Pension with new company

C

Chocolatechip

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Hoping someone might help with my husbands pension.
I completed a money makeover in March 2021 & got great advice from Red Onion. Still no debts & wages have increased for both.
My husband increased his pension to 20% over the last few yrs with 5% from boss.
His boss is now retiring & company is being sold.
He is now on 51k gross which means he does not get 40% tax relief on about €1k on his contribution, I think.

My question is :
1. If he wants to contribute 25% into his new pension with new boss, will he not get 40% tax relief on about €3.5k? Is this a good idea tax wise as we are jointly assessed & I earn approx €80k a yr gross. Or is there any advantage of doing this, other than we can afford for him to do it. Pension very underfunded but I'll have a public service pension. No discussion with new company about pensions yet.

2. He has approx €38k in current company pension, invested in Passive Iris with New Ireland. Presume he should just leave it invested in that until he retires or needs it? 70% equity & a lifestyle approach.

Thanks for reading.
 
Here’s the 2021 makeover for context -

Family of 6, newly mortgage free

Age: 40 Spouse’s/Partner's age: 40 Annual gross income from employment or profession: 66k Annual gross income of spouse: 46k Monthly take-home pay: 5670 combined Type of employment: Education Spouse: private sector In general are you: (a) spending more than you earn, or (b) saving? Mostly...
www.askaboutmoney.com
 
If your husband can comfortably afford to contribute 25% of his salary to a pension then I think he should fire ahead, even if a small element of the contribution only attracts relief at 20%.

However, I suspect it would be more tax efficient for you to purchase notional service (on the understanding that you were a late starter in the public sector) and for your husband to limit his pension contributions to the amount that will attract relief at his marginal rate.

Of course, if you can afford to do both that’s better again!
 
New Ireland’s Passive Iris fund gradually de-risks as you approach retirement.

So, yes, that’s a suitable fund to continue holding throughout the accumulation phase.
 
Thank you Sarenco.
My research a few years ago on notional service was that if I intended on not working fulltime until 65 then AVCs were a better option.. I would ideally like to job share into retirement or leave the full time job before 65 for more casual days but who knows what the job will look like in 20 years.
I have a small pension from a previous life that I hope will fill the gap so I won't need to take a cost neutral option if going before 65.. this could all be wrong though..

Will settle in with the new boss before decide on 20 vs 25% for my husband.
 
If he put 25% into his pension though, would we get any tax back when we do our balancing statement?? As he won't have used his full 20% band or do I not understand the joint assessment correctly?
 
If it’s an occupational scheme, I assume he would get the appropriate relief through payroll.
 
I presume that too.. Will know more when the company takes over.
I guess I was just wondering that if my husbands taxable pay will be approx €39k after he puts in 25% would the 3k to the 40% tax band help MY tax bill reduce as jointly assessed.
 
Chocolatechip said:
He is now on 51k gross which means he does not get 40% tax relief on about €1k on his contribution, I think.
Click to expand...

Would it make sense to allocate €51,000 of the standard rate band to you and €33,000 to your husband so that he gets relief at the higher rate of tax on his present contributions (and also his proposed increased contributions)?

It should leave you enough room to get full higher rate relief on your contributions to your public scheme and allow your husband full relief (through payroll) also.
 
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