AVC Cornmarket Suitable for a 20yo teacher?

Oysterman "retirement at age 60 does not exist any longer for new starters in the teaching profession"


While your daughters Nomal Retirement Age is 65, she does have the option of retiring from 55 onwards under 'Cost Neutral Early Retirement'.
Yeah, I'm aware of cost-neutral early retirement but the difference between the 35 years service/55 years of age scheme which existed until 2004 (which the teachers' unions gave up without even a hint of a fight) and the new cost-neutral scheme is so vast that I think it's true to say the option of early retirement does not realistically exist for most teachers anymore.

At age 55 the teacher on the top of the scale would be earning €57,403 (excluding allowances). The OP's daughter would have been able to retire on a pension of €25,114 (excluding lump sum) at 55 under the pre-2004 arrangements.

Under the new scheme she'd retire on €14,616 (excluding lump) [which, by way of perspective, is a whopping €4,537 above the value of the contributory old-age pension].

Crunching the numbers is complex given the critical assumptions one would have to make about future teacher pay increases but it seems self-evident that funding for the shortfall between the old and the new schemes of €10,498 (indexable at the rate of increase of teachers' salaries which one assumes will continue to beat the CPI handsomely) would be next to impossible given all the other financial commitments she will have across her working lifetime and the fact that her starting salary (excluding allowances) is a modest €31,626.

(There is one further complication in funding for the massive pension shortfall in this sort of situation - to the best of my knowledge the Revenue have not yet agreed that such a cost-neutral early retirement caused shortfall can be funded by way of AVC.)

It is for this reason that I think it's fair to say that early retirement does not exist for new starters in the teaching profession.

I, for one, am glad that my own children will not be taught by teachers in their 60s dying to get out of the profession who have to wait because they can't afford the actuarial reductions to their pensions if they go before 65.