I agree with you Beaky. Its crazy to put off starting a pension until you are 35 or 40 if you are in a position to start you one in your 20's. No-one is saying he should all of the 600 a month into a pension. Assuming he pays tax at the higher level, a pension contribution of €200 p.m. would cost him a pricely sum of around €118 and that doesn't include relief on PRSI etc. Still leaves him €480 odd to do what he likes.
saving approx 600 p/m for 2 yrs - options?
- Thread starter marcellaf
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I agree with you Beaky. Its crazy to put off starting a pension until you are 35 or 40 if you are in a position to start you one in your 20's. No-one is saying he should all of the 600 a month into a pension. Assuming he pays tax at the higher level, a pension contribution of €200 p.m. would cost him a pricely sum of around €118 and that doesn't include relief on PRSI etc. Still leaves him €480 odd to do what he likes.
A high rate taxpayer will get up to 41% tax, 4% PRSI and 2% health levy relief on pension contributions up to his/her age related tax relief limit. This means that each €1 contributed may only cost them a €0.53 reduction in net/disposable income. Obviously pension income is assessable for income tax at retirement but remember that the pension fund will grow tax free and you can take up to 25% of the pension fund as a tax free lump sum.
(1) The op says in original statement he wants access to at least some of the money. Any money put into a pension fund is not readily accessible.(2) I think the notion that pensions are ''better than SSIA'' is overstated. Remember when you get to retirement (like me) my AVC (ARF) is readily available to me - but is taxable - so some of the gains I made would be clawed back. With SSIA's one gets the 25% for keeps, no strings attached. (3) Re ''you can take up to 25% of the pension fund as a tax free lump sum'' for me the jury is still out on this one. I was eagerly looking forward to my tax free lump sum on retirement but because of my tax implications re my lump sum I was informed I was entitled to nothing tax free. Am still investigating and may have to seek the assistance of an accountant. I constantly see this statement and cringe - I think it should be worded '' you may be able to take up to 25% of the pension fund as a tax free lump sum.
What tax implications?
My point really was that if you are 28 and don't own a house, once the market seems right, I would think it is generally more prudent to save to maximise the deposit on a house/land. That would mean putting the cash in to lump sum and surplus in to as much high interest savers for the next few years until the time to buy is right.
On the other hand, if house-buying isn't a target in the next 5-10 years, then the debate widens to investment category.
On the other hand, if house-buying isn't a target in the next 5-10 years, then the debate widens to investment category.
Re pension, I do not pay any tax at the higher rate, so any tax savings would be at 20%. Still not too bad I suppose, but there's more of an incentive to invest in a pension if you are on the higher rate of tax I feel.
The house buying debate, well, its a tricky one. My partner and I could (in theory anyway) get a mortgage right now to buy a house near where we currently live. I just feel at the moment that it is not the time to buy, the prices are way too high (min 350k) and we'd be paying 3 times in mortgage what we are paying in rent. So after a year or two of me being frantic to buy a house (got caught up in the whole panic) I have finally calmed down and realised that trying to enjoy my life and having the money to do so is more important than working to pay my mortgage each month. Maybe in a few years time I'll feel different or be in different circumstances. That's my take on it at the moment anyway, I could be completely wrong but!
Clubman, you quote 'investing indirectly in shares through a low charges unit linked fund while choosing a fund with a suitable risk/reward profile that matches your specific needs might be an option' - this indeed might be an option. Is there any thing like a dummys guide to this type of investment?
thanks again everyone, much appreciated.
The house buying debate, well, its a tricky one. My partner and I could (in theory anyway) get a mortgage right now to buy a house near where we currently live. I just feel at the moment that it is not the time to buy, the prices are way too high (min 350k) and we'd be paying 3 times in mortgage what we are paying in rent. So after a year or two of me being frantic to buy a house (got caught up in the whole panic) I have finally calmed down and realised that trying to enjoy my life and having the money to do so is more important than working to pay my mortgage each month. Maybe in a few years time I'll feel different or be in different circumstances. That's my take on it at the moment anyway, I could be completely wrong but!
Clubman, you quote 'investing indirectly in shares through a low charges unit linked fund while choosing a fund with a suitable risk/reward profile that matches your specific needs might be an option' - this indeed might be an option. Is there any thing like a dummys guide to this type of investment?
thanks again everyone, much appreciated.
