Please send your queries to Dominic Coyle, Q&A, The Irish Times, 11-15 D'Olier Street, Dublin 2, or e-mail to dcoyle@irish-times.ie. This column is a reader service and is not intended to replace professional advice. Due to the volume of mail, there may be a delay in answering queries. All suitable queries will be answered through the columns of the newspaper. No personal correspondence will be entered into.
Savings
Where would be the best place to lodge £20,000 that would allow quick access and decent interest?
Ms F.C., e-mail
As always, choosing a home for your savings depends on individual circumstances. Every option has an attendant cost. In general, the more immediate the access you require to the account, the lower the interest rate you can expect.
In any case, at the moment it is nearly impossible to get a decent interest rate on any savings, a fact which was one of the spurs to calls for some form of tax relief on savings in this week's Budget.
At present, Northern Rock offers what is clearly the best interest on such quick access or demand deposit accounts at 5.75 per cent. This has been the case since the British bank arrived on these shores a year ago with its telephone banking operation - a system that allows it to operate on a lower cost base than many of its rivals in the market.
It is unfortunate that while some of the other banks are quick to encourage customers to switch to Internet or telephone banking, they have been rather slower to provide real value in terms of the interest they offer on such accounts.
One other option you might consider is the credit union movement. These operate on a stand-alone basis so it is impossible to give you an interest rate that would apply to every one. They are generally open to people living in particular areas or working in particular companies or public services. You might check with the Irish League of Credit Unions in Lower Mount Street in Dublin for more information or with your employer.
Pensions
I wish to return to college next January for six months. However, I am concerned about my pension entitlements during this period. I have been in employment for the past three years and have quite a sum in my company's pension scheme as I have been using AVCs to top it up. The course will be full time for six months after which I will be hoping to gain employment with another company. Do I have to exit out of my present company's pension scheme and get hit for the exit tax as a result? Is there any way that I can keep my present pension amount without having to pay exit tax and then transfer it to my new employer's pension scheme after my course?
Mr B.H., e-mail
The key aspect of this situation is your intention to leave your present employer and whether that happens before or after completion of your course. Under pension fund rules, occupational schemes can insist that you serve five years with the company before you become eligible for benefits under the terms of the scheme. It is true that not all employers impose this threshold in today's climate of labour shortages - especially in high technology companies - but most still do.
A new Pensions Bill due before the Oireachtas in the new year is set to reduce this entry threshold to two years, but whether that comes into law before you finish your course and change jobs is impossible to say at this stage.
If the new rules arrive too late for you and your occupational scheme adheres to the normal rules, you will not be entitled to any benefits from your pension contributions and will be forced to exit. What will happen is that your contributions to the scheme will be returned to you.
This has one windfall, if your are a higher rate income taxpayer, in that while you received tax relief at your marginal rate on those contributions when they were made, tax will be deducted from those returning contributions at 25 per cent only. Unfortunately, the employer's contribution to the occupational scheme will also be returned to them, depriving you of any benefit accruing from them. Thus, it is very important that you allocate the returned money to the occupational fund in your new employment assuming it has such a scheme.
With regard to your AVC contributions, the same rules apply, given the length of your service.
Pay
What is the legal status of the PPF national pay agreement? Are all employers obliged to enforce it?
Ms A.F., e-mail
The Programme for Prosperity and Fairness is, as you state, a national agreement and is therefore binding on the various social partners who enter into it. There are certain groups that fall outside its boundaries, most notably the self-employed. However, for the PAYE sector, it is the guiding agreement on pay over the period it covers in the same way its predecessors have been.
As you might guess, however, nothing in this world is ever so absolute, especially when it comes to pay rises. There is, as there always has been, an understanding that businesses which would find the terms of the agreement so onerous that it might undermine their viability or very existence can plead inability to pay.
The argument, simply, has been that it is better for people employed by a company to have a job even without the benefits accruing under a national agreement rather than getting the pay rises in the short term only to lose their jobs as a result. Equally, it has been understood that if those circumstances change, the employer should make every effort to restore to their employees the pay awards that would have been theirs under the agreement.
When you say legally binding, the agreement is not something that would come before the mainstream judiciary. However, errant employers - or indeed employees who fail to live up to their part of the bargain in any national agreement - can go to the Labour Relations Commission and, ultimately, the Labour Court to seek recommendation on their positions. In this way, it is the same as local agreements which preceded social partnership and which still exist in many industries today.
