# Current/Future pension value in real terms if no further contributions made ?



## meadow (1 Jun 2010)

Hi

I am 43 and will probably be made redundant in the next few months,

 I have worked so far in a niche area where there are few jobs and one option we are considering is that I may end up staying at home to mind our 2 young kids while my partner continues to work.

We believe with some cutbacks we can manage long term on my partners salary plus some savings (but time will tell on this).

I am wondering what my current pension fund will be worth in real terms when it comes to retirement age,

I think I have been fairly OK at maximizing pension contributions and AVCs to date and have paid a lot into the fund so far.

My current pension fund stands at 260k as of April 2010.

If I was to make no further contributions to this fund, can anyone tell me what kind of income this would provide when I draw this down at retirement age ?

What yearly pension could I expect to get from this assuming average growth rates over the next 20 odd years ? 

Figures in todays value would be great,

ie this would be equivalent to an annual pension of 5k,10k 15k or whatever in todays terms if you were to leave it as is and then draw it down at age 65.

Hope this is clear

Many thanks for any insights


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## Gervan (1 Jun 2010)

Very, very roughly, and assuming growth = inflation over the next 22 years, a male on retirement at 65 is offered about 6% of the amount saved, as an income, which would be about €15,600. 
There are so many variations depending on whether you take a tax-free lump sum, want a joint pension, guaranteed etc.


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## meadow (2 Jun 2010)

Thanks for that Gervan. This was what I was looking for,

I know yours was a very rough estimate but armed with the 6% figure , I did some more playing with figures.

according to pensionprophet, 260k would be worth 490k in 2032 assuming annual growth rates of 4%  (3% growth and 1% management fee taken into account).

This could roughly correspond to an annual income of  29,400 (based on 6% estimate)

According to an inflation calculator I found then this would be worth 17,400 in todays terms (though this assumes US inflation rates as I couldn't find a calculator with Irish rates).

I looked at the DSW website and think I would also qualify for the contributory state pension as I have full PRSI contributions for the last 21 years  (assuming the rules for qualifying don't change between now and 2032!)

Can both myself and my partner claim the contributory state pension if we have sufficient credits.

This would in effect mean we could draw down 4 pensions ?

My DC contribution income of ~ 17k as calculated above
My contributory state pension income
My partners DB pension income (public servant)
My partners contributory state pension income

or are there rules/means testing on how many pensions a couple can draw down ?


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## Berni (2 Jun 2010)

meadow said:


> My partners DB pension income (public servant)
> My partners contributory state pension income



As a public servant your wife can't claim the contrib state pension.
If she is pre 95, she won't be paying a qualifying class of PRSi, and if she is post 95, her DB pension will be co-ordinated with the state contrib one, so it is already taken account of in her rate.


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## meadow (2 Jun 2010)

Berni said:


> As a public servant your wife can't claim the contrib state pension.



Thanks for that Berni, I was not aware of that.


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## Gervan (2 Jun 2010)

There are changes proposed for qualifying for the full State pension. Make sure you keep up your annual voluntary PRSI contribution, even if you are not in paid employment, to give you the best shot.


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## meadow (2 Jun 2010)

Gervan said:


> There are changes proposed for qualifying for the full State pension. Make sure you keep up your annual voluntary PRSI contribution, even if you are not in paid employment, to give you the best shot.



Thanks Gervan

That is really useful information that I was not aware of,

I was a bit worried that if the rules for the contributory pension change then I may no longer qualify as I am kind of borderline on credits at the moment (as far as I recall when I looked into it a few months ago)

I did not realize I could make voluntary contributions to top up my PRSI

More importantly when I looked this up I saw that I could also apply for the homemakers scheme which could also cushion the effect of any changes that might make it harder to qualify,  as it ignores the 12 years that you are caring for children

Really useful pointers, 

Would you recommend to apply for the homemakers scheme now and then top up with PRSI contributions in 12 years time (our youngest is 8 weeks), in order to give the best shot

Or should I continue with voluntary contributions for the duration of the homemaker scheme as well (though not sure if this is allowed/advantageous)


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## LDFerguson (2 Jun 2010)

[broken link removed]


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## JoeRoberts (4 Jun 2010)

I reckon that by the time you reach retirement age the state will have means tested the contributory state pension because they won't be able to afford the pensions.
They will justify it by saying that people who have a private pension already got tax breaks on it.
Just my thoughts - keep it in the back of your mind, nothing is guaranteed, not even from the state.


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