AIB provide a Versatile Investment Plan (VIP), into which you can put €200 - €1000 p.m.
If you join before this friday 30th, AIB will match your first months installment (up to €1000), as long as you maintain the same monthly rate for the first 5 years.
You have a choice of about 6-8 managed or passive funds, of differing risk levels.
The fee on the EuroZone and Irish funds is 1.4%. More actively managed funds are higher.
Monthly contribs are 200-1000.
The T&C are actually quite flexible. You can reduce monthly contrib's at any time, or take up to 6 months holiday, at no charge; as long as the fund balance is over 2,400.
If you reduce you monthly contrib in the first 5 years, AIB will take back the same % of the bonus; i.e. if you contrib 1000 p.m, and reduce it 600, they will take back 400 of the 1000 they gave as bonus.
You can also withdraw funds, as long as the balance is kept over 2.4k also.
there are loyalty units purchased (2-3%) on 7, 14, 21 years.
heres the link to the funds availab, but as I said above, the offer finishes tomorrow CoB:
[broken link removed]
Monthly contribs are 200-1000.
The T&C are actually quite flexible. You can reduce monthly contrib's at any time, or take up to 6 months holiday, at no charge; as long as the fund balance is over 2,400.
If you reduce you monthly contrib in the first 5 years, AIB will take back the same % of the bonus; i.e. if you contrib 1000 p.m, and reduce it 600, they will take back 400 of the 1000 they gave as bonus.
You can also withdraw funds, as long as the balance is kept over 2.4k also.
there are loyalty units purchased (2-3%) on 7, 14, 21 years.
heres the link to the funds availab, but as I said above, the offer finishes tomorrow CoB:
[broken link removed]
Thanks to everyone for all their help, much appreciated.
Apologies in advance for how stupid this next question may seem, but I just don't want to get it wrong!
How do you open a Rabo direct 5% interest account? Or more to the point, I want to move 10k from my credit union account in to a new rabo account. Do I ask the credit union to make the cheque out to me personally, or to Rabo? Can I then post the cheque to Rabobank, along with my application form and whatever ID is required?
I just don't want to start the ball rolling until I know exactly, step by step, what I need to do.
Thanks a mill.
Apologies in advance for how stupid this next question may seem, but I just don't want to get it wrong!
How do you open a Rabo direct 5% interest account? Or more to the point, I want to move 10k from my credit union account in to a new rabo account. Do I ask the credit union to make the cheque out to me personally, or to Rabo? Can I then post the cheque to Rabobank, along with my application form and whatever ID is required?
I just don't want to start the ball rolling until I know exactly, step by step, what I need to do.
Thanks a mill.
LDFerguson
Registered User
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- 4,717
Apologies in advance for how stupid this next question may seem, but I just don't want to get it wrong!
How do you open a Rabo direct 5% interest account? Or more to the point, I want to move 10k from my credit union account in to a new rabo account. Do I ask the credit union to make the cheque out to me personally, or to Rabo? Can I then post the cheque to Rabobank, along with my application form and whatever ID is required?
Definitely not a stupid question. Everyone has to learn the first time.
You go through the Rabo website application process and get the Rabo account opened up before you put any money into it. You'll then have an account number and sort code like for any other bank account.
Your Credit Union may or may not have credit transfer facilities. If it does, you can simply instruct them to lodge the money directly into your Rabo account.
If it doesn't you can get a draft made payable to yourself. As Rabo don't have branches, you can either post the draft to Rabo and they'll lodge it manually or else lodge it to another current account and transfer the money to your Rabo account using internet banking.
Marcellaf - good luck with Rabo. I was quite apprehensive about opening an account with them because of what I'd read about the security gadget (Digipass). I went ahead recently and was very surprised to find how easy it is to use. They automatically open a current account as well as a savings one though I don't know why. The only minor gripe I have is that the cheque I posted on 2nd April (a refund from Revenue made out to myself) has still not been credited to my account. Maybe it's because so many are opening accounts since their rate is the best available so far.
elefantfresh
Registered User
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- 450
Am i right in saying that once 65 you will get the full state pension by default and then you top that up with whatever pension scheme you had? or does the state pension become "means" tested according to your pension? for example : if i had a private pension of say 300e per week, am i still entitled to a full state pension? man, this is a confusing topic.