Pension drawdown strategy

jim said:
Yeah it would be touch and go.
I have 3 yrs contributions in uk and i have received confirmation that i qualify for class 2 contributions to bridge the gap. So i have the opportunity to obtain the full uk state pension.
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You cannot backdate 32 years. I think its usually only 6 years you can backdate, but there is currently an extended backdated period allowed due to brexit back to 2006 I think it is, but that wont cover half that period, so like the prsi, you will need to continue paying yearly. Admittedly its peanuts vs the gain (assuming it doesn't get pulled)
 
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@fayf
I would certainly avail of the maximum tax free lump sum.

@50andOut
Good points. Im conscious that pension rules may change but i think this is a good investment regardless. For about €5k now, ill buy an annuity of approx £8,800 per annum for rest of my life from state pension age which could be 70 by the time I arrive. Its a no brainer. Im aware as well re backdating but my understanding is that i can buy enough NI class 2 stamps to get full pension.

Two state pensions would sustain me as i plan to have other income, savings and a spouse with a good pension. Hope to be debt free with modest spend. Of course there may be unforseen spend and medical spend.

I would tske the higger occupational pension in those 13 years and enjoy it, i would have some going into savings too. But realistically a lower drawdown amount of €30k would work and would prolong the fund. To minimse market risk i would seek to have the fund in safer assets rather than equities.

Thanks for the pointers. Biggest concern, as you pointed out 50andout is pension rule change but hopefully they wouldnt be too radical.
 
jim said:
Im aware as well re backdating but my understanding is that i can buy enough NI class 2 stamps to get full pension.
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I really think you need to confirm that point as it seems to be fairly critical to your proposed strategy.

TBH it seems too good to be true that you can purchase 32 years of contributions for as little as €5k.
 
SBarrett said:
It will always be linked to the occupational pension scheme. You can't access the AVC's ahead of the main DB scheme
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Thanks Steven and Conan. Sorry Jim also for hijacking your initial query.

I see this in our company AVC manual under Leaving Service: "You may transfer the value of your AVC Account to a new employer’s scheme or to a qualifying pension policy with a life assurance company. Alternatively, you may transfer the value of your AVC Account to a Personal Retirement Savings Account (PRSA) in your name"

This seems at odds Steven with having to leave the DB and AVC together?

Cheers
Tom
 
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Thomas1 said:
Thanks Steven and Conan. Sorry Jim also for hijacking your initial query.

I see this in our company AVC manual under Leaving Service: "You may transfer the value of your AVC Account to a new employer’s scheme or to a qualifying pension policy with a life assurance company. Alternatively, you may transfer the value of your AVC Account to a Personal Retirement Savings Account (PRSA) in your name"

This seems at odds Steven with having to leave the DB and AVC together?

Cheers
Tom
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No it doesn't. It will be a PRSA AVC, still linked to your employer scheme.
 
jim said:
@Sarenco this is my understanding. Ill confirm and post back here.
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Again as I mentioned above you cannot buy back this amount. you can currently buy back years from 2006-2020, so 15 years is possible.
This will bring you over the 10 year threshold and allow you a reduced pension.

However in order to get the full pension you need 35 years and so will need to continue purchasing each year going forward.

That said, whilst it is not possible to purchase in one go, it is possible to purchase and the price is correct @Sarenco, the reduced stamps at class 2 for a person living abroad is ridiculously cheap. SHHHH!
 
Interesting.

Do you need to have already made some minimum level of contributions or can anybody apply?
 
ha! nice thought, but no, you have to be on the system to begin with and have a National Insurance (PPS) number.
 
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According to this link, somebody living outside the UK is only eligible to make voluntary contributions if they worked in the UK immediately before leaving, and they previously lived in the UK for at least 3 years in a row or paid at least 3 years of contributions -
https://www.gov.uk/voluntary-national-insurance-contributions/who-can-pay-voluntary-contributions

I'm sure there are plenty of folks living in Ireland that previously worked for at least 3 years in the UK that are blissfully unaware of this option. It really is extraordinarily generous of the UK taxpayer.
 
