Is it easy to break out of NSP?

Hi all,
I am thinking about starting to buy back years instead of paying into AVCs. I will be 7 years short at age 65 and am 40 next birthday. My HR department are useless for any info but have told me that if I do decide to buy back years that you have to keep paying no matter what happens. I am worried that if there are more pay cuts on the way or if anything happens in the future and I can't afford to pay that I will be stuck. Is this correct, can I break out of it? Also 7 years is very expensive so I was thinking about maybe buying 4 or 5 years and then re evaluating in the future, is this possible can I up the number of years in the future? Thanks for any help!

It is very unlikely that you can't break out of it. In my organisation, the only risk of breaking out is that you lose your current contract price. If the cost of purchasing service goes up and you want to get back in, then you'll end up paying a higher price.

You might want to give some consideration to the risk of whether the Govt will default on their commitment to you, i.e. will they be around to pay you the pension in your old age.

Have they told you in writing that you'll have to keep paying no matter what happens?

You can buy any amount of years up to the maximum. Your choice.

Increasing contributions in the future would be subject to the contribution rates then in operation.....and those years would obviously be purchased over a shorter period of years so the rate would be higher.

Stopping NSP contributions is possible at any stage....you would get credit for the service already bought.

I would strongly endorse Complainer's caveat as to whether you believe the state will make on its pension obligations.

And do remember that every pay reduction means that you have overpaid for the service you've previously bought.

Thanks guys, so are you both saying that I should stick with the AVCs? I thought the advice on AAM was to buy back years in most cases? Do you really think that the government won't meet my pension obligation at retirement?

oysterman said:

And do remember that every pay reduction means that you have overpaid for the service you've previously bought.

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That's a further nail in the coffin all right - hadn't thought of that before.

I'm still buying back service, but I'm having serious doubts as to whether I should continue.

Maxie37 said:

Do you really think that the government won't meet my pension obligation at retirement?

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For perspective, the Greek bailout further austerity measures that may or may not have been agreed today sees a minimum 15% pension cut across the board (and other deeper cuts in some pensions) insisted on by the Troika.

When Ireland defaults the write-down on government pension obligations will surely use a similar number as the baseline.

It is really hard to believe that state pensions (including both public service and old-age pensions both contributory and non) will be paid in full.