# Teachers Pension, Superannuation and AVC



## daithid2000 (20 Sep 2005)

Hi, my partner is wondering about her pension plan and is not too sure how it works.   She is a secondary school teacher aged 29 and is currently putting in 6.55% herself and her superannuation is 4.8 ish percent.   She is wondering whether this is too much to be putting aside already.

Also, does anyone know how the AVC's work with teachers when she does retire.   What percentage of an income would she get with it.

What percentage of an income would she get if she didn't pay into an AVC and just relied on the Superannuation.

One last question...she is investing through Cornmarket and they have her in an adventurous fund.   She is worried about losing money and is thinking of changing to a very low risk find.   Would this be wise?

Sorry there are so many questions there, but if even some of them get answered it would help an awful lot.

Thanks


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## dam099 (20 Sep 2005)

Its never too early to be putting aside for a pension, if she can afford this level of contribution at this point then she should go ahead, contributions made at this stage will arguably be more valuable as they will get a full 30 years of growth before she is likely to be retiring.

It all depends on what you mean by an "adventurous" fund? Does this mean it is invested nearly all in equities which at her age is probably advisable as they offer the best growth prospects (than say a bond fund) or do you mean they are invested mostly/all in biotech, emerging markets or some other high risk market? A well diversified equity fund (ideally across sectors and geographic regions) should be fine at this point, later as she approaches retirement age introducing some bonds etc. to lower volatility might be considered (but not until she is in her mid to late 50's at the earliest)


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## Marathon Man (22 Sep 2005)

My wife has a teachers AVC with Cornmarket/Woodchester for the past 9 years. 
We are going about setting up an alternative AVC elsewhere through a PRSA.  

Current value is less than she has put in over the period.  Cornmarket have never been able to explain to our satisfaction what charges have been applied.  When asked Cornmarket refer us to Irish Life and vice versa. 

Cornmarket have a punitive charging structure.  Everytime you meet the Cornmarket contact person, you are charged €775, if you simply want to change the amount you pay, without advice, the charges is €375.5.  There is a 1% charge for collecting (??!!) the contribution, a 5% contribution charge and a 1.75% fund value annual fee.

My advice: get an AVC but don't touch Cornmarket with a 40 foot pole!


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## Brendan Burgess (23 Sep 2005)

You can be too young to start a pension. You should not start a pension until you have bought your own home and got the mortgage down to a reasonable level. By buying a home, you are saving for the longer term which is all a pension is doing for you anyway. It is a very common myth that "you cannot be too young to start a pension".

Cornmarket is very expensive. They claim their charges are justified by the fact that they spend a lot of time with you advising you on the relative benefits of the state scheme vs. the AVC. 

Your partner will have a very generous state pension if she continues to work until retirement age. If she takes time off and returns to work, she can "buy back years" through the teachers' pension scheme. This seems to be better value than the Cornmarket AVC. 

I am very surprised that the ASTI, and some of the other teachers' unions who can negotiate great salaries for teachers cannot negotiate a better pension deal for their members. They should commission some independent actuaries to review the pension options for teachers and evaluate the product they are getting from Cornmarket.


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## maryrose (23 Sep 2005)

Have been following this thread with interest, as I also have an AVC investment account with Cornmarket ,although I'm not a teacher.

On querying the poor performance of the sum invested thus far, I was told my contributions are currently invested in Eagle Star's Balanced fund and SuperCAPP fund.

The Balanced Fund is a medium risk fund, and the SuperCAPP Fund offers a high level of security with the potential for real growth, I should add I'm paraphrasing the bumph a bit here , just to give you an idea of the type of hype I had to wade my way through to get at something approaching the truth.

The set up fee was 37.50% of the first years contributions, for a thirteen year term, and any susbsequent topups have a similar charging structure, to add insult to injury.


The service is 5% of contributions per annum.

The total charges deducted from my contributions over this period will amount to (according to CMarket)  7.62% of the total paid in .

They believe that these charges are fair and reasonable........On an AVC fund thats  losing me my hard earned money.

The tax relief available on AVC's is the only reason I'm hanging in there at the moment, plus the fact that due to years of jobsharing while my kids were small, I will have a very compromised lump sum when i retire, and I have no wish to be working well into my dotage!


Is the same tax relief available on a PRSA, if the AVC was to be discontinued, 
and the PRSA set up instead.


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## daithid2000 (23 Sep 2005)

Marathon Man said:
			
		

> Current value is less than she has put in over the period.


 
Yeah that is what she is afraid of.   I think I might tell her to join a PRSA.   Are these set up through any bank?


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## Marathon Man (23 Sep 2005)

Any financial adviser should be able to sort if for you.  If you intend paying anything more than a nominal amount, do negotiate on fees & charges.

My (limited) experience of the Banks is that they are generally tied to their own/subsidiarys products - they also know how to charge, though maybe not as high as Cornmarket!

BTW, for anyone who is looking at exiting Cornmarket, my adviser has informed us that my wife's accumulated Cornmarket AVC funds cannot be extracted and put into our proposed PRSA AVC.  So she's going to invest in the new PRSA AVC and leave the Cornmarket fund where it is until retirement.


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