# Am I Contributing Enough?



## borisWA (17 Dec 2007)

Hi,

My employer is in the process of changing pension providers, and this has gotten me thinking about my pension and whether i am paying enough ?

I am 29 with Pension contributions of 6% which is matched by my employer [6%]

I am also contributing an additional 2% as an AVC.

I have 4 years worth of a fund, that I am transferring into this pension scheme [approx25k]

If I am looking to hit the magical number of 66.67% of final salary as pension should I start to up my contributions.

I should add that I am married, home owner[approx 80k equity] with some other savings but nothing of note - approx 2k.

My wife is also 29 - but yet to really start contributing to a pension fund.

Pension options available through employer - couple of Irish Life Funds, Eagle Star Balance, International Equity, and 5*5 Global fund. 

Was leaning to the 5*5 fund due to my age etc ?

Any help/comments greatly appreciated !!


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## LDFerguson (18 Dec 2007)

Have a look at the Pensions Board's calculator here.


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## MMilken (19 Dec 2007)

As long as you are paying higher rate tax on marginal income, it could be worthwhile contributing more to your AVC (within personal contribution limits).

For someone your age, a total contribution of about 30% of salary should get you close enough to revenue maximum (this should be reviewed every few years).

The fund choice sounds good.

5 * 5 funds are good funds, but in my view too concentrated (just 25 stocks) for your entire pension fund...if you were to spead over the four 5 * 5 funds it might be OK, but just using one of them would seem high risk to me.


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## borisWA (19 Dec 2007)

Thanks MMilken !

Am thinking of uping my contribution [AVC's and company contribution included] to 17%

That is the figure that Liams calculator [Liam - Many thanks for that] suggested that I need to be contributing.

There are a number of funds available with the Eagle Star range - am thinking now of putting 65% in a balanced fund, with 25% in international equity and the remainder in the 5*5 fund. [These are the three funds available from Eagle Star].


Thanks for all help and comments - Happy Christmas to all !


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## MMilken (19 Dec 2007)

Sounds like a better investment mix - best of luck with everything!


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## asdfg (19 Dec 2007)

Bear in mind that the calc is based on your current salary allowing for inflation. 

What happens if you get a promotion or hopefully a few promotions or change jobs with increased salary along the way. 
What happens if you want to retire at say 55. 

To overcome this it might be worth contributing a little more now 

Also bear in mind that the calc incl the state pension. Revenue allow you to take 66.66% of final salary and the state pension.


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## IrlJidel (19 Dec 2007)

MMilken said:


> For someone your age, a total contribution of about 30% of salary should get you close enough to revenue maximum (this should be reviewed every few years).



Is that correct? OP is 29 so can only contribute max 15% (including employer contrib if it's a prsa)

 Under 30: 15%
 30 to 39: 20%
 40 to 49: 25%
 50 to 54: 30%
 55 to 59: 35%
 60 and over: 40%


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## ClubMan (19 Dec 2007)

IrlJidel said:


> Is that correct? OP is 29 so can only contribute max 15% (including employer contrib if it's a prsa)


Those limits only dictate what amount qualifies for full tax and _PRSI_/health contribution relief. They are not hard limits on total pension contributions. Also for a (non _PRSA_) occupational scheme the employer contribution is not included when calculating if the limits have been (b)reached. You can contribute more than the amount that will qualify for tax relief but in most cases it probably doesn't make sense.


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## LDFerguson (19 Dec 2007)

These age-related limits apply to employee contributions only.  In an Occupational Pension Scheme an employer can contribute additional amounts on top of these employee maxima.  On PRSAs, tax relief is limited to these percentages for the combination of both employer and employee contributions.


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## ClubMan (19 Dec 2007)

And it looks like the original poster may well be talking about a non _PRSA_ occupational scheme.


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## MMilken (19 Dec 2007)

IrlJidel said:


> Is that correct? OP is 29 so can only contribute max 15% (including employer contrib if it's a prsa)
> 
> Under 30: 15%
> 30 to 39: 20%
> ...


 
As a few posters have pointed out...the Revene Maximum Contribution limits are not the contributions required to achieve a 2/3rds pension.


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## borisWA (19 Dec 2007)

The scheme that I am talking about is a Company Pension Scheme - not a PRSA.

All comments gladly welcomed - we have been hit with an information overload situation on the new pension on offer - I am reasonably interested and know something about the subject matter - but to me it appears that the scheme offers the ulimate in Pick and Mix with 9 seperate options and % allocations with each scheme.

From doing some further reading and taking on board the comments here , I have decieded on the international equity and Balanced fund - probably in a 35/65% split going forward. I will invest the fund to date in the balanced fund. Really wish the Dynamic fund was available !!

Will up my AVC's so that approx 17%[including company contrib] will be hitting my fund.

Whether that is enough or not we will have to wait and see. 

I assume that this should be reviewed every year and I am assuming that the contributions will increase as my salary does[hopefully].


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## LDFerguson (20 Dec 2007)

Assuming you turn 30 in 2008, you can increase your contribution to a total of 20% (exclusive of your employer's contribution) for the full year if you want.


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## MarkW050965 (9 Jan 2008)

I can see I'm a rank novice here.  Can you clear up whether the 'x% of salary' refers to gross or take-home salary...


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## ClubMan (9 Jan 2008)

Gross.


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## asdfg (10 Jan 2008)

basically it your p60 gross figure for the year which includes BIK


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## ClubMan (10 Jan 2008)

asdfg said:


> basically it your p60 gross figure for the year which includes BIK


Not if you are already making pension contributions via payroll since your _P60_ figure will be net of these!


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