Jill Kerby

YOUR LETTERS: DEBT, SHARE DEALS, PENSIONS AND SAVINGS

BW writes:  My daughter, who has a long, chronic psychiatric illness has run up approximately €9,000 in credit card debt which has only come to my attention recently. MABS has advised her and her options are to try and get a credit union loan, or from me. What do you think would be a fair repayment term and interest rate? Her only income is disability benefit.

Credit unions typically charge c10%-12% per annum on the diminishing balance of personal loans, but the CU may not be willing to extend your daughter a loan given that she is unemployed and relies on a state benefit. If you want to be repaid for clearing her €9,000 debt you need to take into account that she may not have much leeway to even make a token repayment. Given that your daughter’s credit record is probably already impaired, I suggest she (or you on her behalf) speak to the MABS adviser about the option of applying for a Debt Relief Notice from the Insolvency Service of Ireland. The DRN allows up to €35,000 worth of unsecured debt to be permanently written off for qualifying debtors. See www.isi.gov.ie

Mr NB writes: At one point my 163 AIB shares, at €17.90 were worth $3,000.
Can you tell me if there is any way I can redeem these shares or is there any way that the government might reallocate something now that the bank is doing so well.  It would seem a bit unfair that the ordinary man can be left high and dry.
 
The collapse of Irish bank shares from 2007 came as a huge financial and psychological blow to thousands of ordinary people who, for good reason for so many years, that bank shares were a low risk, conservative way to invest their savings.  Pinning hopes on an single share, or even a few shares, no matter how strong an economy is, frankly, never a good idea.

Unfortunately for every AIB shareholder, they are nothing more than penny shares and the state is the single real shareholder. The bank is finally beginning to repay us (via the state shareholder) some of the c€20 billions we piled into it, and it may even be sold on some day, but you will not receive an individual payment. We can only live in hope that if and when the proceeds of the sale of AIB are “banked”, the money will be used to improve state services or reduce the national/government debt which has quadrupled since 2008.

TM writes: I would welcome your opinion on how best I can manage my savings over the next 12 months or so. I plan to retire later this year when I will be eligible for both a state and personal pension. I have been self-employed for the last seven years after being made redundant and have approximately €50,000 on deposit which will mature in October. With deposit rates dropping, and a pension tax free lump sum on the way I would like to get the best return and wonder about other options.

You may have more decisions to make than just what to do with your existing savings and the pension tax-free lump sum.  First, you are not obliged to encash your private pension at age 66 and take that lump sum. You don’t have to purchase an annuity income with the balance of the fund; you could keep it invested if you wanted to keep working, for example and the state pension (and work income) was enough to live on for the moment.  Either of these options are available to you if you switch your private pension fund into an Approved (and/or Minimum) Retirement Fund or even a Personal Retirement Savings Account. There are different tax implications for all of these options. 

What you need to consider doing first is to speak to a good, impartial, fee-based pension adviser. As for the cash, be aware that deposit rates everywhere are extremely low and could even be moving towards negative returns, by which we could all end up paying the bank to leave our cash with them. A good adviser can discuss other ways (albeit with capital risks) to produce a real return on your lump sums.

CF writes:  I've been getting emails from Vodafone lately and have no clue what they are up to. I am one of those who tried out the whole notion of buying shares for the first - and last - time on this floatation, and their value sank like a rock seconds after the deal was closed. I had decided to just leave the shares alone in the vague hope that somewhere down the line they might pick up. I have a suspicion they have done something now to make this difficult, but I am really not clear what. 

There’s nothing sinister going on. The UK company is simply offering the 334,000 plus Irish shareholders with up to 1000 shares a special low cost or even free share dealing service if they wish to sell their stock. The offer is open until May 24. Anyone with fewer than 50 shares can now sell them at no cost and those with between 51 and 1000 shares and an electronic share certificate will only pay a trading commission of 21 cents a share or 35 centc a share for paper certificate holders. Total dealing charges are capped at €42.

Do you have a personal finance question for Jill?  Please write c/o this newspaper or by email to jill@jillkerby.ie