Why are people obsessed with getting a pension

Teddy Daniels

downtheroad wrote: »

Auto enrolment being brought in soon will allow this person to accrue a pension. Australia have it set up quite well, the salary package includes a pension contribution that is mandatory. Salary packages there are described as X plus Super, meaning you get pension contributions from Day 1 of any employment.

You can also very easily move your contributions to another fund if you change employer, by just providing the equivalent of a PPS number to the new employer's pension provider.

I hope that the system we bring into Ireland in 2021 will be modelled on the Australian system.

Auto enrolment is crap, I manage my own financial affairs so I hope there is an opt out.

Monife

Teddy Daniels wrote: »

Auto enrolment is crap, I manage my own financial affairs so I hope there is an opt out.

You can still manage them when auto-enrolled. Think the current proposal is you can opt out after 8 months, but if you change jobs you'll be auto-enrolled again.

Jim2007

downtheroad wrote: »

I hope that the system we bring into Ireland in 2021 will be modelled on the Australian system.

The Australian system is the same basic three pillar system favor in most Europe countries addressing pension reform. I’d expect Ireland will do the same.

Jim2007

Teddy Daniels wrote: »

Auto enrolment is crap, I manage my own financial affairs so I hope there is an opt out.

Very short sighted of you. First of all most people think they are good at managing money, but the reality is that very few actually are. But let’s suppose that you are as good as you say and you do accumulate a nice pot on reaching retirement age while the others do not. Guess who’s pot they will come after? Supported by the politicians who are their representatives.

The best way to safeguard your pot is to make sure everyone has a pot of their own.

AndrewJRenko

Ace2007 wrote: »

The "new" Single public sector Pension scheme which was set up for new members of public sector post 2013. It is a CARE scheme.

I don't think you saw the word notional. I am well aware that they public sector pensions are unfunded, but equally am aware the values are placed on the liabilities and the government know how much the pension are costing them each year, the money in turn is taken from the tax receipts that you and I and everyone else pays.

For the DC Scheme, the government would pay a % in contribution as would the employee, just like in private sector scenarios, and the employee is in control of how they want the funds invested themselves. The cost of the DC scheme and the closed DB scheme, would be higher in the initial years, but the overall cost would significantly reduce in the future. The initial cost would depend on the design of the new DC scheme etc. Where would the extra money come from you ask - there are many ways the government could do this - for example increasing corporation tax by 1.5%, would be a extra billion for instance. They could reduce USC and introduce a pension levy tax for everyone.

Like I said, there are many ways for it to be done, but if it's not in the interest of those at the top, or if those at the top are negatively affected, they will be unlikely to do it.

The 'initial years' would be a generation - about 50 years of funding both the DB pensions of current pensioners AND the DC contributions of future pensioners, at a cost of billions. Good luck with persuading politicians to put their future election chances on financial benefits for 50 years in the future, when we're crying out for funding for basic infrastructure and services.

screamer

Don’t worry OP, people in their thirties to forties won’t get to retire. Americanization of Ireland / overpaid defined benefit pensions and the lack of children in working class families to pay into the revenue pot will insure we’ll all be employed packing bags in the supermarket at 70+
Besides, retirement, Jesus boring, I’d rather stay working.

Ace2007

AndrewJRenko wrote: »

The 'initial years' would be a generation - about 50 years of funding both the DB pensions of current pensioners AND the DC contributions of future pensioners, at a cost of billions. Good luck with persuading politicians to put their future election chances on financial benefits for 50 years in the future, when we're crying out for funding for basic infrastructure and services.

The overall cost would be less than leaving the DB schemes the way they are.

Like I said it's not in their interest to do it so they won't. And hence individuals should be obsessed with getting their finances in order for when they retire, instead of hoping that the state pension will be available and will meet their needs. For instance given how bad the health system is now, when we have 5 workers for every pensioner, how worse is it gong to be around 2050, when we only have 2 workers for every pensioner. State won't be able to afford the DB pensions, yet alone the health case system for all these pensioners who never bothered saying for their retirement.

how.gareth

Thanks for all the positive replies folks, I work for a small employer so I presume they are not obliged to contribute anything to a pension? So if I put €100 a month into one and retired when I hit 70 what would I be looking at roughly? And would it be on top of whatever state pension was available at that time?

Zamboni

how.gareth wrote: »

Thanks for all the positive replies folks, I work for a small employer so I presume they are not obliged to contribute anything to a pension? So if I put €100 a month into one and retired when I hit 70 what would I be looking at roughly? And would it be on top of whatever state pension was available at that time?

Give this a go.
https://www.pensionsauthority.ie/en/LifeCycle/Useful-Resources/Pension-Calculator/

AndrewJRenko

Ace2007 wrote: »

The overall cost would be less than leaving the DB schemes the way they are.

