# Pension in your twenties



## Talking Money (9 Jul 2017)

Just a pension health check please. I'm aged 27 and have been part of this pension scheme for the past three years. I'm currently paying into a 50:50 risk sharing scheme, DB Section & DC section. Just to note the Salary Cap is €48,000 - I expect to exceed that salary by 2021 - 2023.   

*Currently these are the figures:*

Basic Salary:  €36,000
Overtime:      €4,000 - 6,000 _(not pensionable I understand)_
Total:            €42,000

Pension:        Enrolled since 24
Employer:     Contributes 8%
Myself:         Contributes 5%
AVC:            Paid 2% AVC for two years, raised it to 6% in January.
Total:           19% combined total.

As I'm earning good money for my age, am I doing the right thing by having an AVC? I understand and accept that I won't see this until retirement.

Also my salary will rise to 40K by December of this year. Instead of increasing my AVC this December I was thinking of increasing my debt pay down by the surplus and building a solid emergency fund.

What would you advise?


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## Brendan Burgess (9 Jul 2017)

Do you own a house? 

Have you paid down the mortgage to a suitable level? 

You should only voluntarily contribute to a pension scheme to the extent that your employer matches it, if you have not yet bought a house.

Save your money outside a pension scheme until you have bought a house and got the mortgage down to a comfortable level.

Brendan


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## Talking Money (9 Jul 2017)

Brendan Burgess said:


> Do you own a house?
> 
> Have you paid down the mortgage to a suitable level?
> 
> ...




Currently renting, but saving with partner for a property that will be for sale in two years, private sale.

Is it not best to let a fund grow with compound interest as other variables like rent, transport and food are well covered for.


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## Brendan Burgess (9 Jul 2017)

Your savings outside the pension will also grow with compound interest!

The bigger your deposit, the better your choice of mortgages and the lower the interest rate you will pay on your mortgage.

Brendan


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## Talking Money (9 Jul 2017)

Brendan Burgess said:


> Your savings outside the pension will also grow with compound interest!
> 
> The bigger your deposit, the better your choice of mortgages and the lower the interest rate you will pay on your mortgage.
> 
> Brendan



Thank you Brendan.

Fair point regarding compound interest, although I won't get tax relief on savings outside pension pot.

Should have mentioned we are saving already, will increase from December.


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## Sarenco (9 Jul 2017)

Paying off expensive consumer debt should certainly take priority over making AVCs.

Beyond that, it's a question of balancing your long-term and medium-term financial needs.


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## Brendan Burgess (9 Jul 2017)

Sarenco said:


> Beyond that, it's a question of balancing your long-term and medium-term financial needs.



Just to be clear putting your savings into a a deposit account is both for your long-term and medium-term financial needs. 

It takes absolute priority over tying it up in an inaccessible pension fund.

Brendan


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## Sarenco (9 Jul 2017)

Brendan Burgess said:


> Just to be clear putting your savings into a a deposit account is both for your long-term and medium-term financial needs.


I fundamentally disagree.

I wouldn't use a taxable savings account for my long-term financial needs (such as retirement savings).  

But a simple savings account is an ideal vehicle for saving for a medium-term objective (such as a house deposit).

Striking an appropriate balance between medium-term and long-term financial objectives is a matter of judgment.  I don't know how you could possibly say that one takes "absolute priority" over the other.


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## Brendan Burgess (9 Jul 2017)

Saving is saving.  The long-term is just a series of short-terms. 

The advantages of owning your own home are so big that this must take absolute priority over everything else.  Buying a home and paying down the mortgage is a great form of long-term saving. 

Brendan


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## Marc (9 Jul 2017)

Brendan,

Sorry, this is nonsense. You can't possibly state that "owning your own home should take absolute priority over everything else"

In Germany or Switzerland it is extremely normal to rent and this provides considerably flexibility in the labour market - a very relevant point for someone in their 20s and possibly more relevant to someone than getting on the housing ladder at all costs, only to find that it's against the wrong wall....


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## Brendan Burgess (9 Jul 2017)

Hi Marc 

With respect, it is not nonsense at all. 

The advantages of home ownership in Ireland are huge. 


