@duke7779 Are you sure you're not just hearing this incorrectly? Pension matching up to 10% of salary usually means they put in the same as you, up to 10% (meaning you can get 20% contribution at a cost of 10). Various chickenshit versions match up to 5%, meaning that they can claim "we match your pension contributions up to 10%". Matching at 10% of your contributions probably costs them more to administer than support.
Is this a good deal?
- Thread starter duke7779
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danyyyy101
New member
@duke7779 Run out the numbers:
If you went it alone and contributed enough pension in a year, you probably could get AMC down to 0.5%.
If your pension grows at 6% p/a over its lifetime, 6 - 1.5 = 4.5% growth vs 5.5% growth, which is 18% less.
Does their +10% beat the loss of 18% of growth?
Clearly no, so the rational thing to do is to refuse if you can find somewhere with an AMC much lower.
If you went it alone and contributed enough pension in a year, you probably could get AMC down to 0.5%.
If your pension grows at 6% p/a over its lifetime, 6 - 1.5 = 4.5% growth vs 5.5% growth, which is 18% less.
Does their +10% beat the loss of 18% of growth?
Clearly no, so the rational thing to do is to refuse if you can find somewhere with an AMC much lower.
resjudicata
New member
that is awful. @spinuscyn That was my original plan - a self-directed Davy Select PRSA buying the most diversified Vanguard fund I can find. At 0.75% annual charge it beats the hell out of the 1.5% charge on the company scheme.
I calculated that after 5 yrs of paying in 30% of 50k (I work part time) the annual charge of 1.5% would almost totally consume the employer contribution! Ffs...
So I might suck it up for a few years and max out the employer contribution at 3% and then bail into a personal PRSA.
I calculated that after 5 yrs of paying in 30% of 50k (I work part time) the annual charge of 1.5% would almost totally consume the employer contribution! Ffs...
So I might suck it up for a few years and max out the employer contribution at 3% and then bail into a personal PRSA.
@duke7779 That’s crazy - I didnt think it would be so dramatic!
I think the move is definitely do it for the employer match (sorry if yiu clarified before but they are really inky matching 10% of your contributions?) and then just transfer it into something better once you move on from the company
I think the move is definitely do it for the employer match (sorry if yiu clarified before but they are really inky matching 10% of your contributions?) and then just transfer it into something better once you move on from the company
@spinuscyn Yes, really only matching 10% of my contribution...
Assuming zero growth and contributions staying the same, for first five years i.e. my contribution of 15k per year plus employer contribution of 1.5k per year...
Pot = my pension pot
AMC = 1.5% annual management charge
Yr 1 - 16,500 - 247.50
Yr 2 - 33,000 - 495
Yr 3 - 49,500 - 742.50
Yr 4 - 66,000 - 990
Yr 5 - 82,500 - 1,337.50
Yr 6 - 99,000 - 1485
Assuming zero growth and contributions staying the same, for first five years i.e. my contribution of 15k per year plus employer contribution of 1.5k per year...
Pot = my pension pot
AMC = 1.5% annual management charge
Code:
Pot AMCYr 1 - 16,500 - 247.50
Yr 2 - 33,000 - 495
Yr 3 - 49,500 - 742.50
Yr 4 - 66,000 - 990
Yr 5 - 82,500 - 1,337.50
Yr 6 - 99,000 - 1485
@duke7779 I cant emphasise enough how important it is to start your pension plan as early as possible in your career. As a retired Irish public servant I would have needed to accumulate €1m in order to have the pension I now have. Take personal responsibility for your own financial well being and start investing in the stock market and govt bonds with a mix of risk you are happy with. Use the internet as Irish stockbrokers are charging savage fees which bite into your returns big time.
hazelnutoc
New member
@hazelnutoc Public servants can have defined benefit pensions.
Generally your pension would pay out between 4-5% of its value per year. So if you want 20K you’d need 500k in your pension pot. If you want a retirement income of 40k then you’d need a million in your pension pot.
If you’ve a defined benefit then it’s an amount calculated as a % of your wage and years of service. So you could get a pension that’s paying you 60% of your salary before you retired as an example. Or if you worked for a shorter amount of time in public service it might be 10% of your yearly wage. Its one of the big benefit of working in public sector.
Generally your pension would pay out between 4-5% of its value per year. So if you want 20K you’d need 500k in your pension pot. If you want a retirement income of 40k then you’d need a million in your pension pot.
If you’ve a defined benefit then it’s an amount calculated as a % of your wage and years of service. So you could get a pension that’s paying you 60% of your salary before you retired as an example. Or if you worked for a shorter amount of time in public service it might be 10% of your yearly wage. Its one of the big benefit of working in public sector.
hazelnutoc
New member
@duke7779 I work in pensions and that's a shockingly bad deal. I do work with a scheme that does the 10% of what you pay as well and it's so hard to build a pension like that.
For companies to start pension schemes they at a minimum have to either pay for the setup & administration of the scheme as well as the death in service benefits. Or their other option is to pay a minimum of 10% of your ordinary employee contributions.
They're literally scraping the barrel to be able to be a pension scheme.
Also usually or often the AMC charges are built in to the unit prices.
For companies to start pension schemes they at a minimum have to either pay for the setup & administration of the scheme as well as the death in service benefits. Or their other option is to pay a minimum of 10% of your ordinary employee contributions.
They're literally scraping the barrel to be able to be a pension scheme.
Also usually or often the AMC charges are built in to the unit prices.