Older public servant

[Paddylast]

Having worked in the public service for the last 9yrs part-time- worth 4.5 yrs in pension terms. I want to end my AVCs to March and instead use this money to purchase notional years of service. I'm looking at transferring a small British based pension to my public service one. I have been informed by the Dept of Finance that the estimated TV value is 7.3 yrs to retirement age of 65yrs but they cannot tell until the actual transfer takes place how much service I can purchase.

My questions is:
a) does this TV above 7.3yrs mean I would effectively have 11.8yrs public service (4.5yrs at present plus the TV 7.3yr) in total and that the number of years I could purchase will be based on this higher figure?

b) Would I be better off leaving my British pension in place and drawing down on it in 2 yrs time at age 60 and use this money to fund my AVCs

Hope someone can provide some advice.

 

[oysterman]

a) does this TV above 7.3yrs mean I would effectively have 11.8yrs public service (4.5yrs at present plus the TV 7.3yr) in total and that the number of years I could purchase will be based on this higher figure?

Don't quite understand. If it buys 7.3 years at the time of purchase that will enhance your pension by 7.3 years at age 65. There will be no further "purchase" at that stage (unlike what you could do with your AVCs which would be to buy some superannuation at that stage, based on the then value of your AVC fund).

By the way, I'm interested in your description of your UK pension as "small". For a small fund it seems to be buying a lot of notional service (which usually looks expensive when the cost is quoted as a lump sum).

b) Would I be better off leaving my British pension in place and drawing down on it in 2 yrs time at age 60 and use this money to fund my AVCs

Who knows?:
(i) Sterling's not great at the moment so it may not be a smart time to move your sterling pot home.
(ii) If you prefer notional service to AVCs (which your post indicates), should you not use the income from your UK pension to buy NS (and not AVCs) on an ongoing basis?
(iii) Would you like the security of having a UK pension separate to your ROI one?
(iv) Can you get a higher UK pension if you postpone drawing it down until 65 when you draw down your Irish one?

 

[Paddylast]

Thanks Oysterman for you help with this.
Just to explain a little better (I hope). The fact that I have so little service means I cannot purchase notional service unless I have 7 full years completed. The fact that I work part time reduces my working time to half a year for pension purposes i.e.4.5 yrs. The idea of the TV was to help make up the years from 4.5 to at least 7yrs in order to buy NS. I would probably still only be able to purchase at the most 3 or 4 years service. I thought I could then use my AVC money to purchase these years. To quote from the letter from the Dept it states

"the estimated service value of the TV available to you is 7.3789 years for retirement at age 65.. As regards purchasing service it will not be possible to determine how much service you may purchase until the TV has been receive and definitively valued".

In relation to the "small" Uk pension...it was valued at 69,500 sterling for TV purposes. I only worked for 10 years with that company but the pension is index linked. However,if I was to draw down on it now it would only come to about 300 sterling a month. So that's the reason I referred to it as "small".

 

[oysterman]

Paddylast,

Apologies for delay getting to this.

Yours is a really interesting case.

Index-linked is the nirvana of pension plans. So, normally, I'd metaphorically lock you in your house if I thought you were going to go out and trade in such a guarantee.

But if you need that pot to buy notional service......?

I'm second to nobody in my regard for notional service. But would I trade in an index-linked pension for one?

It all depends on the maths.

How much do you anticipate your salary will grow between now and retirement (in real terms)? How much pension would that UK pot deliver? How much do you think the notional service will get you?

It sounds like you need professional advice. But please be sure that anybody you engage understands public service pensions and notional service; all too often it seems that advisers havn't a clue about these.

Best of luck with your decision. Please let us know what you do and how you sort it.