Surely 5pc of my salary is enough to be putting into my pension?

QI am enrolled in my employer’s occupational pension scheme. It puts in 10pc of my gross salary and I put in 5pc. I am aged 39. Am I taking full advantage of my pension options?

AThe short answer is you are not taking full advantage of your pension options. At age 39, you are entitled to put away up to 20pc of net relevant earnings, while the salary cap is €115,000, according to Frank Conway, founder of financial wellbeing provider Moneywhizz and a qualified financial adviser.

At present, because you are enrolled in an occupational pension scheme, you’re only putting away 5pc of your gross salary, as the employer’s 10pc is not counted against your limit. If you were enrolled in a company-sponsored PRSA (personal retirement savings account), it would be different, he said. So, to make up the difference, you can use an Additional Voluntary Contribution (AVC).

QWe have a joint income of just over €120,000 and we are planning on buying our first home. It is a three-bed semi but all the three-beds in our area are around €550,000. This means we would not get the Help-toBuy grant of up to €30,000. We are thinking of buying a two-bed for just under €500,000 and trading up to a three-bed in a couple of years. Is this feasible, mortgage-wise?

AYou could probably qualify for a mortgage on the three-bed house under the mortgage income exemption rule, according to Cathal Coates of BRM mortgage brokers. You could then stay put in your new home.

But you will lose out on the benefit of the Help-to-Buy scheme, he said. Trading up to a three-bed from two-bedroom house is perfectly feasible from a mortgage perspective, providing you are able to show you have the financial capacity to afford a bigger mortgage, Mr Coates added. There are other considerations. Firstly, will you be able to afford to move in two to three years’ time? Note that property prices are currently moving upwards, and there is a lack of supply in new homes which makes demand an issue.

You will need to factor in other costs associated with buying a house such as legal costs, moving costs, estate agent fees etc. If you do go for the two-bed now, then you might want factor in your future plans when furnishing your first home to ensure what you buy will work in your second home. Also, maybe your circumstances might change in the future which could impact affordability – children and childcare; a reduction in working hours, car loans etc. While you will probably be able to avail of the HTB scheme if you purchase a cheaper property, you might not actually qualify for the full amount of the grant, he added. So check this before making your decision.

Q

The other day, I received a letter from my life insurance provider, a standard letter they issue periodically. I realised it’s been eight or nine years since I looked at my life cover policy. Since then, my three children have grown up and no longer live at home, and both my wife and I have reduced the hours we work. Should I work out what level of life cover I need now and reduce the amount of cover on my policy accordingly?

A

It is definitely beneficial to be familiar with your insurance policies so you can be sure that they are still meeting your needs, according to Barry McCutcheon, protection proposition lead at Royal London.

He said everyone’s situation is different, but a simple way of estimating the level of life cover you need can be to look at your family’s expenses and think about how these could be met without your regular income. Whatever financial commitments your family would find difficult to meet is an indication of how much cover you might need, Mr McCutcheon said.

Life cover can provide financial protection for dependents if you pass away, and it can also help your family to take care of some of the practicalities they may be faced with if that happens.

For example, for people like yourself with grown-up children, having life cover in place could help your family with funeral costs or allow you to leave an inheritance for your beneficiaries. Before making any decisions about reducing your cover, it’s important that you talk to a financial broker, Mr McCutcheon said. They will help you make sure that your policy is the correct one for you and advise whether there should be any alterations made.