No capital gains on any increase in value 

Ignored for any means testing 

Lower borrowing costs that for other asset classes 

Protection if you get into financial difficulty 

No taxation of the benefit. If you choose to rent a property and buy shares instead, you will pay tax on the income from the shares. 
The cost of renting money to buy a property is usually much cheaper than renting property. 

I suspect that they are different in Germany and Switzerland. 

Professional landlords vs. the amateurs we have in Ireland 

Do Germans get tax relief on borrowings to invest in equities? 
I would agree that there is no theoretical reason why owning your own home should be preferable to renting, but in practice in Ireland, it has almost always been the best investment. 

Brendan


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## Talking Money (9 Jul 2017)

Understand what Brendan is saying and some very valid points made, although a mortgage brings huge mortgage interest, challenges of the housing market if need to sell, as mentioned we're working on a five year plan or so as we're still young to invest in a property. I think while we are renting at a very good rate, able to well, and able to save a set amount for a house I'm happy to continue. Agree with Brendan that a home paid for is better than renting long term.

Q1: If I can bring the topic more on track to where I started. Would I be right that my combined 19% into the pension is quite good for this age bracket? and sufficient until at least 30 & home formation.

Q2: And regarding the extra €3,500K raise coming in December. Which I reckon could be an extra €140 per month after tax, how should I allocate that. Increase rainy day fund? begin investing in stock markets, or?

It's a pity that the government don't run another SSIA style scheme.


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## Sarenco (10 Jul 2017)

Q1:  Yes, I think it's a very heathy contribution level for somebody at your age. 

Q2:  if you think you might want to buy a property in five years' time then you will need to save a chunk of cash for the deposit and the various acquisition costs (legal, stamp duty, etc).  The best place to save for this is a regular savings account.

As I said above, it's a question of balancing your medium-term and long-term financial objectives.

Incidentally, I think you have a very good grasp of the pros and cons of property ownership.  The notion that owning your own property "must take absolute priority over everything else" is just daft.


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## Brendan Burgess (10 Jul 2017)

Talking Money said:


> I think while we are renting at a very good rate, able to well, and able to save a set amount for a house I'm happy to continue. Agree with Brendan that a home paid for is better than renting long term.



Hi Talking Money

If you are renting cheaply, then that is a very good argument for not buying a house  now.

But it's still clearly correct to save up as much as possible for your deposit and not make any contribution to your pension scheme which is not matched by your employer.  This is true despite Marc's "nonsense" and Sarenco's "daft" comments. 

I repeat - your absolute priority is to buy a house. You may choose not to do so for 5 years, but it's your priority. The advantages are so huge, that nothing else should be considered. 

In 5 years, after you buy your house, you will be 32 and will still have 33 years to contribute to a pension.

Brendan


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## jjm (10 Jul 2017)

Pension tax breaks could change in the future and need to be taken into account.When I first started paying into my pension I did not have to pay any prsi on the money I paid in ,There is a good chance tax breaks will see a cut once everyone who works has to pay into a pension  by Law.I paid a small amount into an AVC each year since the early eighties best thing i ever did along with (Employer/Employee/Conts All defined benifit) . My AVC defined contributions,Up to 1988 I did not need a big Emergancy Fund that changed when Government changed away from paying 75% of your wages if you were unemployed ,


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## Sarenco (10 Jul 2017)

Hi Brendan

You seem to agree that it makes sense to contribute to a pension scheme if it comes with a matching employer contribution before somebody owns a property.  Right?

Well, if that's the case, how can you simultaneously argue that saving for a house purchase "must take absolute priority over everything else"?  You have already allowed for one exception to your "absolute".


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## Brendan Burgess (10 Jul 2017)

Sarenco

It's very clear from my first post 

"You should only voluntarily contribute to a pension scheme to the extent that your employer matches it, if you have not yet bought a house." 

You and Marc are just regurgitating the conventional "wisdom" of the pensions industry.  It's wrong. It doesn't matter how many of you say it. It doesn't matter how you try to dismiss any challenge to this industry mantra by simply labeling it as "rubbish" or "nonsense", your views are still wrong. 

Talking Money should not be making any contributions to a pension scheme which are not matched by his employer until he has bought a house and got his mortgage down to a comfortable level. He will have still have 33 years to contribute to a pension scheme. 

Brendan


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## blured (10 Jul 2017)

Brendan Burgess said:


> your views are still wrong.



