it, it will go up and down, there will be annual charges built in. Ultimately its a long term savings plan approved by Revenue for tax relief.

One thing I know, if you start doing this direct debit most people get weak and stop it after a few years as they lose sight of why they set it up. Those who make money and actually a difference to their long term pension planning do it deduction at source through salary.

Its very tempting when you know you are likely to have 40 years service to do nothing and rely fully on the departments ready made pension structure. If you want anything extra it's your own personal responsibility.

You should do more research now (not on Boards) and make a decision within a given time period you feel comfortable with.

heldel00

Believe me crossvilla I have studied this a lot.
I have cursed that little part time job I got too because it essentially has me working 5 years longer than necessary.
My reasoning in coming to boards at all is just to ask if people had any experience/ preference to using Cornmarket v independent advisory such as PSRA

bungaro79

like mcgaggs said, i wouldn't go near cornmarket. the fees they charge are so much more than a normal broker. the only benefit with going with them is that you can get your tax relief at source but this isn't worth it with the amount they take out in management fees. i took out an avc a few years back with zurich. there are plenty of brokers out there who will help you for a nominal fee. pm me if you want the names of a few i'd recommend.
also like crossvilla said, do your research. askaboutmoney has a brilliant forum with a pension section

Count Down

It's a minefield - what it all boils down to is who can you trust?
They tell us that you get generous tax relief on your contributions, but are cagey when you ask them about what it's all worth when you retire; it could be worthless.

The J Stands for Jay

Count Down wrote: »

It's a minefield - what it all boils down to is who can you trust?
They tell us that you get generous tax relief on your contributions, but are cagey when you ask them about what it's all worth when you retire; it could be worthless.

I don't think you can trust insurance salesmen posing as financial advisors. If you hired an expert, they could run the numbers for you. The tax relief may work out as a tax avoidance (if your AVCs can be taken tax-free along with the gratuity) or it may just work out as tax deferral if it ends up funding a pension when you retire (which may be taxed at a lower rate) It's not going to be worthless, but you need to know what you're going to get out of it.

shar01

OP, if you were recruited after 01/04/2004, you are a "New Entrant". Your minimum retirement age is 65 and you have no maximum. Therefore you may work until State Pension kicks in (and beyond if you wish).

Check with your Human Resources / Superannuation Section to make sure.

I would certainly get independent advice before taking out an AVC.

fg1406

I would advise staying away from Cornmarket/New Ireland etc. I know colleagues that lost money on AVCs due to the crash a few years ago and obviously as it's a financial investment "it may go down as well as up". Also they charge very high fees.

You would be eligible for a supplementary allowance once your 9 months JSB expires. This allowance is based on the difference between the pension paid to an employee paying Class D PRSI and your pension.

Things in SW could be very very different anyway when you get to 65.

Also don't go near notional service. It's massively expensive and it ties you to retirement at a specific age i.e. 65. Should you opt to take early retirement or have to retire on medical grounds there are 2 actuarial reductions on the purchased service.

billyhead

fg1406 wrote: »

I would advise staying away from Cornmarket/New Ireland etc. I know colleagues that lost money on AVCs due to the crash a few years ago and obviously as it's a financial investment "it may go down as well as up". Also they charge very high fees.

You would be eligible for a supplementary allowance once your 9 months JSB expires. This allowance is based on the difference between the pension paid to an employee paying Class D PRSI and your pension.

Things in SW could be very very different anyway when you get to 65.

Also don't go near notional service. It's massively expensive and it ties you to retirement at a specific age i.e. 65. Should you opt to take early retirement or have to retire on medical grounds there are 2 actuarial reductions on the purchased service.

But would these people have lost money if there was no crash and did they withdraw funds during the crash I.e if they kept the funds to today would they not be worth what was invested?

fg1406

I know of many who are fuming that they invested in avcs. Others simply just saved and earned the pittance interest rates that banks were offering.

I know personally I wouldn't go near an Avc. And that's having had dealings with both new Ireland and cornmarket. The latter charging upwards of €400 for statements that a local superannuation department can provide for free.