Why are people obsessed with getting a pension

Bass Reeves

sweet_trip wrote: »

I could add contributions but the way everyone, in real life, on the news and on the internet seems to talk is that the pensions are a ticking time bomb so would it be worth my time if I end up losing it all?



I'm very skeptical of private pension schemes too. A lot of them to me, and some other people I've spoken to (ex salesmen) are of the opinion a large portion of them are scammers.








You're right, I should but I've never really been provided any info on how to look into them. My contract is very vague about it.

A retired colleague recently said after 35 years in the job he left with €20,000 goodbye money and €180 a week.



I don't know if thats good but everyone at work seems to think its not.

From those figures his basic salary must have been only in the 20k bracket.

neutral guy

Every politicians group has bussines group which getting proffit from politicians in power if politicians losing elections then other bussines group which support winners has profit.Politicians are not independent and never was.
The old people has majority on elections and ammount of them are rising and if politicians want win elections and get proffit from cooperation with bussines group they has to buy voices lifting pensions,minimum wages.
Every single group /party who will reduce pensions,lift the pension age wil lose elections.Bussines groups will not support losers.
I dont worry about my pension because only way for politicians get in power is buy my voice paying/rising pension.
If politicians will not do that then people will vote for who will do that no matter who it will be fashists,communists.maoists or populists.
There will be bigger taxes for working class,rich people ,property,etc but pensions are and will be paid in full.

Geuze

sweet_trip wrote: »

You're right, I should but I've never really been provided any info on how to look into them. My contract is very vague about it.

Here you go, plenty to read:

https://singlepensionscheme.gov.ie/

https://singlepensionscheme.gov.ie/for-members/scheme-information/

This is for the new, post 2013 scheme.

Geuze

sweet_trip wrote: »

A retired colleague recently said after 35 years in the job he left with €20,000 goodbye money and €180 a week.

The lump-sum is (3/80) of salary for each year of service.

So in this case it is 35*3 / 80 = 105/80 of salary

So the lump-sum after 35 years is 1.3125 salary.

A 20k lump-sum means this person earned 15k pa.

You are not been told all the facts.

Dodge

sweet_trip wrote: »

You're right, I should but I've never really been provided any info on how to look into them. My contract is very vague about it.

Your contract isn’t vague about it at all. Every PS contract is very forthright in its pension obligations. You just need to read it

As for the other stuff, don’t listen to what other people say they get. It makes no difference to you and your pension (even if they tell the truth, which it appears to not be the case)

sweet_trip

Bass Reeves wrote: »

From those figures his basic salary must have been only in the 20k bracket.

Sorry I was way off the mark.
I just asked that particular person, he did 22 year's service. Got €42000 lump sum + €575 per month pension. Still not much.

I'll go look at my own contract later.

Limpy

If your getting a state pension are you intitiled to receive a state pension in another EU state? Basically can EU citizens move around after retirement and be gaurenteed a state pension with credits from Ireland to say Spain ect.

sweet_trip

sweet_trip wrote: »

Sorry I was way off the mark.
I just asked that particular person, he did 22 year's service. Got €42000 lump sum + €575 per month pension. Still not much.

I'll go look at my own contract later.

What was his role and final salary?
You'd need over €400k in a pension fund to get €7k/year pension at current annuity rates so as sh1t as it sounds it's not too bad if you crunch the numbers.

thebiggestjim

Augeo wrote: »

What was his role and final salary?
You'd need over €400k in a pension fund to get €7k/year pension at current annuity rates so as sh1t as it sounds it's not too bad if you crunch the numbers.

Are you sure on this one? I believe rule of thumb guidance is in retirement you can draw down 4% of your pension pot per year without reducing the fund size so that would be EUR16k/year before tax.

This depends on a few factors such as asset allocation and stock market performance but over the course of 20-30 years of retirement this number "should" hold.

thebiggestjim

thebiggestjim wrote: »

Are you sure on this one? I believe rule of thumb guidance is in retirement you can draw down 4% of your pension pot per year without reducing the fund size so that would be EUR16k/year before tax.

This depends on a few factors such as asset allocation and stock market performance but over the course of 20-30 years of retirement this number "should" hold.

