Single Scheme Pension

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Sunnygirl69

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I'm aged 51 & a member of the HSE Single Scheme Pension (new entrant, joined 2015) have worked full time until now ie 5 years service. Have previously worked in private sector & have a small prb (Irish life) also have payed a class A stamp past 30 years. I would now like to put some money into avc's /prsa towards retirement. What is the best way to do this & when would this pot of money become available to me? I was thinking of paying in for approx 10 years, perhaps 5k pa gross.... I earn 36k pa
Any advice gratefully received
I
 
Thank u for response..... So for me as a 'new entrant' is that retirement at 70 years?
Also would it be tax efficient for me?
Can u recommend any providers? Sorry but there is absolutely no support here (large acute hospital) for new entrant queries.
All help gratefully received.
 
  • The normal retirement date for most members is the same as that for the State Pension. This is currently 66 years of age. It will rise to 67
    in 2021 and 68 from 2028. Using your Date of Birth is the easiest way to figure out what your normal retirement age is under the Scheme:
    • Age 66 Pension Age: If you were born before 1 January 1955
    • Age 67 Pension Age: If you were born between 1 January 1955 and 31 December 1960
    • Age 68 Pension Age: If you were born on or after 1 January 1961
  • There is an upper compulsory retirement age of 70 years for most members of the Scheme.
 
Sunnygirl69 said:
I'm aged 51
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As you are 51 now, your normal retirement age (NRA) for the scheme is 68. You can work on the assumption that this will also be your age for drawing the State Contributory Pension (PRSI). Given that you have 30 years PRSI already you are probably looking towards a full State Pension if you work up to your normal retirement age - or near it (likely that full state pension will require 40 years of PRSI, some of which may be credited).
You can take cost-neutral early retirement (CNER) at any time from 55 - but your Occupational Pension will be actuarially reduced as a result, proportional to how long it is before your NRA.

Sunnygirl69 said:
Also would it be tax efficient for me?
Click to expand...

There are many ways to evaluate this but if you are paying tax at the top rate now and are likely to be below the top rate in retirement (for all income) then it should be very much tax efficient. This is even more relevant if you think you may want to avail of CNER. And, at least some of the AVC pot can be used to top up your tax-free retirement lump sum, which is very tax efficient. Any amount over the limit that Revenue allow for the lump-sum top-up can be placed in an ARF and drawn down as income on retirement.

This is all based on current rules - but that is all you can really go on.
 
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Thank u very much early riser & protocol. So is AVC just something I can initiate & then inform my wages dept? Yes I am paying tax at the top rate so broadly speaking if I were to put €500 per month into AVC, it would cost me €250 net?? Apologies but I know nothing about pensions or avc's. Final question.... My PRB with Irish Life value €90000 at present...... Will take impact anything in terms of OP/state pension or future AVCs?

Many thanks
 
On €500 p/m you would get tax relief of €200 - so a net cost of €300( if you are currently paying tax at 40% on the €500). Between ages 50-55 pension tax relief is available on up to 30% of your pensionable salary, inclusive of whatever pension contribution that is deducted for your main Single Scheme pension. So provided the €500 does not bring you above this you are fine.
(I am just noting that your salary is €36k. Are you sure about paying 40% tax on €6000 per year? If not , the relief is not so attractive).

There are two ways of doing it. There is the standard AVC option. One brokerage company will have an arrangement with your employer to offer AVC to employees - generally this is Cornmarket (you can check this with colleagues or via your wages department). If you do it this way the €500 (or whatever) will be deducted directly from your monthly salary and tax relief applied at source. It is straighforward and the only thing you will be aware of is €300 less in your net pay.

Alternatively you can arrange an AVC privately. This is called a PRSA-AVC. This can be set up as "execution only" or with the advice of a broker. Going this way you should have a wider choice of providers and funds. You should also be able to source a better deal on charges and deductions than you are likely to get via Cornmarket. The €500 would not be ducted from your salary - instead you would have to pay yourself through your bank. You would also have to set up the tax relief with Revenue, but you should then be able to have the tax relief applied via your wages office.
If you do a search here for PRSA-AVC you will find various threads. It will still cost you €300 net but it is a bit more complicated to set up.