Seems a bit mad to say someone's opinion is wrong? Surely an opinion is someone's held beliefs - Sarenco is not claiming that it is fact in all cases that you should max AVCs instead of saving for a mortgage - just that balancing medium to long term ambitions can be the right way to go.

For Talking Money, I would fall in the middle. I would say that getting money together for a deposit is very important, but contributing to your pension is extremely tax efficient. Your current contribution levels are very good for someone in their twenties so if you can keep them at that level and then look to get money into a deposit account to start building a deposit for a house, I would say that this is probably the best bet.


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## Marc (10 Jul 2017)

Brendan,

To be clear. I wasn't saying that having not bought a house, that the default alternative was therefore to invest in a pension. My point was that the benefits of labour market flexibility in your 20s may well outweigh the longer term structural advantages of home ownership in Ireland.

You have to include the costs of purchase (stamp duty, solicitors costs etc) and the costs of selling (more solicitors costs, estate agents fees) into your decision to buy relative to your holding period. Say, you buy a house today and need to move in 6 months to Frankfurt? Is it still the case that owning a house is now an absolute priority?  Of course you could rent it out but really how many 20 somethings want to be dealing with the hassle of being a landlord having moved away??


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## Steven Barrett (10 Jul 2017)

Talking Money said:


> Just a pension health check please. I'm aged 27 and have been part of this pension scheme for the past three years. I'm currently paying into a 50:50 risk sharing scheme, DB Section & DC section. Just to note the Salary Cap is €48,000 - I expect to exceed that salary by 2021 - 2023.
> 
> *Currently these are the figures:*
> 
> ...



Back to the original point as this thread seems to have been hijacked. 

If you do not have an Emergency Fund, you should start one ahead of putting the money into your pension. While aggressively funding your pension now with stand you in good stead come retirement, it is a long way away and a lot will happen between now and then. It is important you have enough cashflow available now for when you need it. 

Whether you did the correct thing in January depends on how much cash you have left as a result of increasing your pension contributions. Is your pension all your savings or are you able to put a few quid away each month? If it is all you are able to save, I would look at reducing the AVC's back down and building up some liquid cash. 


Steven
www.bluewaterfp.ie


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## Sarenco (10 Jul 2017)

Brendan

I really don't see why you think we are "regurgitating the conventional wisdom of the pension industry".  I didn't argue that Talking Money should increase his AVCs - or even maintain his current level of AVCs.  I simply suggested that deciding whether to save within or outside a pension vehicle was a question of balancing medium and long-term financial objectives.  That's hardly controversial.

There are certainly a number of advantages to home ownership but there are also disadvantages – primarily a loss of flexibility, which I would have thought would be an important consideration for somebody in their 20s.  I strongly disagree with the absolute nature of the "get on the housing ladder ASAP" mantra.  Renting is a perfectly reasonable option for people in a variety of circumstances.

I certainly agree with Steven's point that establishing a reasonable emergency fund (having cleared all personal debt, where relevant) should take priority over making AVCs.


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## Brendan Burgess (10 Jul 2017)

Sarenco said:


> I really don't see why you think we are "regurgitating the conventional wisdom of the pension industry".



The conventional wisdom which is really conventional stupidity is that you can't be too young too start a pension. That is daft. 

The OP should save his money to buy a house.  He might well decide that renting is preferable to buying because he might move abroad, but he still should not contribute to a pension fund, unless it's to max out his employer's contributions. 

He should save his money outside a pension scheme until he is ready to buy in Ireland. 

Brendan


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## Sarenco (10 Jul 2017)

Brendan Burgess said:


> The conventional wisdom which is really conventional stupidity is that you can't be too young too start a pension.


Did anybody say anything that banal?  I know I certainly didn't.


Brendan Burgess said:


> He should save his money outside a pension scheme until he is ready to buy in Ireland.


Well, in my view it's a question of striking a reasonable balance between pursuing medium and long-term financial objectives.

I strongly disagree with the absolute nature of your opinion that nobody should contribute to a pension before they have bought a house.


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## jjm (10 Jul 2017)

Talking Money said:


> Just a pension health check please. I'm aged 27 and have been part of this pension scheme for the past three years. I'm currently paying into a 50:50 risk sharing scheme, DB Section & DC section. Just to note the Salary Cap is €48,000 - I expect to exceed that salary by 2021 - 2023.
> 
> *Currently these are the figures:*
> 
> ...