Like I said it's not in their interest to do it so they won't..

Any cost savings would result from the reduced benefits to pensioners. This isn't a pain-free option. Public servants aren't dumb, and know when they're being sold a pup. Any reduction in benefits would need to be balanced out by increased basic salary, or public service posts become considerably less attractive to strong candidates, resulting in worsening public services.

And you still have the challenge of paying on the double for pensions for 50 years or so.

Ace2007

AndrewJRenko wrote: »

Any cost savings would result from the reduced benefits to pensioners. This isn't a pain-free option. Public servants aren't dumb, and know when they're being sold a pup. Any reduction in benefits would need to be balanced out by increased basic salary, or public service posts become considerably less attractive to strong candidates, resulting in worsening public services.

And you still have the challenge of paying on the double for pensions for 50 years or so.

As you have already eluded to, current DB pension are being paid out of general taxation, which is grand when the model has 5 paying tax workers for every pensioner.

Fast forward to 2050, when we will have 2 paying tax workers for every pensioner and tell me how all of these public backed DB pensions are going to be paid? As well as providing benefits to the hundred of thousands of private section people who didn’t bother saving for retirement?

There are two choices - act now - set up DC pensions for all in society, close public sector DB schemes to future, or kick the can down the road, when someone else will have to deal with it. Regardless of what way you do it - a government minister or senior civil servant, will not be adversely affected, because even if you cut their pensions through some innovated new regulation, Their pension will be so big that it won’t affect them, however cutting the pension of a normal public sector worker will affect them - but there will be no other option - unless your happy for your children and grand children to be paying 60/70% tax?

AndrewJRenko

Ace2007 wrote: »

As you have already eluded to, current DB pension are being paid out of general taxation, which is grand when the model has 5 paying tax workers for every pensioner.

Fast forward to 2050, when we will have 2 paying tax workers for every pensioner and tell me how all of these public backed DB pensions are going to be paid? As well as providing benefits to the hundred of thousands of private section people who didn’t bother saving for retirement?

There are two choices - act now - set up DC pensions for all in society, close public sector DB schemes to future, or kick the can down the road, when someone else will have to deal with it. Regardless of what way you do it - a government minister or senior civil servant, will not be adversely affected, because even if you cut their pensions through some innovated new regulation, Their pension will be so big that it won’t affect them, however cutting the pension of a normal public sector worker will affect them - but there will be no other option - unless your happy for your children and grand children to be paying 60/70% tax?

There are actually a lot more choices than that. We had a nice pension reserve fund building up until it had to be redirected to bailing out our banks and property developers, so that's another option for funding future pensions deficit. Either way, it's just one more part of public expenditure, just like health and transport and education.



Any switch to DC schemes would require double-funding of pensions for 50 years or so. Where's that money going to come from?

kippy

Ace2007 wrote: »

If he really thought the country was on verge of bankruptcy, he could have closed the public sector DB pensions to future accrual and have everyone contributing to a DC pension instead. This would lead to billions in savings each year.

But my doing this it would lead to the unions organising a mass walk out and virtual shut down of public sector, so instead he raided the private pension funds.

Pensions in this country are a ticking timebomb, but those making decision aren't affected and so they don't care. There are many articles from many professional bodies outlining such.

If likes the board of the HSE/health department all have gold plated health insurance policies, so do you really think they are going to sort of the issues in the health industry.

It wasn't an "instead" it was an "as well as".
There were significant structural changes made to public sector pensions in the same time period which reduced greatly in a number of ways the benefits to the employees, so it wasn't just private sector pensions that were "raided". It was a balancing act to keep public sector on side while saving money for the state.

Don't get me wrong. There are major pension issues ahead of us. As a state we should be ensuring all citizens have a decent pension and more needs to be done in this area.
Its annoying to see Canadian Teachers benefiting from the national lottery, multiple vulture funds getting assets at knock down prices to benefit from long term income, as well as various operators operate toll roads etc etc when one would think the state could and should use these types of things as long term investments for a universal pension scheme but people would no doubt have issues with that as well.


Ultimately people need to take some responsibility for their income in their later years while balancing that with current requirements for spending.
No point letting a house go to ruin to save for a pension.

Ace2007

kippy wrote: »

It wasn't an "instead" it was an "as well as".
There were significant structural changes made to public sector pensions in the same time period which reduced greatly in a number of ways the benefits to the employees, so it wasn't just private sector pensions that were "raided". It was a balancing act to keep public sector on side while saving money for the state.

