# Contract Employee currently working in Public Sector in need of a Pensions Primer.



## dellas1979 (29 Apr 2009)

I have been looking up about pensions for a couple of days now (including this site) and am still as confused as when I started.

A few things about me:

I currently work in public sector. I pay a tiny contribution a week to a pension (plus spouse and child-I have no children as of yet anyways). I am on contract there so anything could happen. I am interested in a personal pension. I can afford to contribute about €100 a month (I hope for the next 30-35 years). I dont know if I will ever need to dip into this (I hope not but who knows).

A few questions:

1. Once I pick a certain type of pension plan, so I have to stick with it? What if in, for example, 5 years I see something better/I prefer more?

2. What would €100 per month be in 30-35 years?

3. Do you just go and pick a pension yourself or are there certain places you go?

4. What happens if you die/get ill/loose your job and cant make any payments?

5. Is now a safe time to invest in one?

6. Is there a chance of loosing it all?

Thanks and sorry if some of the questions seem silly but I think there might be other people out there with similar questions.


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## StevieC (30 Apr 2009)

*Re: Pensions 101*

Hi

Heres some answers that might help you.

1) You dont have to stick to a personal pension. You can make it "paid up" by stopping contributions and start another one.

2) No one knows what 100 euro a month will be worth in 30-35 years as there are too many factors involved. Plan charges, investment performance etc. You would need to decide on what type of plan you were to invest in before any financial advisor could give you a quote (guess-ta-mit) at what the plan would be worth in 30-35 years, using assumptions on average growth that no one can guarantee.

3) You can purchase pensions from individual life companies but I would recommend that you talk to an independent broker who can talk to you about your risk adversness and recommend the best type of plan/company to invest with.

4) If you die then the value of your fund goes to your estate. If you become ill and cant afford to make contributions, simply take a premium holiday or make the plan paid up.

5) It depends on what you invest in. In my own opinion I think its fine to invest in gilts/bonds at this time but I wouldnt recommend equities until the markets regain some form of normality.

6) Every investment has a chance to lose money but by investing in more secure funds, you decrease this likelyhood. Stay away from equities at the moment if you dont want to risk losing money.

You mentioned dipping into fund, please note that you will not be able to touch the pension fund until retirement. Pensions are not savings plans and you cant just take money out of them whenever you feel like it.

Hope this helps. Find a reputable independent broker in my opinion before investing in anything.


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## Protocol (1 May 2009)

*Re: Pensions 101*

NB: you may not contribute to a separate personal pension while a member of an occupational scheme.

You may do AVCs, instead.


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## StevieC (5 May 2009)

*Re: Pensions 101*



Protocol said:


> NB: you may not contribute to a separate personal pension while a member of an occupational scheme.
> 
> You may do AVCs, instead.


 
If OP has a separate source of income then they can take out a personal pension on that income. If not go the AVC route as Protocol suggests.


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## ajapale (5 May 2009)

*Re: Contract Employee currently working in Public Sector in need of a Pensions Primer*

Hi Dellas and welcome to AAM!

I was going to move your question to the public pensions sub forum but have decided to leave it in the general (private sector) forum while I ask some questions.

1. Is it fair to say that you work short to medium term contracts and alternate between the parts of the public sector and the private sector?

The public sector schemes are designed for life time employees. Those employees with 40 years up and retiring on a high salary do best. Unfortunately employees with broken or low service or who are on low basic wages do not do merely as well.

So if you intend spending a long part of your career with this Public Sector organisation and intend retiring on a relativly high salary then the Occupational DB scheme is good option. You should investigate the possibility of notional purchase of additional years if you do will not have the full forty years clocked up at retirement.

If on the other hand you spend a few years here and a few years there in and out of various public and private sector schemes then Im afraid these DB schemes are not good for you. If I were in this situation I would investigate setting up an AVC which would be portable and maintaining this through your various employments.