Talking money
I am not sure anyone has asked you seeing you have a pension fund DB & DC there is a good chance the company  has a sick pay scheme  along with health insurance schame if so you don't need as big emergency fund going fowdard

,You also need to ask yourself would you have saved the money or used it if it was not locked away in a pension fund ,
I also note youre earnings from overtime  is taxed at 40% another good reason to put into a pension avc
can you let us know if you have a sick pay scheme it is something to factor in when you talk about an emergancy fund


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## Talking Money (10 Jul 2017)

If I may bring this thread back into line - I don't think everyone will agree with Brendan and I don't think Brendan will agree with the other view.

My opinion, taken as a pinch of salt from a young lad is that the approach of Brendan and many others, "that you must buy a house at all costs", got this country into the housing mess during the Celtic Tiger. These sentiments of owning your own home introduced many great people into negative equity, financial insecurity, broken relationships and worse over the past decade. As I mentioned before renting suits our situation best for the next 2-3 years. I do of course understand the pro's and con's of owning your home, but it's not a case that I'm 50 paying into a pension and no home.

I may be wrong, but I thought the figures of a pension pot started in your twenties vs thirties  is massive.

@jjm2016 I have a sick pay scheme/salary protection which gives me full pay for 6 months and a lower amount for another year. I also pay into a life insurance policy for death in service ect.

I also have a rainy day fund of €1,000. I'm planning to build up 3 months expenses over the next few months. Although I do have assets of 25K that I could liquidate if I became ill.

Currently save around €200 - €350 per month depending on overtime, could save more but clearing a small loan in the Credit Union to become debt free by 2018.


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## jjm (10 Jul 2017)

Talking Money said:


> If I may bring this thread back into line - I don't think everyone will agree with Brendan and I don't think Brendan will agree with the other view.
> 
> My opinion, taken as a pinch of salt from a young lad is that the approach of Brendan and many others, "that you must buy a house at all costs", got this country into the housing mess during the Celtic Tiger. These sentiments of owning your own home introduced many great people into negative equity, financial insecurity, broken relationships and worse over the past decade. As I mentioned before renting suits our situation best for the next 2-3 years. I do of course understand the pro's and con's of owning your home, but it's not a case that I'm 50 paying into a pension and no home.
> 
> ...



I would agree with all of the above .sick pay scheme/salary protection is  great to have,I have it myself never had to use it TG. when I was your age I was paying AVC later on in life when my kids went to university I was able to stop paying and still watch AVC pension pot grow trough these years, we have a culture where I work of paying into AVC most will tell you including myself when I started paying into a AVC  take the income tax out you still will have a good income left out of 42000  euro to enjoy your life, even after paying 11% between matching employers cont you will  still be paying 1600 euro at 40% .tax planning is the only show in town.

you should seek advice on how best to grow your pension pot seeing you can take a long term view,good advice here if you ask,


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## Sarenco (10 Jul 2017)

Talking Money said:


> I may be wrong, but I thought the figures of a pension pot started in your twenties vs thirties  is massive.



It certainly can be but I would treat any projections you receive from your pension provider with some caution.  They tend to show a very consistent and unduly optimistic rate of return, based on what often turn out to be unrealistic assumptions.

In my opinion, it makes no sense to a contribute to a pension to a point that: (a) it is causing you to live below a modestly comfortable standard of living today; or (b) means you are taking on (or not discharging) expensive personal (i.e. unsecured) debt.

I don't think you are really saving at all while you are continuing to carry a credit union loan - that's just mental accounting.

So, in my view, your priorities should be as follows:-

Put €1,000 aside (genuinely aside) as a "bare bones" emergency fund;
Contribute to your pension to the minimum level that secures your employer match;
Pay off the credit union loan;
Build your emergency cash reserve until it equates to six months' expenses; and
Start saving for a house deposit and/or make AVCs in whatever reasonable proportion makes sense having regard for your medium-term and long-term plans.


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## Brendan Burgess (10 Jul 2017)

Talking Money said:


> I may be wrong, but I thought the figures of a pension pot started in your twenties vs thirties is massive.



This is the mistake that everyone makes. 

