M
molloyda
Guest
I'm working since 25 (32 now) and paying a pension since then, aiming at retiring at 65. The pension is a defined benefit pension when I retire of 0.5 times salary + lump sum of 1.5 times salary (index linked afaik). All is well there - pretty standard across where I work.
I'm currently earning 87k and my pension contribution per month is 407 euro, which works out to be 5.5 - 6% which seems pretty reasonable.
Three years back I started into an AVC with the intention of possibly retiring 5 years earlier and currently I pay about 230 euro per month (of 7240 gross) into it (3% ish).
Indeed, things were going fine and I was thinking I was financially sensible. Now Cornmarket took over the previous company and an advisor came to visit me and told me that I should MAXIMISE my AVC up to the very maximum of 20% (after the other pension stuff is taken away) for my age.
So now he's come up with gross contributions per month of 1041 (551 after tax taken into account) for my AVC... an increase of 4-5 fold!
This would provide benefits at 65 of 1.4 million, with a projected pay of 225k.
This seems massively over the top to me and I was wondering if anyone might have any advice! I mean the AVC contributions would be 2.5 times my pension contributions each month!
Surely, this would push me right over the limits of 2/3rds final salary - given that I should already pretty much be at this point with my current pension.
Equally, in today's tax terms 0.5 salary would already have me teetering on the married tax limit. So even if I was allowed to top up my salary from my AVC money, I'd just end up paying the higher rate of tax anyway (in todays terms). When I mentioned these concerns the advisor touted ARFs as some magical vehicle where I'd only be paying 3% tax pa - which was misleading imho.
Is this sort of recommendation more in Cornmarket's interest or do they have valid financial reasons for pushing this on me?
Thanks for any advance in advance,
Dave
I'm currently earning 87k and my pension contribution per month is 407 euro, which works out to be 5.5 - 6% which seems pretty reasonable.
Three years back I started into an AVC with the intention of possibly retiring 5 years earlier and currently I pay about 230 euro per month (of 7240 gross) into it (3% ish).
Indeed, things were going fine and I was thinking I was financially sensible. Now Cornmarket took over the previous company and an advisor came to visit me and told me that I should MAXIMISE my AVC up to the very maximum of 20% (after the other pension stuff is taken away) for my age.
So now he's come up with gross contributions per month of 1041 (551 after tax taken into account) for my AVC... an increase of 4-5 fold!
This would provide benefits at 65 of 1.4 million, with a projected pay of 225k.
This seems massively over the top to me and I was wondering if anyone might have any advice! I mean the AVC contributions would be 2.5 times my pension contributions each month!
Surely, this would push me right over the limits of 2/3rds final salary - given that I should already pretty much be at this point with my current pension.
Equally, in today's tax terms 0.5 salary would already have me teetering on the married tax limit. So even if I was allowed to top up my salary from my AVC money, I'd just end up paying the higher rate of tax anyway (in todays terms). When I mentioned these concerns the advisor touted ARFs as some magical vehicle where I'd only be paying 3% tax pa - which was misleading imho.
Is this sort of recommendation more in Cornmarket's interest or do they have valid financial reasons for pushing this on me?
Thanks for any advance in advance,
Dave