# Should I buy back pension years?



## Ciara8x (19 Nov 2019)

Hi,

I apologise in advance for being pretty clueless about this stuff and hope I'm not asking stupid questions. I'd be really grateful for any guidance. 

I started working for the HSE a couple years ago at age 31. This is my first time having a pension. 

I have the option of purchasing additional pension years, I can buy 5 additional years for the cost of 0.55% of my gross salary and 4.23% of my net salary. Or I have the option of buying it now straight out with a lump sum of 52k (which I don't have anyway).

I really don't know if this is worthwhile or if I would be better off starting a separate private pension in addition to my current HSE one? As a post 2013 hire I know that my pension will be pretty inferior to the old public service pensions anyway. From what I can figure out using the pension estimate calculators on the HSE website, buying the extra 5 years will give me an extra 8k lump sum and an extra 1k per year on retirement.

For reference, I'm working as a nurse, currently on €31500 plus an additional 6-7k per year in weekends and nightshift pay.


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## Early Riser (20 Nov 2019)

Ciara8x said:


> I started working for the HSE a couple years ago at age 31. This is my first time having a pension.
> 
> I have the option of purchasing additional pension years, I can buy 5 additional years for the cost of 0.55% of my gross salary and 4.23% of my net salary. Or I have the option of buying it now straight out with a lump sum of 52k (which I don't have anyway).
> 
> ...



*EDIT*: Deleted post as I misread your original post. Sorry


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## Early Riser (20 Nov 2019)

Ciara8x said:


> From what I can figure out using the pension estimate calculators on the HSE website, buying the extra 5 years will give me an extra 8k lump sum and an extra 1k per year on retirement.



Hi again,

I rechecked the pension benefits from buying back your 5 years using the pension benefit formula from the Scheme Booklet. 

Here are the calculations based on 5 years at a pensionable salary of €38,500:

Lump sum = €38,500 * 3.75% * 5 = *€7,218   *
Annual pension = €38,500 * 0.58% * 5 = *€1,116. *

These figures are index linked.

 Buying back the years is probably worth considering, in my opinion if you can spare the money. The pension alternative to the buyback is to take out an AVC plan. This would be more versatile in case you were to go for early retirement (very difficult to predict now, of course). It would not necessarily be better value.

On the other hand, it might be better putting the money towards a house deposit (or mortgage) at this stage in your life. That would be my first choice. based on these figures.


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## 872117 (21 Nov 2019)

One thing it may be worth noting is that this option may not be always there. 

In order to buy back years in your HSE pension you need a current active employee number. I worked in the HSE for about a decade over a 20 year period (with 7 year break as return to education involved). 

I recently enquired about buying back these years (with the aim of working towards at 20 year HSE pension (10 worked and 10 bought back)). However I was informed that in order to buy back years you need to be on the payroll which alas I no longer am. 

I think the advice about considering your more current financial issues is sage advice but my above point is worth noting.


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## Ciara8x (24 Nov 2019)

Thanks for the advice both of you! I really appreciate you taking the time to help me. I think that I'll weigh it up for a little while but you've given me a lot to think about!


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