Am I in trouble?

Samuel T. Cogley

So I'm pushing 40 with naff all in terms of a pension, a few grand spread out over a few employers. I've recently started with the civil service (at a junior grade) and hope to not have to move jobs again, planning on working until 70.

While I hope my Parents live on to be 200 and spend all their money on enjoying themselves I know that I'll eventually have an inheritance of €150,000 or so.

Wife is well paid but works contracts in the Public service.

No kids, reasonably manageable mortgages (I have a crash era apartment that will attract a capital loss).

What should I do - I've absolutely no idea about this sort of thing - can I consolidate my pension funds somehow and then pay in a lump sum eventually? I'm most grateful for any advice.

Henry Ford III

Yes you can consolidate your old pensions. A B.O.B. or similar.

You'll have plenty of p.s. years so that's not so bad either. If you can afford it look at buying "added years".

No kids is big financial positive.

As always get proper advice.

p.s. Overall you're not so bad off.

Samuel T. Cogley

Many Thanks Henry!

caviardreams

Henry Ford III wrote: »

Yes you can consolidate your old pensions. A B.O.B. or similar.

You'll have plenty of p.s. years so that's not so bad either. If you can afford it look at buying "added years".

No kids is big financial positive.

As always get proper advice.

p.s. Overall you're not so bad off.

As you will be on the newer single pension scheme (post 2013) I assume, there is currently no option to buy back years on the PS pension. This may change in the future. You could look an an AVC to supplement this (I think, anyway!). However if you are 40, you will have 30 years of contributions if you retire at 70 so 37.5% of your career average salary would be your annual pension entitlement.

Also re the inheritance - you never know what nursing home bills etc that might have to be paid so possibly better not to factor in that for sure

Samuel T. Cogley

Thanks caviardreams!

ct5amr2ig1nfhp

Never, ever presume you'll get an inheritance. Plan as if you were to inherit nothing.

kippy

Morgan Witty Mountaineer wrote: »

Never, ever presume you'll get an inheritance. Plan as if you were to inherit nothing.

Indeed. There are so many variables involved. This is excellent advice.

OP, in general you are in a very enviable position. Probably worth discussing the pension situation with an advisor who is aware of the nuances involved in CS pensions.

AndrewJRenko

Pension tax relief is good, but you will be tieing up your money until retirement age. So make sure you are happy that you're not going to need it before then.

Are you comfortable with your mortgages? Any other loans outstanding?

Samuel T. Cogley

Thanks all for your input!

Mortgages: Hopefully we'll be shot of the apartment soonish we'll use the small profit we make from that to pay down the mortgage on the house. We currently overpay on our home mortgage. We have a car loan also but it's quite small and paid from an account we pay in our Rent a room rent too.

On the car loan we were told that even if we pay it off early we'll still pay all the interest - does that sound right? Must chase that up with the bank. Loan was arranged by the dealership, it's not PCP.

coylemj

Samuel T. Cogley wrote: »

On the car loan we were told that even if we pay it off early we'll still pay all the interest - does that sound right? Must chase that up with the bank. Loan was arranged by the dealership, it's not PCP.

If it was 'arranged' by the dealer then he got a big kickback in the form of commission. It sounds like a loan where the interest was frontloaded meaning that you will pay the same interest even if you pay off the loan now. So it's not worth paying it off early.

Don't want to say you were ripped off but if you own your own house, you should always arrange your own finance, preferably via your own bank as they have the security of your house and will give you a much better rate than anyone else, especially compared to finance houses who lend via motor dealers.

And most credit unions have far too much cash on deposit so they are mad keen to lend. With a job in the public sector and your own home, they will roll out the red carpet for you. Some of them have so much spare cash that they are capping account balances .....

https://www.independent.ie/business/personal-finance/now-credit-unions-turn-away-savings-35524809.html

Samuel T. Cogley

Thanks coylemj - sounds like it alright. Damn car broke down so we were in a pickle at the time, I'll let it just tick over as I'm sure it's front loaded.

Henry Ford III

coylemj wrote: »

If it was 'arranged' by the dealer then he got a big kickback in the form of commission. It sounds like a loan where the interest was frontloaded meaning that you will pay the same interest even if you pay off the loan now. So it's not worth paying it off early....

There's no evidence to support any of that.

p.s. OP ask the finance house for a settlement figure.

AndrewJRenko

Henry Ford III wrote: »

There's no evidence to support any of that.

p.s. OP ask the finance house for a settlement figure.

Could just have been an ordinary fixed rate loan.


But yes, asking the finance house for a settlement is good. OP also needs to understand the basis of the loan to understand if there is any benefit arising from repaying early.

coylemj

coylemj wrote: »

If it was 'arranged' by the dealer then he got a big kickback in the form of commission. It sounds like a loan where the interest was frontloaded meaning that you will pay the same interest even if you pay off the loan now. So it's not worth paying it off early.

Henry Ford III wrote: »

There's no evidence to support any of that.

Sorry that I can't produce a signed confession. So of course there is 'no evidence'. Are you suggesting the sales guy did not get any commission for arranging the finance?

On the interest, the OP said.....

we were told that even if we pay it off early we'll still pay all the interest

If that isn't a loan involving front loaded interest, what would you call it? If it was simply a fixed interest loan, there would be an exit option with a penalty. But the OP says he would have to pay all of the interest to exit the loan.

NIMAN

Are you sure you'll have an inheritance of X value?

What if your parents have to go into sheltered accommodation? Does the Gov not need their property/assets as payment?

Henry Ford III

coylemj wrote: »

Sorry that I can't produce a signed confession. So of course there is 'no evidence'. Are you suggesting the sales guy did not get any commission for arranging the finance?....

If that isn't a loan involving front loaded interest, what would you call it? If it was simply a fixed interest loan, there would be an exit option with a penalty. But the OP says he would have to pay all of the interest to exit the loan.

1/. I've no idea. Nor do you btw.

2/. As I advised the OP should contact the finance house and ask for a settlement figure. Everybody else's figures mean diddly squat.

Samuel T. Cogley

Sorry guys didn't mean to cause a disagreement - I'll check into it. Thanks for all the input.

Samuel T. Cogley

NIMAN wrote: »

Are you sure you'll have an inheritance of X value?

What if your parents have to go into sheltered accommodation? Does the Gov not need their property/assets as payment?

I've been disabused of planning for that. You're right they no doubt would.

BrokenArrows

If you and your wife can put together €500 a month and put it into a private pension fund. At an achievable rate of 5% per year you should be able to accumulate a good fund by retirement age.

If you do manage to get an inheritance then thats icing on top and you can probably retire earlier.

Below is a chart assuming you achieve a consistent 5% return and contribute €500 a month (increased by 2% a year to account for inflation).
This doesnt even take into account pension tax relief on the 500 contribution. So it will be more.