What part of the public sector are you currently in? The civil service, the broader public service (HSE, Guards, LA's, Defence Forces, Prison Service, Fas etc) or the commercial semistates (ESB, Bord Gais, etc.).

aj


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## dellas1979 (6 May 2009)

*Re: Contract Employee currently working in Public Sector in need of a Pensions Primer*

Thanks for the replies. I think this site is great!!!

I work in an educational institution. It is no where near what I trained for but a job is a job. Suffice to say I would love to work in industry but jobs are limited. That is to say if I left public sector in 2 years, maybe in 5 I may find a job there again. Maybe in August my contract wont be renewed. I just dont know. All I know at the moment is contract is up in August but I am determined to try and start some sort of a meaningful pension. At the moment I contribute about €7 a week. I am not even sure if I left would be entitled to take it with me.

Can you please explain what an AVC is?

Thanks again.


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## StevieC (7 May 2009)

*Re: Contract Employee currently working in Public Sector in need of a Pensions Primer*

It stands for Additional Voluntary Contribution. If you are a member of an occupational group scheme then its possible to take out an AVC policy in order to make further pension contributions over and above the normal contributions you make to the occupational scheme.


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## dellas1979 (19 May 2009)

*Re: Contract Employee currently working in Public Sector in need of a Pensions Primer*

Hi ok, to revive this thread. Ok basically I had a chat with some of my work mates and they reckon an AVC is something that you pay into as part of public service-like buying back part of pension-but this is not what I want.

I am looking for a pension that is private to me and that has nothing to do with public sector. I just want to pay into pension every week/month no matter where I work.

So, sorry still confused as to what I should be looking for.


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## Protocol (20 May 2009)

*Re: Contract Employee currently working in Public Sector in need of a Pensions Primer*

If you are a member of an occupational pension scheme, then you can not also contribute to a personal private scheme.

You appear to be a member of a public sector occupational pension scheme.  You should get more info on that.

Your options are as follows:

1.  buy notional service to enhance your public sector occupational pension

2.  contribute to an AVC to enhance your public sector occupational pension

3. contribute to an AVC PRSA to enhance your public sector occupational pension

I'm not an expert, but might option 3 be the best if you may have different employers in the future?


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## Protocol (20 May 2009)

*Re: Contract Employee currently working in Public Sector in need of a Pensions Primer*

Please note: if you have other incomes, e.g. wages from a different job, in the private sector, then that would allow you to have a personal private pension.


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## dellas1979 (22 May 2009)

*Re: Contract Employee currently working in Public Sector in need of a Pensions Primer*

Gosh so am caught because I work in public sector. I am contact there. It ends in August. There is no point in having an AVC as in 3 months I may not be working there!!! Are there any alternatives to pensions or any other ideas what I could do? Can you see my dilemma?


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## ajapale (22 May 2009)

*Re: Contract Employee currently working in Public Sector in need of a Pensions Primer*



ajapale said:


> What part of the public sector are you currently in? The civil service, the broader public service (HSE, Guards, LA's, Defence Forces, Prison Service, Fas etc) or the commercial semistates (ESB, Bord Gais, etc.).
> 
> aj



The public sector is very large and wide ranging. You may have a lot more scope if you work in one of the commercial semistates for instance.


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## Galwaygirl (22 May 2009)

*Re: Contract Employee currently working in Public Sector in need of a Pensions Primer*

Why don't you start putting money into a high interest account until you find out what is happening with your contract. If it is renewed you can start to look at AVCs etc. The PS pension is not really geared up for people who are not in the PS for 40 years, I guess historically they were jobs for life. If it is not renewed the next job may also have a pension scheme or may not in which case you can start looking at private pensions. 
I know what you mean when you say you want a pension that you can pay into no matter where you work - the way pensions are set up means you either end up with lots of bitty pensions and can't get a meaty pension going unless you know you will be hanging around in a job for a worthwhile period of time. Hope the contract renewal works out to your advantage whatever way it goes!


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