ThatNewGuy
Registered User
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- 67
I have a question regarding my partner’s pension as the end of year documentation came in and having had a look through it I’m not sure what we should do for the year coming (and longer term).
Background - Last year she started a pension with a view to just "getting it going". Her work has a pensions guy but as far as I can tell he is more of a facilitator and deals with the mechanics of setting it up than an in-house adviser.
We went with a passively managed consensus fund at the time as there was no detailed documentation on funds / fees available to take home and she did not know enough to discuss in detail with the guy.
Now however after looking at her end of year documentation I’m a little concerned – there’s a 4% contribution fee on each payment and a 1% annual management fee, which for a passive consensus fund I think seems extremely high??
In terms of the current details, she is early 30’s (for self-preservation I would not disclose her actual age!), she is a higher tax bracket PAYE employee, the company pays no contribution, and she currently puts in only a small amount of just north of €100 a month. There is no previous pension.
I am unsure of what the best thing for her to do now is.
· She could increase it by ~200 this year, but between (what I think are) high charges and lack of company contribution, is that enough to make it “worth it”?
· Is it better to have “something” rather than nothing, even if monthly payments were next to nothing at the time of entitlement?
· If the money would be better saved and the pension stopped, would she be entitled to retrieving the existing contributions?
· The contributions were made when she was in the lower tax bracket, so would returned contributions (if available) be taxed at 20 or 40%?
Additionally if the pension is actually continued, it is likely if children come along sometime in the next few years that she would have a break in employment & therefore payments, for an unknown period of time.
I know places on this forum argue for pensions only commencing around 40 when you're nearing peak earnings and have other things sorted first, but I treat my own pension with the view of getting in early with maximum contribution to avail of extra compounding time. However I'm stuck in indecision with my partner's pension largely due to the charges, but also because of a lack of company contribution and potential gap in contributions in a couple years - any thoughts would be much appreciated!
Background - Last year she started a pension with a view to just "getting it going". Her work has a pensions guy but as far as I can tell he is more of a facilitator and deals with the mechanics of setting it up than an in-house adviser.
We went with a passively managed consensus fund at the time as there was no detailed documentation on funds / fees available to take home and she did not know enough to discuss in detail with the guy.
Now however after looking at her end of year documentation I’m a little concerned – there’s a 4% contribution fee on each payment and a 1% annual management fee, which for a passive consensus fund I think seems extremely high??
In terms of the current details, she is early 30’s (for self-preservation I would not disclose her actual age!), she is a higher tax bracket PAYE employee, the company pays no contribution, and she currently puts in only a small amount of just north of €100 a month. There is no previous pension.
I am unsure of what the best thing for her to do now is.
· She could increase it by ~200 this year, but between (what I think are) high charges and lack of company contribution, is that enough to make it “worth it”?
· Is it better to have “something” rather than nothing, even if monthly payments were next to nothing at the time of entitlement?
· If the money would be better saved and the pension stopped, would she be entitled to retrieving the existing contributions?
· The contributions were made when she was in the lower tax bracket, so would returned contributions (if available) be taxed at 20 or 40%?
Additionally if the pension is actually continued, it is likely if children come along sometime in the next few years that she would have a break in employment & therefore payments, for an unknown period of time.
I know places on this forum argue for pensions only commencing around 40 when you're nearing peak earnings and have other things sorted first, but I treat my own pension with the view of getting in early with maximum contribution to avail of extra compounding time. However I'm stuck in indecision with my partner's pension largely due to the charges, but also because of a lack of company contribution and potential gap in contributions in a couple years - any thoughts would be much appreciated!