Starting a Pension

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7upfree

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Hi all, appreciate any advice with the following:

I've just started a new job, €42k gross a year, no employer pension contributions. I've no pension set up currently, however I'm looking into getting one setup asap. Our company has an old one that employees used to use but there isn't anyone using it now ive been told. I'm thinking of contributing the max 15% to maximise the tax relief you get from the pension contributions but keen to hear others views on this - should i maybe go 10% instead and do the rest in savings/investments?

I'm lucky to only be paying €200 a month in rent/towards bills etc. as Im still living at home, if that adds any additional useful context.

Any recommendations/advice on what plan I should go for/how I should proceed? / Any tips/advice regarding fees etc to be aware - any help at all would be much appreciated!

Thanks
 
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If you intend to buy a house in the future, saving for a deposit should be a higher priority.

Bear in mind AE should be starting in 2025.
 
Would contributing to the pension not still be better than paying the equivalent amount in tax with the tax relief they give you?
 
If I could go back in time, to when I first started working, I would do as you are considering and contribute 10-15% into the pension fund.
I've read that if you start contributing to a pension at age 21 and stop when you are 30. You would still end up with more than someone who started at 30 and stops at 70. https://www.professionalcapital.co....0-years-pays-more-than-saving-for-40-jan-2020

For young investors I recommend choosing the world index fund.

According to the Pensions Authority https://pensionsauthority.ie/lifecy...gal obligation,contribute to a pension scheme.

An employer must enter into a contract with a PRSA provider and is obliged to:
  • notify ‘excluded employees’ that they have a right to contribute to a standard PRSA,
  • allow the PRSA provider or intermediary reasonable access to ‘excluded employees’ at their workplace,
  • allow reasonable paid leave of absence, subject to work requirements, so that ‘excluded employees’ can set up a standard PRSA,
  • make deductions from payroll at the request of employees and remit these to the designated PRSA provider (employers cannot charge for deducting and remitting contributions), and
  • advise employees in writing (normally on their payslip) at least once a month of their total contribution including the employer’s contribution, if any.

If your employer does not have a current PRSA provider, I would strongly recommend that rather than let them find one, you do the legwork and find one with reasonable fees (100% allocation and no more than 0.75% Annual Fee), and only then ask your employer to set you up with them.

There are a few brokers I've seen recommended on AAM who might be able to help you with this like
LABrokers
LDFergusson
 
If your employment requires you to negotiate pay increases, I would advise the following.

Set up a PRSA yourself, do not involve your employer.

Pay the pension contributions directly to the PRSA provider. Don't do deductions from wages.

By doing this your employer will have no knowledge that you can afford to make maximum pension contributions from your wages. If your employer was aware that your can afford this level of pension contributions they might not look favourably at a future cost of living increase request.

It's relatively easy to set up your own PRSA and claim the tax relief.

The two brokers mentioned above would assist you in setting up.
You could also contact Gerard Sheehy.
 
Thanks all for the replies so far, much appreciated! I would like to buy a house in the future so I'm debating now whther I'd be better instead saving up for a deposit say over the next 12-18 months and then look to setup a pension after that...? Keen to hear any thoughts/opinions on this sort of strategy...?
 
IMO you should focus on saving a deposit for your first home before funding a pension UNLESS your employer offers a contribution match.

Once you secure your first home, definitely worth starting a pension.

Hopefully your income will grow in time and you can get pension relief @40% (currently you would only get relief @20%).
 
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