pension for self employed

yankinlk

Right, looking for a bit of pension advice. I am currently unemployed/self employed. The last two years I have put it off thinking no point in starting a personal pension when i might get a job where an employer contributes.

But Im 30, and no point in waiting for the tiger to come back. But here are my issues:

1. I was told by boi that i cannot start a personal pension then switch/transfer to an employer based one down the line. it was my understanding that after two years i could do that (maybe thast an american rule?)

2. advice needed on percentage of income at 30 i should be investing.

3. any other helpful advice you might throw my way regarding pensions in ireland.

(any chance of a sticky for sites related to this? or is this the wrong forum)

cheers.

Vexorg

Long time since I have been involved in pensions and there have been a number of changes in legislation over the last couple of years.

I suggest you ring a couple of insurance companies and ask to speak to a pensions specialist. Explain that you are self employed and may, at some future date, be employed, with your employer making contributions.

Your problem is that you do not want to make contributions to a personal pension for a couple of years and then join an employer sponsered scheme and find that you cannot transfer the value of the personal pension or suffer high charges for stopping early.

There was a lot of talk about portable pensions over the last 10 years with the increase in contracting work. The idea was to have a pesions plan that could change from self employed to employed and from employment to employment. ITs a technically difficult plan to operate especially for employers, it may not a happened or may be available with a limited feature set.

If you do go for a personal pension make sure you get a plan where the charges are spread over the life of the policy instead of up front charges. you should be able to get a contract that invests at least 95% of you contributions every year.

If it were me I would start by ringing, Irish Life, Friends First, Eagle Star and Hibernian, ask questions about self employed pensions and employer sponsered pensions, ask them to send you a quote for say eur 100 per month and also for what the maximum allowable self employed contribution is.

Ask them to quote you for the Maximum allowable pension at retirement age 60, ie what would you need to invest today to get a maximum pension at age 60, they will tall you you can only do that in an employer sponsered scheme, (this may have changed in the last few years) if they do, explain that it is for comparison purposes only. You will be horriified at the cost, unless you are extremely well off.

Ask for any brochure,they have also. By trying all four companies, you will find at least one person who genuinely knows what they are talking about, and hopefully 4 good people.

Good luck and let us know how you got on. Try not to ring at lunch time, there is a good chance you will get one of the less experienced advisors:)

Let us know how you get on and if you come up against any problems.


Vex.

RainyDay

Hi Yanklink - Thanks for your kind comments in the other thread. Pensions aren't really my area of expertise, but I'll make a stab at it. You'll find the real pension experts at askaboutmoney.com's Pension's forum if you have further queries.

was told by boi that i cannot start a personal pension then switch/transfer to an employer based one down the line. it was my understanding that after two years i could do that (maybe thast an american rule?)

I think BOI are right to tell you that you can't switch the funds from your personal pension to an employer pension. However, there is nothing to stop you contributing to a personal pension now and then contributing to an employer pension in the future. The funds you've put into the personal pension would just sit there (and hopefully grow) until you retire. The 'two year' rule applies to moving funds from one employer pension to another.

2. advice needed on percentage of income at 30 i should be investing.

How long is a piece of string? Of course, the more you can invest, the more comfortable your retirement will be. You should also think about how much you can afford to invest.

ny other helpful advice you might throw my way regarding pensions in ireland.

1. Don't fall into the trap of believing the 'beware of the big drop' ad's. The financial institutions make huge money on pensions, hence the heavy advertising. You should only invest as much as you can afford.
2. Beware of BOI and most of the other banks. They are usually 'tied agents', i.e. they only offer pensions from one provider. Go to an independent agent who can offer pensions from a range of providers (like www.ferga.com or www.myadvisor.ie)
3. Beware of commission based pensions. These will take a slice of your ongoing contributions each time. You are usually better off with a fee-based contract, where you pay the advisor a fixed fee up front to setup your pension, but he doesn't get any commission from your ongoing contributions.
4. Don't put money into a pension if you're struggling to buy a house or pay off other debts or you haven't maximised your SSIA contributions. See Pensions chapter of the Guide to Savings & Investment (written by Brendan Burgess of askaboutmoney.com) for more details.

yankinlk

will do. boi is not on your list...is that for any reason?

prsa's are what u speak of i think, and they arent here yet;
http://www.e-insuranceireland.com/pensions/prsa.asp

hopefully i can transfer a personal one into them when they do arrive, they sound like the best deal for me.

thanks for the advice, i will try what you have suggested. great idea for doing comparisons.