Do you have a pension?

Greyian

draiochtanois wrote: »

This post has been deleted.

Just on that, it will actually cost you €2100, not €1400. €1400 is the amount you save, compared with taking the €3500 as normal pay (€3500*40% tax, assuming you're on higher rate = €1400 saved in tax).

Still very tax efficient, but not as tax efficient as you suggested.

ytpe2r5bxkn0c1

Rackstar wrote: »

Bleeding China!!! 7.5% gone from my pension in a week

This is what's wrong with people's perception on pension funds. One day, one week, one month, even one year doesn't matter. It's a long term investment.
And any pension fund that lost the full 7.5% yesterday ks nkt a fund I would want to be part of.

mahoganygas

Luckily I work in financial services so I have a bit of understanding of how these things work.

Almost all of my friends are unaware of what their pensions are worth or even how much they are contributing.
Some of them are slowly starting to catch on that they should contribute as much as comfortably possible in their twenties.
Others shrug their shoulders when I ask why they are not taking advantage of the maximum employer contribution available. It's free money!

This stuff should be taught in schools.

kazamo

Ronnie Worried Workaholic wrote: »

This is what's wrong with people's perception on pension funds. One day, one week, one month, even one year doesn't matter. It's a long term investment.
And any pension fund that lost the full 7.5% yesterday ks nkt a fund I would want to be part of.

Why would it matter to you if it lost 7.5% or not.
Your employer picked up the tab for the difference

lawred2

One More Toy wrote: »

Was sitting around at work talking about it, I was the only one of my colleagues to have one set up, and contributing the maximum, why is there such disregard in the Irish population towards private pensions? The state one wont provide the greatest of living standards yet people put it off, even into their forties:eek:

pensions are a scam...

the only pensions worth holding are defined benefit government backed.

The rest are a lottery.

Have you seen the battering pensions have taken in the last 48 hours alone?

Rackstar

Ronnie Worried Workaholic wrote: »

This is what's wrong with people's perception on pension funds. One day, one week, one month, even one year doesn't matter. It's a long term investment.
And any pension fund that lost the full 7.5% yesterday ks nkt a fund I would want to be part of.

Clearly it's a long term investment. It's a fund for when I retire. I'd still rather that it didn't lose 7.5% of its value in a week.

draiochtanois

This post has been deleted.

KomradeBishop

Frankly, in a world stuck in (what looks to be) a state of permanent economic turmoil/crisis - which is going to take decades to play out completely - people would have to be complete fools to believe any promises made to them, about pension payoffs - it's naivety in the extreme.

It's like people don't see that they are investing their money, and that this carries risk - people treat it almost as if it's a sure payoff.
All this nonsense about pensions taking big hits today, and saying "in the long run it'll be fine" is bollocks as well - a pension making promises about payoffs, based on todays performance, can no long deliver on those promises when it takes a hit tomorrow - the 'in the long run' stuff is just specious nonsense, which people who know little about finance (i.e. the people having pensions marketed to them), are easily fooled by.

Good article here, on the state of certain pension plan types:
http://www.irishtimes.com/business/personal-finance/can-you-believe-the-pension-promise-1.1391621

Everyone always thinks "it won't happen to me" when it comes to taking a big hit on their pension, because everyone assumes that their pension is managed well - but the reality is nobody has a clue how their pension is managed, because there is little transparency, and people are just taking a gamble really.


A good note from the above article:

The ECJ ruled that, under EU law, workers should be entitled to at least 49 per cent of their pension, with the State required to step in and foot the bill.

So, there is actually a huge moral hazard here among those managing pension funds, where they can charge fees hugely in excess of the quality of the work done (and how many people here know how much in fees, they pay, to their pension fund managers? Very few I bet), and where - with many pensions - they can take risky investments in order to inflate the on-paper-only performance of the pension fund (because most people don't have a fúcking clue about this kind of thing or know what their pension fund is doing), and then those investments can blow-up later on - at which point the state may have to step in and bail everyone out, up to 49% of the pension.