The difference between the final pot is massive if you defer starting _saving _until your 30s. But if you start saving outside a pension fund in your 20s with a view to buying a house when you are ready, you will probably be in a better position when you retire. 

Brendan


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## Talking Money (10 Jul 2017)

Sarenco said:


> In my opinion, it makes no sense to a contribute to a pension to a point that: (a) it is causing you to live below a modestly comfortable standard of living today; or (b) means you are taking on (or not discharging) expensive personal (i.e. unsecured) debt.
> 
> I don't think you are really saving at all while you are continuing to carry a credit union loan - that's just mental accounting.



Apologies if I was unclear, the pension instalments haven't affected living conditions or debt. 

Regarding the accounting, I'm not sure how you gather that but yes I've a small loan with the C.U that will be done soon. I'm lucky to be on a decent salary at this age.


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## jjm (10 Jul 2017)

Brendan Burgess said:


> This is the mistake that everyone makes.
> 
> The difference between the final pot is massive if you defer starting _saving _until your 30s. But if you start saving outside a pension fund in your 20s with a view to buying a house when you are ready, you will probably be in a better position when you retire.
> 
> Brendan


There is a good chance you will have the same house and a larger pension pot when you retire ,Lots of people on hear finished up buying an incorrect house when they were single only to find out it did not suit them long term, Anyone who I know who started a pension early never regret doing so later on in life,


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## RedOnion (10 Jul 2017)

Brendan Burgess said:


> The difference between the final pot is massive if you defer starting _saving _until your 30s.



This is a very good point, and one where the benefit of pensions can come into play if you're not a disciplined saver.

I lived my early to mid 20's working in banking during the Celtic tiger era.  I spent what I earned and didn't save for beyond the next holiday (100% mortgages were still a thing then, so not much need to save!).  Luckily I had been putting some money into a pension that I never saw so wasn't able to spend. Roll on to my later 20's / early 30's and I had a purpose to saving, so saving was much easier.  Bought a house and prioritised paying down the mortgage as quickly as I could while sacrificing contributing to a pension.  I now have a very manageable mortgage, and a job where I'm maxing out employer matched pension contributions.

If it wasn't for the money I'd put into my pension in my 20's, I'd be uncomfortable starting out from scratch in my mid 30's.  And if it hadn't been going into my pension, your guess is as good as mine as to what I'd have spent it on but I definitely wouldn't be any better off!


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## Sarenco (10 Jul 2017)

Talking Money said:


> Apologies if I was unclear, the pension instalments haven't affected living conditions or debt.



That's really my point - your AVCs are not affecting (as in discharging) your personal debt.  IMO paying off your credit union loan should take priority over making AVCs.

Why?  Because the rate of interest you are paying on that loan is almost certainly higher than expected net return on your AVCs.

"Mental accounting" refers to people treating accounts (debt/savings) as separate pots, without looking at the overall position.  There's no point saving at a rate of X% while simultaneously carrying debt at a rate of X+Y%.


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## jjm (10 Jul 2017)

If it is a credit union loan you have savings/shares against loan wipe out loan with savings/shares once you reach point savings equal loan,


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## jjm (10 Jul 2017)

Sarenco said:


> That's really my point - your AVCs are not affecting (as in discharging) your personal debt.  IMO paying off your credit union loan should take priority over making AVCs.
> 
> Why?  Because the rate of interest you are paying on that loan is almost certainly higher than expected net return on your AVCs.
> 
> "Mental accounting" refers to people treating accounts (debt/savings) as separate pots, without looking at the overall position.  There's no point saving at a rate of X% while simultaneously carrying debt at a rate of X+Y%.


You also have to factor in the 40% tax break into your returns,


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## Brendan Burgess (10 Jul 2017)

jjm2016 said:


> You also have to factor in the 40% tax break into your returns,



And the fact that you will be taxed on the pension when it's being paid to you. 

Brendan


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## jjm (10 Jul 2017)

Brendan Burgess said:


> And the fact that you will be taxed on the pension when it's being paid to you.
> 
> Brendan


lots of people put there AVC  against there lump sum of 25% the bigger the pot the bigger the tax free lump sum
Good chance tax will be at your marginal rate if you have it in the pot early compound interestis your only man

Right now you are getting compound interest on an extra 40% along with the 40% extra in the pot
the houses are not there at present anyway in some parts of the country which needs to be taken to account along with the fact amount you can borrow is capped to your wages,
retirement age will be higher than now . if you have extra in the pot more options you have coming near retirement. nice to have option to go early you never notice two years going at twenty but you will when you are coming near retirement age,


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## Sarenco (10 Jul 2017)

Brendan Burgess said:


> And the fact that you will be taxed on the pension when it's being paid to you.



