# Advice needed on savings options/pension/mortgages repayment??



## Oakkea (4 Dec 2010)

Age: 34
Spouse’s/Partner's age: 38

Annual gross income from employment or profession: €48,000
Annual gross income of spouse:€45,000

Type of employment: Employed by 2 US Multi-Nationals
In general are you:
(a) spending more than you earn, or
(b) saving?
Savings on average €900 a month

Rough estimate of value of home  Who knows right now maybe €300K
Amount outstanding on your mortgage:  €40K, 4 years remaining as we are currently overpaying by €400 a month
What interest rate are you paying?  Tracker + 1.8%

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? N/A

Savings and investments:
Deposit Savings account €46,000
Credit Unton €5,000
Shares in our 2 Employer’s companies €26,000 (current value)

Do you have a pension scheme? Yes, Defined contribution, value €24K, Spouse's is defined benefit, not sure of current value, but is in scheme for past 10 years since starting employment with current employer. Spouse's pension from previous employer €8K.

Do you own any investment or other property?  No

Ages of children: 1 currently 12 month old, would like another in next year

Life insurance: Yes,  both employers provide this plus life insurance for mortgage is €16 monthly


*What specific question do you have or what issues are of concern to you? *

We are in the very fortunate position right now to have reasonable well paid permanent jobs, a small mortgage and a lump sum on deposit.  This was achieved by saving hard for the past 10 years and making a small profit on previously owned property.  As we are both employed by 2 multinationals we do worry in the current climate about our job security?  As we would like another child in the next year, our current month savings are likely to decline as childcare costs will increase by €350 a month and I would like to take as much unpaid time off as possible after my paid maternity leave.  Our €45K is on deposit with a UK Institution at a 12 month fixed rate of 3% which has just matured, we have been offered another 12 month fixed rate of 3.6%.  My queries are
·    Should we pay off our mortgage with our savings?
·    Or as the mortgage interest rate is so low should we continue to keep this €45K on deposit at the new rate offered of 3.6%? 
·    Should we add the €5K in the credit union to this 3.6% account also as we do not believe we will need it in the short term?  
·    Should we pay AVC's to our pensions rather than continue saving our monthly €900?
·    Or should we pay the minimum repayments on our mortgage and use the money we are currently using to overpay our mortgage to buy pension AVC's?  I am concerned that our pensions are very low, and am aware that pension units are currently considered cheap however after the budgetary measures to reduce the tax benefit I am unsure, also after the stock market crash I do not have great faith in pension schemes however I am aware that by the time we get to retirement there will very little of an old age pension to get from the government?  All advice appreciated on this topic.


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## circle (4 Dec 2010)

I would max both of your pension contributions for 2010 as you may not get the same relief on it in the future.


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## Oakkea (5 Dec 2010)

Thanks Circle for the response.  I think given our ages we are entitled to pay up to 25% tax free into out pensions annually.  Is it possilbe to pay a lump sum making up the 25% into each of our pensions in a lump lump before 31 December?  Still not sure if I am sold pensions though.


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## asdfg (5 Dec 2010)

You have up to 31st Oct next year to make payments against 2010 salary (max 25% of salary) to your pension and get full tax relief.


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## circle (6 Dec 2010)

Unless something changes in the budget. Could they get rid of/reduce relief on AVCs made after the budget date? I know changes to duties are applicable instantly, but I'm not sure if tax rates could be.


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## Greta (6 Dec 2010)

circle said:


> Could they get rid of/reduce relief on AVCs made after the budget date?



In theory they could. Whether it's likely, don't know.


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