People are not nearly cynical enough, of an industry - the closely interrelated banking/financial industry - which deserves enormous cynicism due to their past actions/performance; that's very naive of people.

KomradeBishop

Rackstar wrote: »

Clearly it's a long term investment. It's a fund for when I retire. I'd still rather that it didn't lose 7.5% of its value in a week.

Yea the "it's fine in the long term" is bollocks aimed at people who are gullible about finances - as I said in my post above, a pension making promises based on performance today, will fail to meet those promises when it takes a hit tomorrow.

People seeing chunks of their pension get wiped out now, shows exactly how they are a gamble, and how the financial industry and pension fund managers, will be happy to charge huge fees while taking risky investments, because they largely don't give a shít if the people contributing to the fund, lose money - they are getting paid, based on 'on-paper-only' performance, today, so they have no incentive to care about the long-term survival of the fund, only on inflating it's on-paper (and potentially illusory) 'performance', to justify rewarding themselves more money.

Once the shít hits the fan, it's a case of IBGYBG.

Every cent you contribute to your pension, is spent into a long-term gamble, and you're not going to see it (or a percentage of it...) back, for decades.

lawred2

KomradeBishop wrote: »

Frankly, in a world stuck in (what looks to be) a state of permanent economic turmoil/crisis - which is going to take decades to play out completely - people would have to be complete fools to believe any promises made to them, about pension payoffs - it's naivety in the extreme.

It's like people don't see that they are investing their money, and that this carries risk - people treat it almost as if it's a sure payoff.
All this nonsense about pensions taking big hits today, and saying "in the long run it'll be fine" is bollocks as well - a pension making promises about payoffs, based on todays performance, can no long deliver on those promises when it takes a hit tomorrow - the 'in the long run' stuff is just specious nonsense, which people who know little about finance (i.e. the people having pensions marked to them), are easily fooled by.

Good article here, on the state of certain pension plan types:
http://www.irishtimes.com/business/personal-finance/can-you-believe-the-pension-promise-1.1391621

Everyone always thinks "it won't happen to me" when it comes to taking a big hit on their pension, because everyone assumes that their pension is managed well - but the reality is nobody has a clue how their pension is managed, because there is little transparency, and people are just taking a gamble really.


A good note from the above article:

So, there is actually a huge moral hazard here among those managing pension funds, where they can charge huge feeds hugely in excess of the quality of the work done (and how many people here know how much in fees, they pay, to their pension fund managers? Very few I bet), and where - with many pensions - they can take risky investments in order to inflate the on-paper-only performance of the pension fund (because most people don't have a fúcking clue about this kind of thing or know what their pension fund is doing), and then those investments can blow-up later on - at which point the state has to step in and bail everyone out, up to 49% of the pension.

People are not nearly cynical enough, of an industry - the closely interrelated banking/financial industry - which deserves enormous cynicism due to their past actions/performance; that's very naive of people.

My first job was with a MN.. obv I joined the pension scheme. That's what you do.

Remember sitting in with one of the advisors telling me that at current levels of contribution and growth; my fund would be worth in excess of 1.2m upon retirement (60)..

lol

2007 - 2009 wiped it clean out. And I left the company. As it stands 10 years after the fund was created; it's now worth 17k.

I'm taking my pension contribution as cash currently.

ytpe2r5bxkn0c1

kazamo wrote: »

Why would it matter to you if it lost 7.5% or not.
Your employer picked up the tab for the difference

That's nonsense. You know rightly that pensions are long term and that no fund is 100% linked to shares, let alone to the commodities market.

As for DB short falls; these are not always sorted by just an injection of cash from an employer. But, then again, you are well aware of this.

draiochtanois

This post has been deleted.

KomradeBishop

lawred2 wrote: »

My first job was with a MN.. obv I joined the pension scheme. That's what you do.

Remember sitting in with one of the advisors telling me that at current levels of contribution and growth; my fund would be worth in excess of 1.2m upon retirement (60)..

lol

2007 - 2009 wiped it clean out. And I left the company. As it stands 10 years after the fund was created; it's now worth 17k.