I mentioned annuity.
The €575/month is guaranteed, to get that at current annuity rates over €400k pot would be required.

The 4% is a great rule of thumb if going the ARF ............. taking 4%/annum without the fund reducing means you need post charge growth of that amount every year......... that means at least half of the fund needs to be in equities. That brings risk.

If you are happy to take 4%/annum with a reducing fund then your 4% payment will be smaller year on year.

You yourself mention "should" hold.............. again the €575/month is guaranteed, guarantees cost money.

Many won't have the balls to go the ARF route come retirement especially if a sales person is pushing an even p1ss poor annuity option at them.

thebiggestjim

Augeo wrote: »

I mentioned annuity.
The €575/month is guaranteed, to get that at current annuity rates over €400k pot would be required.

The 4% is a great rule of thumb if going the ARF ............. taking 4%/annum without the fund reducing means you need post charge growth of that amount every year......... that means at least half of the fund needs to be in equities. That brings risk.

If you are happy to take 4%/annum with a reducing fund then your 4% payment will be smaller year on year.

You yourself mention "should" hold.............. again the €575/month is guaranteed, guarantees cost money.

Many won't have the balls to go the ARF route come retirement especially if a sales person is pushing an even p1ss poor annuity option at them.

You did mention annuity, fair point and guaranteed cash does cost money.

The question then for me is an guaranteed cash (annuity) worth paying EUR9k per year (16k - 7k) for? For me if I was really worried about having a certain amount of cash per year I would choose the 4% option and have an overflow high interest account which I would contribute to in up years and take from in down years rather than give a boat load of money to the annuity guys. That would greatly reduce the risk of having half your fund in equities and probably leave a lot more money in your pocket. One would need discipline for this approach.

Augeo wrote: »

If you are happy to take 4%/annum with a reducing fund then your 4% payment will be smaller year on year.

The same is true for years the fund is increasing so in theory they will balance each other out. Historically the stock market has risen 2/3 of the time and declined 1/3 of the time. The 4% rule accounts for down years as the average historical stock market return over a long period is 6-7%.

thebiggestjim

thebiggestjim wrote: »

..............

The question then for me is an guaranteed cash (annuity) worth paying EUR9k per year (16k - 7k) for? ................

I'd agree, however the point I made was that at current annuity rates you'd need a fund of €400k to get a guaranteed €7k/annum.

that's fact.

I'm very familiar with the merits of an ARF over the annuity option.

thebiggestjim wrote: »

..............overflow high interest account .............

There's no such thing.

thebiggestjim wrote: »

..............


The same is true for years the fund is increasing so in theory they will balance each other out. Historically the stock market has risen 2/3 of the time and declined 1/3 of the time. The 4% rule accounts for down years as the average historical stock market return over a long period is 6-7%.

Yes, but most don't fancy the risk/volatility with their actual retirement fund once they are drawing from it.
Many can accept/tolerate the risk up to the 5/10 years before planned retirement.

For your fund to increase you need to have it in stocks, many won't accept that risk level once they are retired.

Dodge

Limpy wrote: »

If your getting a state pension are you intitiled to receive a state pension in another EU state? Basically can EU citizens move around after retirement and be gaurenteed a state pension with credits from Ireland to say Spain ect.

It depends on the qualifying criteria but essentially because of EU regulations, they’re all somewhat linked

SI Contributions paid in, say, France can help you qualify for an Irish pension but they won’t be used to determine your rate of pay. A simple example here but if 40 is needed for a max here (under current rules) and 40 is needed in Germany, if you have 20 years contribution in each, you’ll get a half rate pension in both

If you qualify for an Irish contributory pension, then you can receive it anywhere (ie you can live in Spain and receive your Irish pension. You won’t receive a Spanish pension).

S.M.B.

sweet_trip wrote: »

Sorry I was way off the mark.
I just asked that particular person, he did 22 year's service. Got €42000 lump sum + €575 per month pension. Still not much.

I'll go look at my own contract later.

Did you misremember what he said to you previously or did he give you incorrect information? Because there's a big difference between the above and "35 years in the job he left with €20,000 goodbye money and €180 a week." which is what you first said.

