# Completely clueless about pensions so looking for advice.



## loukkcat (10 Dec 2009)

I am turning 30 in a few months, and really feel I should start a pension but am totally clueless as to where to even start.

I worked in the public service for 9 months and had a pension paid for me which  I duly cashed in when I left (it was part of north/ south pension scheme which apparently is a really good one). Other than that, have never had a pension.

Should I talk to a financial advisor? Where do I even look to start one?  

Around how much a month is normal to pay in for someone my age? Do you base it on a % of income or just a lump sum? Would it be set up by my employer or do I pay it separately myself? We definitely don't have a scheme in work with anyone.


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## Protocol (10 Dec 2009)

*Re: Completely Clueless*

I advise you to change the title of the thread to make it more relevant.

I assume you work in Ireland, and that you pay PRSI??  This means you are part of the State pension scheme.

You say there is no occupational pension scheme where you work?  That's a pity.

As far as I know, your options are to start a PRSA pension via your employer's payroll, or start a PRSA yourself.


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## Protocol (10 Dec 2009)

*Re: Completely Clueless*



loukkcat said:


> Around how much a month is normal to pay in for someone my age? Do you base it on a % of income or just a lump sum?
> 
> Would it be set up by my employer or do I pay it separately myself?
> 
> We definitely don't have a scheme in work with anyone.


 
How much to contribute is up to you.  In occupational schemes, employees often pay 5-10%, with employers contributing the same.

An employer is not obliged to offer an occupational pension scheme, but is obliged to offer access to a personal PRSA pension scheme.  They do not have to contribute.


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## Brouhahaha (10 Dec 2009)

*Re: Completely Clueless*



loukkcat said:


> We definitely don't have a scheme in work with anyone.



I thought employers were legally obliged to have a scheme (but not obliged to contribute).

Anyway if you need to set one up yourself  is regarded as a low cost option. Similar pensions can be set up with banks etc.


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## loukkcat (11 Dec 2009)

*Re: Completely Clueless*

Thanks a million! Will look into it, and ask in work a bit more. We're a tiny company, only 5 full time staff, so not much of a set up for anything!


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## GSheehy (11 Dec 2009)

*Re: Completely Clueless*



loukkcat said:


> We definitely don't have a scheme in work with anyone.


 
Have a look at this regarding Employers Obligations on PRSAs


GS


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## eirefinq (2 Jan 2010)

*Re: Completely Clueless*

just thought i would throw this out there - if you are starting now and want to retire at say, age 60. You have 30 years to contribute to a pension fund. If you want a yearly pension of say €15,000 for say 20 years (to age 80 for example) you will need a fund of €300,000 by the age of 60. So if you have 30 years left to work, you will need to contribute €833 gross per month, if you leave it for 5 years you will have to pay €1,000 gross per month. If you had started 5 years ago it would be costing you €714 gross per month. The quicker you start the better, I'd recommend you go to an insurance broker who will provide you with advice on the best offerings in the market.


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## Complainer (2 Jan 2010)

*Re: Completely Clueless*

You might want to post details of your overall financial situation. It may not make much sense to tie up money until your retirement age, if you are going to need that money for a house or family or starting a business.


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## PyritePete (4 Jan 2010)

*Re: Completely Clueless*

I agree with Complainer to an extent. I have decided not to have a PRSA pension plan at all even with the 3% employers contributions. AFAIK you will pay 25% tax on whatever lump sum you accumulate at the end and the balance i.e. 75% you either have to re-invest it or if you dont then you pay tax on this too. You will hear about the tax relief on pensions blah, blah.

Taking eirefing's example if you/I had 833 euro to put towards a pension, why bother ? Is this money better used paying off the mortgage quicker ?? That's our plan anyway and then work mortgage free for some years and save this instead.

It's a gamble alright either way...Good luck with whatever you decide.


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## shaking (4 Jan 2010)

Pensions are the most tax efficient way for saving the obvious drawback is you can't access the funds until your retirement age. If you want to save €100 a month in the bank you have to physically hand them €100, if you put €100 into your pension it costs you €59 (higher rate tax payer) or €80 (lower rate tax payer) you also get PRSI relief on your contribution.

Based on eirefinq's figures the €833 per month would cost you €341 net (not accouting for PRSI relief). I'm not suggesting this is what you should pay, the max amount you can get tax relief on is based on your age and income.  Alot of people would start out paying 5% -10% of their salary and increase it when they're older and have less outgoings.  The amount you pay should definitely be linked to your salary so when your salary increases so does you contribution, the aim is to retire on a % of salary so you should contribute a % of salary.

At retirement you can take 25% of the value of your fund tax free (personal pensions and PRSA).  All gains on your funds grow tax free, no DIRT or Capital Gains to pay.  So if you are putting away money for your future the tax advantages make it way more sensible to use a Pension other than a bank account.

Hope that helps!


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## PyritePete (4 Jan 2010)

have a look at this, as it seems like its a PRSA you need

[broken link removed]

Look at page 24, I got this wrong - 25% of your lump sum is tax free.

I met with a broker and discussed all financial aspects with him, I would advise you do the same


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