Buy pension years or pay off mortgage dilemma

We moved abroad on career break during summer 09.
While abroad we will be missing out on our public service pension contributions for at least two years.

We are working and will have some savings from our current jobs when we return to Ireland.

We are wondering what is the best thing to do?

We have a hefty mortgage in Ireland over 25 years. Luckily we are on a Perm TSB tracker mortgage so the rate is pretty good. Our property is now rented and covers most of the mortgage

While abroad we are not contributing to our public service pensions.

Our question is whether it makes more sense to buy off a number of years from the mortgage or save to attempt to buy at least 1 year pension back.
Paying about 25,000 mortgage per year. Each Year's pension would cost approx 40 000 euro for my wife and me.



Any suggestions

I don't mean to be offensive, but if you can afford a mortgage of 25000 euro, then provision for a pension should be no bother !!!. On a serious note, did you look at the possibility of making voluntary contributions while away. Also remember if you go purchasing notional service, the earlier you purchase, the cheaper it will be. If you are within 15 yrs or less to retirement, it can be pretty expensive. There is a very good Pensions Modeller at www cspensions.gov.ie. There is an option ther to guage how much it costs to purchase notional service.

Thanks tentman for that. We have had an estimate for the year's pension at 40,000 ,but problem is to try and see which brings the greater advantage. Buying off a few year's mortgage or trying to buy back a year's pension on return to ireland

For that matter if annual mortgage repayment is 25,000 on a 25 year mortgage, what would it cost to buy a year off the mortgage. How do they calculate it?

You should look at the possibility of paying back some of the principal element of the mortgage. If you can pay off , say, 100,000 of the principal, then the balance will attract less interest. You will then have the choice of reducing the years or the amount. If you reduce the years, it will release resources to pursue the options of AVCs or a seperate personal pension, as hopefully things will look brighter at that stage.

Thanks Tentman. Will look into it.

At a guess, the return on investment from buying extra years would probably beat any other investment (including paying off mortgage). But you probably need a serious pensions expert to do the calculations to confirm this. The only risk is whether you are confident that the Govt will be around to pay the mortgage that you've bought!

I'm not so sure about paying down the mortgage a public service pension is like gold dust so that's what I'd be contributing to.

Thanks for the advice. Suppose I will have to do some further research for the definitive answer. The world is in a state of chassis!!