I'm taking my pension contribution as cash currently.

Ya that's a perfect example - the economic crisis wiped out your pension almost entirely, and throughout history, economic crises happen on a regular basis.

It's a sure thing, that there will be multiple economic crises occurring, before anyone here gets to see a cent back from their pension - and people expect their pensions to survive unharmed/intact from that? (especially given the past precedent, of loads of peoples pensions getting wiped out almost completely)

It's really naive of people.

custard gannet

One More Toy wrote: »

Was sitting around at work talking about it, I was the only one of my colleagues to have one set up, and contributing the maximum, why is there such disregard in the Irish population towards private pensions? The state one wont provide the greatest of living standards yet people put it off, even into their forties:eek:

I remember having a good old wonder at a girl in work some years ago in her mid twenties talking about setting up a pension. I don't know why you would bother. The living costs of a person in retirement age are a fraction of those of the rest of us.

They have either paid off their pension or, as often would be the case in the dublin a few decades from now, have paid rent all their working life and have their name down to downsize to elderly social housing.

Elderly people have less travel expenses. They no longer have to commute, a great deal of them give up driving, or at least regular driving, and they no longer have to pay for public transport. Also, they go on less holidays than younger working people, usually out of a lack of physical or mental fitness for it.

Elderly people drink less. Plenty of former big drinkers out there who would be pissed as a fart off five pints by the time they are in their seventies.

Elderly people have only themselves to look after, generally, no dependent children, no kids needing the occasional prop up for college and so on, it's a few treats for the grand kids every once in a while and nothing more.

Elderly people eat a little less than younger people, which cuts down on the food costs.

No rent, no transport costs, a higher likelihood of getting a medical card, limited drinking, in all honesty if you have no outstanding debts being old isn't the most expensive lifestyle in the world.

suicide_circus

KomradeBishop wrote: »

Ya that's a perfect example - the economic crisis wiped out your pension almost entirely, and throughout history, economic crises happen on a regular basis.

It's a sure thing, that there will be multiple economic crises occurring, before anyone here gets to see a cent back from their pension - and people expect their pensions to survive unharmed/intact from that? (especially given the past precedent, of loads of peoples pensions getting wiped out almost completely)

It's really naive of people.

How do you plan for your old age do you mind me asking?

KomradeBishop

suicide_circus wrote: »

How do you plan for your old age do you mind me asking?

You think a pension is the only way to have money in old age? It's funny that people have the mindset, that there is no other way, other than having a pension.

suicide_circus

KomradeBishop wrote: »

You think a pension is the only way to have money in old age? It's funny that people have the mindset, that there is no other way, other than having a pension.

are you prepared to answer the question or are you just going to spout a load of pony about how everyone is stupid except you?

custard gannet

suicide_circus wrote: »

are you prepared to answer the question or are you just going to spout a load of pony about how everyone is stupid except you?

Same way as anyone who decides to work from home or take a part time job that isn't physically demanding, such as getting a taxi licence. While most elderly men would balk at working the weekend night shifts i'm sure they could make themselves a modes profit driving the less dangerous day shifts, for example.

While it's rarely seen in Ireland it is quite common to see retirees in the us working part time in fast food joints cleaning up, or as greeters and general assistants in non physical roles in supermarkets and hardware megastores. And like anything else that started in America I wouldn't be surprised to see it here eventually.

custard gannet

custard gannet wrote: »

I remember having a good old wonder at a girl in work some years ago in her mid twenties talking about setting up a pension. I don't know why you would bother. The living costs of a person in retirement age are a fraction of those of the rest of us.

They have either paid off their pension or, as often would be the case in the dublin a few decades from now, have paid rent all their working life and have their name down to downsize to elderly social housing.

Elderly people have less travel expenses. They no longer have to commute, a great deal of them give up driving, or at least regular driving, and they no longer have to pay for public transport. Also, they go on less holidays than younger working people, usually out of a lack of physical or mental fitness for it.