Aside from the tax free lump sum (currently capped @€200k), it is certainly true that drawings from a pension fund are subject to income tax.  

However, a married couple are currently exempt from tax on the first €36,000 of income once one spouse reaches 65.  In other words, as things currently stand, most people won't pay any income tax at all on their pension income, unless they amass a very large pension pot.

They will certainly pay LPT (and a host of other maintenance expenses) on any house they might buy.

Again, I'm not arguing in favour of maxing out pension contributions ahead of buying a house (or making any other consumption choice for that matter).

On the contrary, I'm arguing in favour of taking a more balanced approach to addressing medium-term and long-term financial objectives.  I don't think it's helpful to adopt an absolutist, "one-size-fits-all" approach to these matters.


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## RichardTea (11 Jul 2017)

There is a limit of 15% of net income for tax relief on pension contributions for individuals aged under 30, it looks like OP is putting 19% of income into pension. Am I missing something here? Can the extra 4% (19-15%) still go into the pension pot as net of income tax - and would this still qualify for tax relief on growth (as no CGT etc on money inside a pension)  


The fairly strict limits on tax relief are part of why I intend to contribute 15% of my income to pension now living in Ireland, but while living in UK which doesn't have this restriction I would have prioritised saving for a house.


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## Sarenco (11 Jul 2017)

RichardTea said:


> Am I missing something here?


Yes, 8% of the contributions are coming from the OP's employer.


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## RichardTea (11 Jul 2017)

Sarenco said:


> Yes, 8% of the contributions are coming from the OP's employer.



Thanks. I was thinking the 15% applied to total pension contributions. 

Being similar age and earning similar salary to OP, I have to disagree with Brendan that money should be put towards a house at all costs. Particularly income in the 40% tax bracket (about €6000 of my annual salary) which if put in as employers contribution would save a total of 49% tax, PRSI, USC. Yes it means the money is tied up, but can be taken at retirement, which can be at 50 years old, which I think is worth at least trying to plan for. Plus pension reform may mean that lump sums can be taken while still in employment, like can be done in the UK now.


If I was to take out a mortgage of 140k (the max I could borrow - which would pay for appoximately half of a two bedroom house in the northside of Dublin) the interest alone would be around 5.5k per year - effectively 11k which could be put into pension instead, and there are no guarantees house prices are going to continue to rise. I'm currently living in the west where the market seems very slow and rent is cheap enough to not be a huge concern. I will probably move to Dublin in a few years, so not being tied down to a property is certainly helpful in your 20s.


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## jjm (12 Jul 2017)

Talking Money said:


> If I may bring this thread back into line - I don't think everyone will agree with Brendan and I don't think Brendan will agree with the other view.
> 
> My opinion, taken as a pinch of salt from a young lad is that the approach of Brendan and many others, "that you must buy a house at all costs", got this country into the housing mess during the Celtic Tiger. These sentiments of owning your own home introduced many great people into negative equity, financial insecurity, broken relationships and worse over the past decade. As I mentioned before renting suits our situation best for the next 2-3 years. I do of course understand the pro's and con's of owning your home, but it's not a case that I'm 50 paying into a pension and no home.
> 
> ...


talking money
Is there assets tied up in your credit Union loan that you cannot touch until loan is paid off in full . always factor in the amount credit union insist on having to keep on deposit until loan is paid off when you look at the % charged ,As the loan shrinks insist savings required as backing are transferred to pay loan off faster,


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## Brendan Burgess (12 Jul 2017)

RichardTea said:


> If I was to take out a mortgage of 140k (the max I could borrow - which would pay for appoximately half of a two bedroom house in the northside of Dublin) the interest alone would be around 5.5k per year - effectively 11k which could be put into pension instead, and there are no guarantees house prices are going to continue to rise. I'm currently living in the west where the market seems very slow and rent is cheap enough to not be a huge concern. I will probably move to Dublin in a few years, so not being tied down to a property is certainly helpful in your 20s.