50andOut said:
You cannot backdate 32 years. I think its usually only 6 years you can backdate, but there is currently an extended backdated period allowed due to brexit back to 2006 I think it is, but that wont cover half that period, so like the prsi, you will need to continue paying yearly. Admittedly its peanuts vs the gain (assuming it doesn't get pulled)
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At the moment you can pay arrears of NI for a 14 year window (2006/07 - 2019/20). That is a concession arising out of changes to the UK state pension in April 2016. That extended window grows further up until 5th April 2023 when the rules revert to the normal 6 historical year maximum. You also have to be in "insurable employment abroad (Ireland)" to continue be eligible for the cheaper Class 2 rate.

I still can't see how mathematically you can achieve a full standard Irish and UK state pensions if your intention is to retire shortly. After retirement you will not be eligible for teh Class 2 rate and instead will avail of the Class 3 rate (which costs roughly 5 x the Class 2 rate).
 
Sarenco said:
According to this link, somebody living outside the UK is only eligible to make voluntary contributions if they worked in the UK immediately before leaving, and they previously lived in the UK for at least 3 years in a row or paid at least 3 years of contributions -
https://www.gov.uk/voluntary-national-insurance-contributions/who-can-pay-voluntary-contributions

I'm sure there are plenty of folks living in Ireland that previously worked for at least 3 years in the UK that are blissfully unaware of this option. It really is extraordinarily generous of the UK taxpayer.
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Indeed it is Sarenco and I have availed of it! BY any annuity comparison the payback is extraordinary. Of course there is always a risk with state pensions as the rules can change abruptly but you take your chances!
 
If I wanted to go back 10 years - the first half of which I was working in Ireland and the last 5 years I wasn't working. Do I pay Class II for the first 5 years and Class III for the latter 5 years or would it all be subject to Class III?
 
@Sadim im a long way from retirement, just planning ahead. It seems i do qualify for class 2 as i said above and i can go back some years and then fwd for the remaining which i think requires me to buy each remaining year as it comes up.
I project i will have enough prsi contributions in ireland also thereby entitling me to both pensions.

I didnt know about the class 3 rate if not in insurable emp. Still, small price to pay.
 
Thomas1 said:
Thanks Steven. I’ll look into starting a completely separate PRSA and direct my existing AVC contributions there instead.
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If you are a member of an occupational pension scheme and you also contribute to a personal plan yourself, you are not allowed to claim any tax relief on the contributions that you make.

Steven
http://www.bluewaterfp.ie (www.bluewaterfp.ie)
 
Pensions make my head hurt! So what’s the best way for a person entitled to a decent (but not huge) DB pension at 65 to make a separate arrangement to retire before 65? I wouldn’t be interested in property and it seems bananas to pay 52% tax and leave the pension tax relief on the table to invest in funds outside of a pension scheme.
 
SGWidow said:
If I wanted to go back 10 years - the first half of which I was working in Ireland and the last 5 years I wasn't working. Do I pay Class II for the first 5 years and Class III for the latter 5 years or would it all be subject to Class III?
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That is the gist of it alright but you have to apply to HMRC in Newcastle to determine your eligibility first
 
jim said:
@Sadim im a long way from retirement, just planning ahead. It seems i do qualify for class 2 as i said above and i can go back some years and then fwd for the remaining which i think requires me to buy each remaining year as it comes up.
I project i will have enough prsi contributions in ireland also thereby entitling me to both pensions.

I didnt know about the class 3 rate if not in insurable emp. Still, small price to pay.
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You are right, it is a cracking deal even at the Class 3 rate. Class 2 is pure icing on the cake. I suppose the thing you have to watch for though is legislation can change the rules of the state pension system. Indeed, we have seen that in Ireland with a) pushing out retirement ages and b) introducing different bases for calculating benefits.

There is nothing to stop the UK bringing in legislation that denies foreigners state pension rights! That said, to some extent we are protected by the Common Travel Area but the UK can change eligibility rules. I still think the risks are quite modest though.
 
I got a notification from the UK pension authorities to say that I have 10 qualified years of NI contributions and I am, therefore, entitled to a partial state pension. I thought this would be added to my Irish record ( currently 25 years) and I would get a combined pension, at the rate of my country of residence. Basically, I would get the Irish state pension due to the combined contributions in both countries.
Are people saying that I could get both pensions, if I make voluntary contributions ( I would need another 20 years of UK contributions)?
 
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