What significant structure changes were made to existing public section pensions? nothing, they simple introduced law stating new joiners from 2013 would go into a new scheme. it didn't affect anyone already in a scheme. For instance, they didn't close the final salary DB pension scheme, and move everyone into the CARE scheme, which would have been fairer system, than have 2 distinct schemes now in existence

kippy

Ace2007 wrote: »

What significant structure changes were made to existing public section pensions? nothing, they simple introduced law stating new joiners from 2013 would go into a new scheme. it didn't affect anyone already in a scheme. For instance, they didn't close the final salary DB pension scheme, and move everyone into the CARE scheme, which would have been fairer system, than have 2 distinct schemes now in existence

The are at least three distinct schemes, as well as the myriad of specific terms and conditions within various sub schemes.
The significant structural change introduced outside of the one that affected new entrants was the introducing of the PRD which significantly increased the cost of a pension for a public sector worker.

Moving all schemes to a standard worse scheme for everyone would have resulted in massive industrial unrest.

AndrewJRenko

Ace2007 wrote: »

For instance, they didn't close the final salary DB pension scheme, and move everyone into the CARE scheme, which would have been fairer system, than have 2 distinct schemes now in existence

What would have been 'fairer' about breaching existing contracts of existing employees?

Ace2007

AndrewJRenko wrote: »

What would have been 'fairer' about breaching existing contracts of existing employees?

You mean the same contracts that members in private schemes had?
You seem to think there are no way out of these contracts. The ordinary joe soap in the PS doesn't even appreciate how much of a benefit their pension is - they are reliant on the unions fighting for them. Yet in the private sector - who educates people that they need to look after their pension needs? Like I keep telling you - unless those at the top are negative effected, or incentivsed to fix a problem, it will never get fixed.

kippy

Ace2007 wrote: »

You mean the same contracts that members in private schemes had?
You seem to think there are no way out of these contracts. The ordinary joe soap in the PS doesn't even appreciate how much of a benefit their pension is - they are reliant on the unions fighting for them. Yet in the private sector - who educates people that they need to look after their pension needs? Like I keep telling you - unless those at the top are negative effected, or incentivsed to fix a problem, it will never get fixed.

One of the major benefits of unions is the ability to fight this type of thing.
Public Sector still ended up paying significantly more for their pensions than prior to when the changes were made.

Those new entrants on the lower scales are not getting anywhere near a gold plated pension once COAP is taken into account.

I know a bit about pensions as both my parents and theirs before them ended up with very little after working extremely hard all their lives.

Again, I'd like to see a higher than COAP for every worker in the country. A mandatory scheme from when you start paying income tax. Funds are invested in state capital programmes or programmes that will return year in year. But there are two many vested interests in the pensions industry involved.

AndrewJRenko

Ace2007 wrote: »

You mean the same contracts that members in private schemes had?
You seem to think there are no way out of these contracts. The ordinary joe soap in the PS doesn't even appreciate how much of a benefit their pension is - they are reliant on the unions fighting for them. Yet in the private sector - who educates people that they need to look after their pension needs? Like I keep telling you - unless those at the top are negative effected, or incentivsed to fix a problem, it will never get fixed.

I doesn't matter who else did or didn't have those contracts. They're still contracts, and one side doesn't get to unilaterally walk away from the contracts. And you'd be surprised how well the 'ordinary Joe Soap' in the public sector appreciates their benefits, and how well they make sure their paid representatives in the unions fight to hang onto those benefits.



Maybe the members of private schemes should take a few lessons about how to not join the race to the bottom?

Ace2007

AndrewJRenko wrote: »

I doesn't matter who else did or didn't have those contracts. They're still contracts, and one side doesn't get to unilaterally walk away from the contracts. And you'd be surprised how well the 'ordinary Joe Soap' in the public sector appreciates their benefits, and how well they make sure their paid representatives in the unions fight to hang onto those benefits.

Maybe the members of private schemes should take a few lessons about how to not join the race to the bottom?

And the fact that despite court cases, private pension schemes wind up and close to future accrual all the time. It doesn't matter if a private company members' go on strike or not.

Monife

kippy wrote: »

The are at least three distinct schemes, as well as the myriad of specific terms and conditions within various sub schemes.
The significant structural change introduced outside of the one that affected new entrants was the introducing of the PRD which significantly increased the cost of a pension for a public sector worker.

Moving all schemes to a standard worse scheme for everyone would have resulted in massive industrial unrest.

PRD was also applied on total remuneration, so people in acting up positions (temporary promotions) were stung badly as these positions are not pensionable. I was on an acting up for 3 years, paying PRD on full salary but only paying/receiving pension contributions at the lower grade. So I was effectively paying an extra 150 quid a month for nothing.

The new single scheme also has worse death in service benefits than even standard private sector occupational pension schemes. The standard is 4 times salary but the new scheme is only 2 times.

Ace2007

The CARE scheme is a considerable reduction on pension benefits compared to the Final Salary, however it is still much better than one could imagine in the private sector under DC.