I still think it's unwise to judge the merits of a pension based solely on the outcome and a belief that it's 'not much'. It's akin to me saying that I know a guy who told me he saved all his life outside of a pension and when he went to access his savings at retirement he only had £200,000. I have no idea if he got some great return of investment as he was only putting in a small amount a month over 30 years or maybe he was lumping massive money every month into a savings account and it all got eroded by inflation. And I could also say that figure is 'still not much'.

Henry Ford III

Augeo wrote: »

I mentioned annuity.
The €575/month is guaranteed, to get that at current annuity rates over €400k pot would be required.

The 4% is a great rule of thumb if going the ARF ............. taking 4%/annum without the fund reducing means you need post charge growth of that amount every year......... that means at least half of the fund needs to be in equities. That brings risk.

If you are happy to take 4%/annum with a reducing fund then your 4% payment will be smaller year on year.

You yourself mention "should" hold.............. again the €575/month is guaranteed, guarantees cost money.

Many won't have the balls to go the ARF route come retirement especially if a sales person is pushing an even p1ss poor annuity option at them.

Best advice has to apply, and that will take into account the individuals circumstances, health, and attitude to risk.

Commission disclosure is mandatory.

p.s. ARFs carry higher commission potential than annuities. Over double infact.

sweet_trip

S.M.B. wrote: »

Did you misremember what he said to you previously or did he give you incorrect information? Because there's a big difference between the above and "35 years in the job he left with €20,000 goodbye money and €180 a week." which is what you first said.

.

I literally said sorry I was wrong and corrected myself.

Dodge

sweet_trip wrote: »

I literally said sorry I was wrong and corrected myself.

The other figures don’t add up either fwiw. Suppose the best thing to do is not listen to other people when they tell you what they got/are to get

The public service pensions are easy to calculate for those retiring now (ie those recruited before 1995).

Bass Reeves

Augeo wrote: »

What was his role and final salary?
You'd need over €400k in a pension fund to get €7k/year pension at current annuity rates so as sh1t as it sounds it's not too bad if you crunch the numbers.

I say you are incorrect there Even if you subtract the lump sum it leaves 358K for annunity leaves which less than a 2% annunity rate. Even if leaving half of pension to a spouse a 358 lump. Irish life are quoting sample annunity rates of 3.85% for a joint life with 50% to spouse and 3% excalation for someone at 65. On 358K it is nearly 14K of an annual pension. At a rough calculation his 575/month is equivlent to about 225K of a pension pot including lump sum

Henry Ford III

Henry Ford III wrote: »

Best advice has to apply, and that will take into account the individuals circumstances, health, and attitude to risk.

Commission disclosure is mandatory.

p.s. ARFs carry higher commission potential than annuities. Over double infact.

Indeed, as you may have noticed I was commenting wrt to "Are you sure on this one? I believe rule of thumb guidance is in retirement you can draw down 4% of your pension pot per year without reducing the fund size" & I also mentioned "For your fund to increase you need to have it in stocks, many won't accept that risk level once they are retired"

Bass Reeves

Bass Reeves wrote: »

I say you are incorrect there .......

Apologies

S.M.B.

sweet_trip wrote: »

I literally said sorry I was wrong and corrected myself.

Apologies, I'm not having a go at you for telling us something that wasn't true. I'm trying to determine if you are putting too much weight in the words of someone who hasn't been 100% truthful with you or are you exaggerating their words due to some bias against pensions.

I would give very different advice depending on which of those it is.

Bass Reeves

sweet_trip wrote: »

Sorry I was way off the mark.
I just asked that particular person, he did 22 year's service. Got €42000 lump sum + €575 per month pension. Still not much.

I'll go look at my own contract later.

If he had 22 years service and working on 1.5 years wages as a lump sum his annual basic wage is in the 51K bracket. Under the old scheme he have a pension of 22/80 of his salary his annual pension would be about 14K ( 1/3 of his lump sum) for 22 years service. As the OAP is now considered part of a public servant's pension in theory his pension is over 19K when you add the OAP of 248/week. Where the catches come in is that public servants could traditionally retire at 60 years of age. However there is a catch unless public servants especially those with partial service contribute to a private pension they fail to reach substandical pension as previous. However if this person had contributed to an AVC he could have even over the last 5-10 years put in money earned at the high tax rate to bring his lump sum to the 1.5 times salary which would have added about 33K to his lump sum at a cost of 17-20K. If he had started it earlier it would have allowed him to to put in place that kind of amount fairly easily.