Richard

This strongly suggests that you should not be contributing to a pension as you can't afford it. 

You do not need to buy a house now while your accommodation is cheap and while you don't expect to live there for very long.

But your circumstances may change. You and, maybe a future partner, might want to buy a house together in Dublin.  But you may well be borrowing 90% to buy a house you don't really want while looking at a load of your own money inside a pension cage which you can't access. 

When your plans are uncertain, the right thing to do is to keep your money accessible. That trumps everything else. 

Brendan


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## Talking Money (12 Jul 2017)

Firstly, thank you all for the opinions - it is gladly received.

From advice here and reviewing all said, I won't increase my pension contributions by a further 3K this December. I think I will place a standing order for the after tax amount to a savings account, that account can either be eventually be a house fund or a travel fund if I decide to take a career break over the next few years.

As my employer pays 8%, I pay 5% plus AVC of 6% - I wonder after reading this thread would I be best just to match the employers contribution* _(*Although I don't need to pay more than 5% to get their 8%). _Then it would be Employer 8%, me 5% plus 3% AVC - as I mentioned earlier the extra 3% isn't felt in my pay package, although it is helpful bringing down the top rate of tax.




jjm2016 said:


> talking money
> Is there assets tied up in your credit Union loan that you cannot touch until loan is paid off in full . always factor in the amount credit union insist on having to keep on deposit until loan is paid off when you look at the % charged ,As the loan shrinks insist savings required as backing are transferred to pay loan off faster,



Yes, shares are held against the loan.

No non money physical assets are held against this, I am paying ahead of schedule and more than agreed expecting this loan to be gone by Dec 2018 or so, ideally I would like to replace the loan with a standing order to save.


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## Brendan Burgess (13 Jul 2017)

Talking Money said:


> I also have a rainy day fund of €1,000. I'm planning to build up 3 months expenses over the next few months. Although I do have assets of 25K that I could liquidate if I became ill.
> 
> Currently save around €200 - €350 per month depending on overtime, could save more but clearing a small loan in the Credit Union to become debt free by 2018.



I had missed this because I was focusing on the main question. Your financial priority is to clear this very expensive credit union loan.
If you have a loan of €10,000 @12%  and shares of €5,000 @0%. you are paying 24% APR on your net loan of €5,000. 

You don't need a rainyday fund if you have a good record with the credit union.  

Ask them to set the shares against the loan. They will probably refuse. But push them. Then liquidate enough of your assets if there is no penalty to clear this loan.

Brendan


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## jjm (13 Jul 2017)

Brendan Burgess said:


> I had missed this because I was focusing on the main question. Your financial priority is to clear this very expensive credit union loan.
> If you have a loan of €10,000 @12%  and shares of €5,000 @0%. you are paying 24% APR on your net loan of €5,000.
> 
> You don't need a rainyday fund if you have a good record with the credit union.
> ...


Lots of time on askaboutmoney you see advice given  on having a large emergancy fund the never ask if the have a sick pay/health insurance which should be factored to the size of fund required  especially if the are single ,The best advice any one can give anyone is after there mortgage look very careful at the cost of any loans the take out. some people take out loan from credit unions before it is paid off they get a top up while still paying money into buying shares finish up paying very high % when you look at the amount of money backing up such loans,


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## galway_blow_in (13 Jul 2017)

jjm2016 said:


> Lots of time on askaboutmoney you see advice given  on having a large emergancy fund the never ask if the have a sick pay/health insurance which should be factored to the size of fund required  especially if the are single ,The best advice any one can give anyone is after there mortgage look very careful at the cost of any loans the take out. some people take out loan from credit unions before it is paid off they get a top up while still paying money into buying shares finish up paying very high % when you look at the amount of money backing up such loans,



in a long standing climate of cheap credit , is it any wonder people are so slow to pay down debt ?


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## Brendan Burgess (13 Jul 2017)

galway_blow_in said:


> in a long standing climate of cheap credit , is it any wonder people are so slow to pay down debt ?



I don't think 24% net APR to a Credit Union is cheap credit. 

Brendan


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## galway_blow_in (13 Jul 2017)

Brendan Burgess said:


> I don't think 24% net APR to a Credit Union is cheap credit.
> 
> Brendan



true

note  to self , read things carefully in future


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