AndrewJRenko

Ace2007 wrote: »

And the fact that despite court cases, private pension schemes wind up and close to future accrual all the time. It doesn't matter if a private company members' go on strike or not.

They don't 'wind up' all the time. Winding up of schemes is fairly rare, and when it happened in a major employer like Waterford Glass, the legislation was changed to reduce the chances of it happening again. Members and their representatives need to keep a close eye on funding.

Ace2007 wrote: »

The CARE scheme is a considerable reduction on pension benefits compared to the Final Salary, however it is still much better than one could imagine in the private sector under DC.

Do you have a source for this please?

kippy

Ace2007 wrote: »

The CARE scheme is a considerable reduction on pension benefits compared to the Final Salary, however it is still much better than one could imagine in the private sector under DC.

Its impossible to back up that statement.......
Indeed I would suggest that making that statement highlights how little you know about pensions in general

rhubarbcustard

My employer contributes to my private pension every month, (approx 14% of my salary) I turn 36 this year.

A few months ago, I payed possibly too much attention to Recession & stock market crash predictions and moved my pension to cash after Winter 2018 losses. So my currently modest pot is now exposed to Zero Risk.

I'm starting to think I should move it back out of cash and select the default Pension option appropriate to my age and just simply accept that markets go up and down and let Compounding offset any Market dips over the next 30 years and try to forget its there?

Ace2007

AndrewJRenko wrote: »

They don't 'wind up' all the time. Winding up of schemes is fairly rare, and when it happened in a major employer like Waterford Glass, the legislation was changed to reduce the chances of it happening again. Members and their representatives need to keep a close eye on funding.

A scheme can wind up anytime an employer chooses to

https://www.pensionsauthority.ie/en/LifeCycle/Scheme_funding_restructuring/Scheme_wind-ups/

A lot more schemes close to future accrual regardless of how well they are funding - for example Irish Life - was in surplus but they close the scheme.

Ace2007

kippy wrote: »

Its impossible to back up that statement.......
Indeed I would suggest that making that statement highlights how little you know about pensions in general

How is it impossible to back up?

CARE scheme is a reduction on the final salary based scheme - are you saying that's not true?


CARE scheme is considerable better than DC. In the DC world the member takes all the risks.

Even just do some simple math and you can see how much of a DC fund value you would need to get the same pension as one would in a CARE scheme.

Very rough calcs 30 year old with 60k salary joins the CARE scheme in 2018 and works until their NRA - 68. 38 years service, should see a lump sum of ~90K, and pension of 18k + state pension.

An annuity with the same level of increases would be approve 26/1 at the moment - maybe a little dear, so 18K*26 = 468K +90K = 558K,

DC contribution rates vary per industry from very generous to terrible. So assume employee puts in 5% and employer 10%, so 15% per annum, so 9k per year. you would probably end up with a fund of maybe 400k if your lucky with investment return - which will reduce as you get closer to retirement.

So DC you take all the risk, there is no guarantee how much your fund will be at retirement, nor is there any guarantee how much an annuity will cost you. So purely from a pension/annuity point of view a CARE scheme is much better than a DC scheme.

The J Stands for Jay

rhubarbcustard wrote: »

My employer contributes to my private pension every month, (approx 14% of my salary) I turn 36 this year.

A few months ago, I payed possibly too much attention to Recession & stock market crash predictions and moved my pension to cash after Winter 2018 losses. So my currently modest pot is now exposed to Zero Risk.

I'm starting to think I should move it back out of cash and select the default Pension option appropriate to my age and just simply accept that markets go up and down and let Compounding offset any Market dips over the next 30 years and try to forget its there?

Bad decision. You've missed out on the recovery since then. You need to get back in asap and leave it alone in future.

ytpe2r5bxkn0c1

rhubarbcustard wrote: »

My employer contributes to my private pension every month, (approx 14% of my salary) I turn 36 this year.

A few months ago, I payed possibly too much attention to Recession & stock market crash predictions and moved my pension to cash after Winter 2018 losses. So my currently modest pot is now exposed to Zero Risk.

I'm starting to think I should move it back out of cash and select the default Pension option appropriate to my age and just simply accept that markets go up and down and let Compounding offset any Market dips over the next 30 years and try to forget its there?

You are too far from retirement to take those types of moves to low or zero risk.

Franz Von Peppercorn

AndrewJRenko wrote: »

By 'stole', you mean that he reclaimed a very small part of the very generous tax relief that you got on the way in, at a time when the country was verging on bankruptcy.

There’s something particularly despicable about civil servants complaining about the “generous” tax relief the people paying for the civil servants incredible generous pensions get while it’s the private sector workers who end up in penury if they don’t set up a private pension. Meanwhile the private sector pays for all of that, and in return gets the worst public service is Europe.