As Protocol has already pointed out, you can only access your AVC funds when you are taking retirement from your public sector employment.

Your PRB has no impact as regards your State Pension, Single Scheme Pension or AVCs (although the maximum total lifetime tax free lump sum is €200,000 - this is unlikely to be a factor for you). The only relevance it might have is if it were to bring your total income in retirement over the threshold for the top rate of tax - and thereby cancelling out some of the relief you get on your contributions in the meantime (assuming you will be getting relief at 40%).
 
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If you earn 36k, maybe you do not pay tax at the higher rate?

The SRCOP is 35,300.

Maybe very little of your income is exposed to the top MTR.
 
If you do a PRSA-AVC, that is nothing to do with your employer, no need to tell them.
 
I'm Public Sector and have a PRSA AVC that was set up via my employer and intermediary. . . I don't like the fee structure though 1.5% and then a 98% allocation rate.
1% AMC then 0.5% to Intermediary and then the 98% allocation rate.

the upside is they take the contributions directly from my wages so I don't need to worry about revenue or anything. . . Although is doing the tax that hard? would I be better off getting a better AMC elsewhere and doing the contributions and tax myself?

Can I do better?
 
Was just about to move forward with this... Got further info about set up from Forsa recommended pension advisor.... Company they use is New Ireland.... I am truly shocked by the fees/charges 0.75% fees & only 75% allocation for year 1. Year 2 onwards 95% allocation. Its hard to believe this is what the Forsa union promotes!!
 
Those allocation rates are shocking for a union backed company thats meant to have members best interests at heart. Not sure if you could try LA Brokers which may be provide you with a better deal.
 
Absolutely I'm wondering is there any point in contacting Forsa about this..... Like on what basis are they recommending this advisor & New Ireland to members..... I mean at the end of the day we are typically low earners with far reduced pension entitlements.
 
As @Ent319 & @Bluecup mentioned in post of early November, its very hard to see how notional purchase of years (pension or lump sum) is a good idea for new entrants (single scheme) Cost of approx €22 for every extra €1 in pension at 68years
I'm veering towards the AVC option but I have asked the union backed advisor to relook at allocation figures.... Year 1 76% & year 2 onwards 95%. The fund management charge of 0.75% seems reasonable.
It's not clear to me is this best rate New Ireland do or does advisor cream off portion??
 
Hi Sunnygirl69,
I posted about the cost of notional purchase on another thread a couple of weeks back, I've yet to get a response.
Similarly, the 'Cost of approx €22 for every extra €1 in pension', is what I have been advised too.
Its next to impossible to get any sort of advice on this scheme/purchase options from anywhere, I contacted the Union a year ago and got virtually no response.
I have an AVC set-up and am considering just continuing with it, and not bothering with the single purchase scheme top up.
My father was public servant a long time ago did a week purchase of years, and is encouraging me to buy the notional service etc, as it was worth it in the end he says, but this appears to be a new product by comparison.
Amazed that the unions haven't pushed for better terms on this for us, especially given how many public servants have been recruited since 2013.
Is the lump sum payment better than the referable amounts?
If somone retired early/cost neutral etc, would the extra contributions come in to play? I'm just trying to find some positives about this scheme and purchase option...
 
I ended up today going with AVC contribution option. I managed to negotiate slightly better allocation rates with the broker.... Makes me feel bit better Feel like terminating my union membership #Forsa.... I feel they have really failed new entrants on a number of fronts.
 
Hi - don't have much to add on this other than what's been said here and in other threads. I was thinking about doing a more comprehensive post analysing the purchase facility a while ago but life got in the way. It does seem extremely bad and AVCs seem to be the more favourable option in nearly all cases for single scheme members. Key thing would be that if you invest your money in an AVC long term it can grow higher than the rate of inflation.
 
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