# employer and employee contribution rates



## roytheboyo (23 Sep 2014)

Hi,
My employer is offering a prsa where they contribute 12% and I contribute 8%, which after tax relief will be 5% approx.
Is this good/normal/bad
Thanks
Roy


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## Conan (23 Sep 2014)

I would think that a 12% employer contribution rate is very good. In effect you are getting a total contribution of 20% for a personal net cost of circa 5%. Sounds like a good deal. Recent research I saw suggests that the "average" employer contribution is closer to 6%.


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## garbanzo (23 Sep 2014)

That is an excellent DC contribution rate. 20% is a significant amount to be salting away for retirement. The employer portion is generous by normal standards. Just don't get screwed by hefty charges on your PRSA account. All in all you should be happy with your good fortune to have it.


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## elacsaplau (23 Sep 2014)

May sound like a silly question but 12% of what - salary or some other definition? And, out of curiosity, what % of total income does salary represent? If based on salary, you're well ahead of the average employer DC rates. Arguably, it's not that you'll have a magnificent pension but rather that those with a lower contributions will have an insufficient amount.


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## Steven Barrett (24 Sep 2014)

You're getting a great contribution by your employer. Most do 5%, some as little as 3%. 



> Just don't get screwed by hefty charges on your PRSA account.



The charges under standard PRSA's are set by legislation. The AMC will be 1% and the premium charge no more than 5% of premium. If your employer is putting in 12% of salary, they may be paying for the adviser fee too so you have 100% of your money invested. 


Steven
www.bluewaterfp.ie


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## roytheboyo (4 Oct 2014)

Thanks for replies. It's percentage of gross salary. I will go with it. I will check out fees.


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## RSMike (5 Nov 2014)

I have a related question, I'm afraid I am not as lucky with the DC rates my employer gives.

Current Employer:         6% and I am required to contribute 5% 
( I voluntarily contribute another 12% by way of AVC), Total = 23%

Prospective Employer:    6% and I am required to contribute 3%

Question: For the prospective employer, is there any disadvantage to me if I up my AVC rate to 14% to maintain a 23% contribution, i.e is the 3% and 14% treated any differently in terms of determining the maximum I am potentially allowed to contribute?


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## PaddyW (5 Nov 2014)

12% is an excellent contribution from employer. My employer matches my 5% contribution


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## LDFerguson (6 Nov 2014)

RSMike said:


> Question: For the prospective employer, is there any disadvantage to me if I up my AVC rate to 14% to maintain a 23% contribution, i.e is the 3% and 14% treated any differently in terms of determining the maximum I am potentially allowed to contribute?



No.


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## RSMike (6 Nov 2014)

LDFerguson said:


> No.



Thanks, that is good to know, and I do have another question. I notice that in my existing Pension, the AVC contribution is managed separately from the main fund.

Are there any advantages or disadvantages to my contributions going into the main fund or the AVC fiund?


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## Homer (7 Nov 2014)

RSMike said:


> Thanks, that is good to know, and I do have another question. I notice that in my existing Pension, the AVC contribution is managed separately from the main fund.
> 
> Are there any advantages or disadvantages to my contributions going into the main fund or the AVC fiund?



At a fundamental level, there should be no real difference.  However, there may be different charges applying to the main fund and the AVC fund or there may be different fund choices.  You would need to know what differences there are in order to be able to answer your question.


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## Steven Barrett (8 Nov 2014)

RSMike said:


> Thanks, that is good to know, and I do have another question. I notice that in my existing Pension, the AVC contribution is managed separately from the main fund.
> 
> Are there any advantages or disadvantages to my contributions going into the main fund or the AVC fiund?



There may be a monthly policy fee under the two contracts. It can be €4 - €5 a month. You need to check out whether there is one under your contract.


Steven
www.bluewaterfp.ie


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