PERSONAL FINANCE:Your queries answered

Q

I’m on a tracker mortgage with AIB at 0.9 per cent above the EU rate. It’s €140,000 for another 26 years with repayments of €527 a month. I have €25,000 in savings, I don’t have any other debt, would it be better to:

– pay off some of the sum and bring down the years?

– wait for AIB to copy the TSB with the tracker offer?

– leave it alone, use the saving as long term deposit?

- Mr KT, DUBLIN

A

You appear to be in a very fortunate position when compared with many other mortgage holders.

Not alone are you on a tracker but the mortgage itself is not excessive in size which means your payments are more manageable. On top of that, you have sufficient savings to provide a healthy buffer against the sort of unexpected events that are proving all too common for so many people these days.

In financial terms, the most important thing to note is that your outstanding loan is at an interest rate that is unlikely ever to be matched again in your lifetime. Any future borrowings you make are likely to cost you considerably more.

You say you have no other debt at present but that could change.

The other thing to note is that your current mortgage rate – 2.15 per cent – is below what you could reasonably expect to achieve on deposits that carry a guarantee. For instance, An Post savings bonds currently offer 3.23 per cent tax free per year for a three-year term.

So, you will effectively be losing money by opting to pay down your mortgage rather than investing.

It’s always possible that AIB will bring in some offer to incentivise people to pay down their trackers but, again, it only makes sense if you do not need to borrow down the line.

Do I have to pay the pension levy?

Q

I am a retired teacher and acted as a presiding officer at the recent general election. Upon being appointed, I was informed that I would have to pay a pension levy of 10.5 per cent.

I queried this with the returning officer who was the employer for the administration of the general election. I explained that while I was retired and receiving a pension. I did not think it fair or reasonable that a pension levy would apply to retired people.

The returning officer said that the instructions from Revenue were that all payments were to be subject to the pension levy. Is this correct and could you advise me as to who in Revenue would be dealing with this matter.

- Mr V McG, Wicklow

A

It is correct, unfortunately for you. The fact that you are retired from another job is not relevant to this employment. Your role at the general election was a public service role and you were paid for the duties – albeit at a lower rate than in previous elections.

As such, you are liable for the public service pensions levy. The level at which the levy was applied is apparently related to how the payment you received would be annualised.

The same issue applies, for instance, to retired people working as enumerators for the Census. The department handling the pension levy is the Department of Finance, rather than the Revenue.

This column is a reader service and is not intended to replace professional advice. No personal correspondence will be entered into. Please send your queries to Dominic Coyle, Q&A, The Irish Times, 24-28 Tara Street, Dublin 2. E-mail: dcoyle@ irishtimes.com