Elderly people drink less. Plenty of former big drinkers out there who would be pissed as a fart off five pints by the time they are in their seventies.

Elderly people have only themselves to look after, generally, no dependent children, no kids needing the occasional prop up for college and so on, it's a few treats for the grand kids every once in a while and nothing more.

Elderly people eat a little less than younger people, which cuts down on the food costs.

No rent, no transport costs, a higher likelihood of getting a medical card, limited drinking, in all honesty if you have no outstanding debts being old isn't the most expensive lifestyle in the world.

Total nonsense to be fair.

A large number of people live very good lifestyles when they retire and want to have good funds to be able to cover it. People are also not that old when they retire lots retire in their late 50's and early 60's and have a lot of living to do yet.

kazamo

Ronnie Worried Workaholic wrote: »

That's nonsense. You know rightly that pensions are long term and that no fund is 100% linked to shares, let alone to the commodities market.

As for DB short falls; these are not always sorted by just an injection of cash from an employer. But, then again, you are well aware of this.

Never mentioned where the money was invested in at all.

I was merely pointing out that as a DB pensioner news such as the last few days wouldn't have an impact and there was someone else making up the shortfall. You can't change schemes now anyway.

Re DB shortfalls, if the pension regulator wasn't demanding actions on this matter and plans put in place, the DB schemes could continue pretending that they don't have a problem.

In the last hour or so, another poster posted a link re pensions and it was very interesting. To get a 60k a year pension, would require a fund of 2.4 million.
And that's where the public and private pension schemes will fall down.
Way too much needed and the annuity rates crucify people when it is time to draw down.

So when I hear 7.5% wiped off share prices, it doesn't bother me. I have 2 pension schemes and they will be impacted, but so far away from 2.4million
and with pension levies etc, if I am not being screwed by one lot, another is sure to get me.

mahoganygas

draiochtanois wrote: »

This post has been deleted.

They are marketed to twenty somethings but that doesn't mean they have to invest in an all equity fund.

My pension is split between 3 funds, each with a further split of 9 sub-funds. These represent a spectrum for my appetite to risk. At one end, all government bonds. At the other, equities and commodities.

The 20 somethings can invest in just treasury bonds if that's what they want.

KomradeBishop

suicide_circus wrote: »

are you prepared to answer the question or are you just going to spout a load of pony about how everyone is stupid except you?

Why? And pretend you're not asking the question, to make an "everyone is stupid not to have a pension" argument?

No thanks - not going to allow you that rhetorical line of questioning, when it's just a statement under the guise of a question.

mahoganygas

KomradeBishop wrote: »

Ya that's a perfect example - the economic crisis wiped out your pension almost entirely, and throughout history, economic crises happen on a regular basis.

It's a sure thing, that there will be multiple economic crises occurring, before anyone here gets to see a cent back from their pension - and people expect their pensions to survive unharmed/intact from that? (especially given the past precedent, of loads of peoples pensions getting wiped out almost completely)

It's really naive of people.

Equity performance is cyclical. That's why they call it a downturn.
Pension values get restored in the boom times.

Long term performance in a well diversified equity tracker has been about ~8%.

suicide_circus

KomradeBishop wrote: »

Why? And pretend you're not asking the question, to make an "everyone is stupid not to have a pension" argument?

No thanks - not going to allow you that rhetorical line of questioning, when it's just a statement under the guise of a question.

Ah, a bona fide pony merchant, off down to smithfield market with you.

It was a genuine question btw I'm not convinced by pension schemes at all.

KomradeBishop

mahoganygas wrote: »

Equity performance is cyclical. That's why they call it a downturn.
Pension values get restored in the boom times.

Long term performance in a well diversified equity tracker has been about ~8%.

Your making a basic mistake in understanding finances there. 'Fund Value' and 'Future Investment Profits' are two different things - when you wipe out a part of 'Fund Value', that is gone forever, and 'Future Investment Profits' will forever be less, than they would have been if 'Fund Value' didn't get partly wiped out.

