# Views on financial position



## Oakkea (7 Mar 2021)

Age:45
Spouse’s/Partner's age:49

Annual gross income from employment or profession:100K (including Bonus)
Annual gross income of spouse: 50K

Monthly take-home pay: 7K after max pension contributions

Type of employment: e.g. Civil Servant, self-employed        Both of us in Private Sector

In general are you:
(a) spending more than you earn, or
(b) saving?     Saving 

Rough estimate of value of home: EUR 380K
Amount outstanding on your mortgage: Nil
*What interest rate are you paying? N/A*

Other borrowings – car loans/personal loans etc      None

Do you pay off your full credit card balance each month?    Yes
If not, what is the balance on your credit card?

Savings and investments:  
€ 110K  Government Savings Bonds (includes children's allowance)
€ 40K BOI Fund
€ 145K in savings account (following covid crisis sold shares in March 2020)
€   60K in shares in both employer companies
€   20K in another savings account






Do you have a pension scheme? Yes 1 defined benefit own by partner earning 50K & 1 defined contribution (€200K current value)

Do you own any investment or other property? No

Ages of children:   11 and 8 years

Life insurance: Yes with both employers

Partner on 100K (aged 45) considering taking time our for childcare purposes (circa 1 year) and possible returning on a reduced salary also wants to retire at 60.
Looking into doing some home improvements to the value of €100K
Currently saving €1500 monthly plus children's allowance

Questions:

What should we be doing to make life a little easier on ourselves and to ensure financial security in future?
What investment opportunities should we seek with savings balance (after potentially spending € 100K in home improvements)?  Both partners quiet risk adverse but perhaps we need to change this!


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## NoRegretsCoyote (8 Mar 2021)

You have a good income, mortgage paid off, and lots of savings. This is great.

But as a couple your pension fund is pretty low as a ratio of income for your age. You basically have €300k in cash sitting doing nothing.

Your spouse could set up a pension fund too to take advantage of tax relief. You could even add to your own fund despite no further tax relief. Tax free growth in equities should do better than cash on deposit over the next 25-30 years.


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## Oakkea (13 Mar 2021)

Thanks NoRegretsCoyot - to clarify partner earning EUR 50K has a Defined Benefit Pension scheme which by retirement age will meet spouse's retirement needs.


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## NoRegretsCoyote (14 Mar 2021)

Oakkea said:


> to clarify partner earning EUR 50K has a Defined Benefit Pension scheme


You didn't need to clarify.

I still think that as a couple you are under provisioned.

Your spouse may still be able to make tax-relieved pension contributions to a PRSA.

I think this would be the most tax-efficient use of your wealth.


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## ginslia (15 Mar 2021)

For the partner with the DB scheme - it may still be worth contributing to AVCs if they haven't maxed out their contributions.
Usually the DB scheme offers a pension of [2/3 salary] OR tax free lump sum + lower pension (check annual statements for actual amounts offered).  Where you have AVCs to cover the lump sum (up to 150% salary), it can be taken from here, preserving the higher pension from the main DB scheme.


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## asdfg (16 Mar 2021)

ginslia said:


> Usually the DB scheme offers a pension of [2/3 salary]


Having worked for 40 years. Usually 1/40 of final salary for each year worked or 1/40 of salary at end of each year then all years added to give total salary. Percentage of State pension is then deducted to give a final pension. This should be explained in your annual benefit statements. If you take a tax free lump sum the pension is reduced.


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## TheLastBeep (16 Mar 2021)

I could be wrong but I think the normal accrual rate is 1/60th per year for most schemes. Meaning 40/60 or 2/3 final salary after 40 years. Fair play if you are on a scheme that accrues at a rate of 1/40th!


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## asdfg (16 Mar 2021)

TheLastBeep said:


> I could be wrong but I think the normal accrual rate is 1/60th per year for most schemes. Meaning 40/60 or 2/3 final salary after 40 years. Fair play if you are on a scheme that accrues at a rate of 1/40th!


Sorry stupid me meant to say 1/60th per year in prev post. Tired when posting late at night


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## ginslia (16 Mar 2021)

Gotta watch the T&C on the DB schemes.  Some older ones are Final Salary schemes, others are Career averaging, and then there's the hybrid where the rules changed at some point during your service.    Also worth checking whether it is Integrated with the state pension - which may affect the net amount paid out OR the calculation of scheme salary to begin with.  Ask the trustees for a plain English explanation of how it works for you, and read together with the annual statements to make real sense of it all.


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## Oakkea (8 Apr 2021)

Thanks all for the advice, we have taken it on board and adjusted pension contributions accordingly.


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