Dodge

Pre 1994 civil servants didn’t pay prsi so aren’t eligible for the state pension

Post 94 pay prsi and their pension is ‘integrated’ meaning they get the state pension and then an occupational pension but the overal result (for those recruited before 2013) would be the same as the above

Bass Reeves

Dodge wrote: »

Pre 1994 civil servants didn’t pay prsi so aren’t eligible for the state pension

Post 94 pay prsi and their pension is ‘integrated’ meaning they get the state pension and then an occupational pension but the overal result (for those recruited before 2013) would be the same as the above

I say sweet-trip friend is a post 94. While they are supposed to be the same technically they are not.

If you have 22 years service in public service and say 25-30 other years service in the private sector haw is the OAP distributed between the two employment. In this case it seems that about 7k of the OAP was allowed to balance the the remainder of the PS pension. The other 5k ish was allocated to the non PS work life.

Dodge

Bass Reeves wrote: »

I say sweet-trip friend is a post 94. While they are supposed to be the same technically they are not.

If you have 22 years service in public service and say 25-30 other years service in the private sector haw is the OAP distributed between the two employment. In this case it seems that about 7k of the OAP was allowed to balance the the remainder of the PS pension. The other 5k ish was allocated to the non PS work life.

Tbh I just don’t think the figures are real.

Jim2007

neutral guy wrote: »

Every politicians group has bussines group which getting proffit from politicians in power if politicians losing elections then other bussines group which support winners has profit.Politicians are not independent and never was.
The old people has majority on elections and ammount of them are rising and if politicians want win elections and get proffit from cooperation with bussines group they has to buy voices lifting pensions,minimum wages.
Every single group /party who will reduce pensions,lift the pension age wil lose elections.Bussines groups will not support losers.
I dont worry about my pension because only way for politicians get in power is buy my voice paying/rising pension.
If politicians will not do that then people will vote for who will do that no matter who it will be fashists,communists.maoists or populists.
There will be bigger taxes for working class,rich people ,property,etc but pensions are and will be paid in full.

Fantastic strategy..... now if you happen to know a tax payer in the Canton of Bern in Switzerland, ask them how that worked out for them...

To their surprise.... companies and young tax payers did not like the idea very much so they exited! Taxes on pensions went up, public services fell etc....

You have to have people generating wealth and willing to pay, before you can tax them.

Bass Reeves

Jim2007 wrote: »

Fantastic strategy..... now if you happen to know a tax payer in the Canton of Bern in Switzerland, ask them how that worked out for them...

To their surprise.... companies and young tax payers did not like the idea very much so they exited! Taxes on pensions went up, public services fell etc....

You have to have people generating wealth and willing to pay, before you can tax them.

I think this is the flaw in many people understanding of the present pension situation. Italy is a case in point where the economy is in tatters due to high tax rates to support pensioners who can retire at 60 years of age. France is in tatters from a combination of not as many pensions as Italy but retirement still at 60 and employment and tax laws that discourage business

Jim2007

sweet_trip wrote: »

Sorry I was way off the mark.
I just asked that particular person, he did 22 year's service. Got €42000 lump sum + €575 per month pension. Still not much.

I'll go look at my own contract later.

Not much in comparison to what? Without knowing how much he and his employer contributed it is a mean less statement.

Jim2007

Bass Reeves wrote: »

If he had started it earlier it would have allowed him to to put in place that kind of amount fairly easily.

That is the biggest problem with a lack of pension planning... it is almost always too late to correct.

Bass Reeves

Jim2007 wrote: »

Not much in comparison to what? Without knowing how much he and his employer contributed it is a mean less statement.

All public servants pay 10% PRD( pension related deduction) on salary over 26K/year. he have been paying about 2500/year in a PRD deduction. It worse for HSE staff who were paying a pension deduction already prior to the 2010 bail out. Admittily they are only pay it 10 years. However in 20 year time staff retiring from the public service will have paid more into a pension pot than they get out maybe even before an employer contribution. This is especially true for staff on income in the 40-50K bracket especially with average income based pensions.