This is why only the gullible fall for the "in the long term, it's fine" argument - that's wrong; whenever someone tries to assure you with 'in the long term', your bullshít-o-meter should be blaring.

Wiping out part of the fund value is not cyclical either - that's a straight-up bad investment and permanent loss - the "it's just cyclical, be grand" argument, is another one aimed at the financially gullible.

ytpe2r5bxkn0c1

kazamo wrote: »

Never mentioned where the money was invested in at all.

I was merely pointing out that as a DB pensioner news such as the last few days wouldn't have an impact and there was someone else making up the shortfall. You can't change schemes now anyway.

Re DB shortfalls, if the pension regulator wasn't demanding actions on this matter and plans put in place, the DB schemes could continue pretending that they don't have a problem.

Don't paint all DB schemes with the one brush. Ours was always proactive and identified issues well in advance of any regular involvement. We reviewed benefits, changed investment protocols, and increased contributions as needed. It is now absolutely solid and contribution rates were actually reduced back to the previous levels. We pick up the shortfalls when actuarial projections anticipate them, not "someone else". For the past 10 years investment return alone greatly exceeded pension payouts and the fund is currently sufficient to pay entitlements to all members on an assumed life expectancy in excess of 85. That said, the DB scheme is now closed to new members.

Regardless of a DB, DC pension or just investing for retirement generally, the last couple of days should have little impact long term.

mahoganygas

KomradeBishop wrote: »

Your making a basic mistake in understanding finances there. 'Fund Value' and 'Future Investment Profits' are two different things - when you wipe out a part of 'Fund Value', that is gone forever, and 'Future Investment Profits' will forever be less, than they would have been if 'Fund Value' didn't get partly wiped out.

I have absolutely no idea how you managed to cobble this nonsense together.

Imagine my fund is made up entirely of a single investment of 100 shares in microsoft.
If I bought these shares at a price of $5. My fund is worth $500.

Fast forward ten years and MSFT shares are now only worth $3. I still hold 100 shares and my fund is now worth $300. Apparently I have somehow "wiped out a part of the Fund Value".....???

Fast forward again another 20 years and MSFT shares are now worth $6. I still hold the same 100 shares and my fund is now worth $600.

KomradeBishop

suicide_circus wrote: »

Ah, a bona fide pony merchant, off down to smithfield market with you.

It was a genuine question btw I'm not convinced by pension schemes at all.

Okey, well assuming it was a genuine question then, I'd simply save the money and put it into useful assets - and steer well clear of investments, unless I personally know exactly what I'm doing (and almost nobody has a clue what their pension fund is doing).

Don't believe the fantastical promises of huge returns. A lot of people get completely screwed over by pension funds, and the financial industry overall (the industry is based around dozens of different kinds of legalized fraud, aimed at screwing people over - making shítty investments to create high 'on-paper'/illusory profits that justify huge salaries/fees, high among them - so just stay away unless you know precisely what you're doing).

Limited return or even inflation-eroded savings, and more modest living in the present to save for that, are better than going into retirement, after watching a huge portion of your pension go up in smoke (which does happen to people...).

Kimbot

Paying into my pension since I was 18

KomradeBishop

mahoganygas wrote: »

I have absolutely no idea how you managed to cobble this nonsense together.

Imagine my fund is made up entirely of a single investment of 100 shares in microsoft.
If I bought these shares at a price of $5. My fund is worth $500.

Fast forward ten years and MSFT shares are now only worth $3. I still hold 100 shares and my fund is now worth $300. Apparently I have somehow "wiped out a part of the Fund Value".....???

Fast forward again another 20 years and MSFT shares are now worth $6. I still hold the same 100 shares and my fund is now worth $600.

In the real world, rather than this imaginary scenario, pension funds are invested in companies other than Microsoft (quaint that you believe all companies/investments are as secure as that...), and a lot of companies go bust during economic crises - leading to a complete wipeout of a part of investments.