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Pension

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  • Registered Users Posts: 1,945 ✭✭✭bilbot79


    Cute Hoor wrote: »
    Obviously past performance is no predictor of future performance, but here is an actual example of how a pension can accumulate, an actual example can be easier to get your head around.

    2003 to 2010 - €91k (Nett) invested in a pension – a very late start to be putting money into the pension fund obviously.
    2013 - €27k withdrawn tax free
    2013 - €175k invested in an ARF
    2014 to 2020 - €86k pension collected (5% pa), taxable obviously
    2021 - €266k – current value of ARF fund

    There is no need to micro manage, no worries about dodgy tenants, no requirements for expensive and time consuming repairs, no annual bills to organise and worry about, no late night phone calls, just sit back and relax and collect the pension annually.

    That's pretty good that you pulled out 86 over 6 years but the ARF pot still grew by 91k. Do you have state pension aswell?


  • Registered Users Posts: 1,788 ✭✭✭Cute Hoor


    bilbot79 wrote: »
    That's pretty good that you pulled out 86 over 6 years but the ARF pot still grew by 91k. Do you have state pension aswell?

    The €86k was over 7 years but yea not bad. Yea I have other pension as well, hence the reason for putting it into an ARF and taking out a relatively small annual %.


  • Registered Users Posts: 29 Moochy Pugh


    I'm in the same boat been maxing my pension last couple of years paying the full 20 per cent in. Looking at the benefit statement the pension company classify 4 per cent as regular savings the remaining 16 as AVCs. Is there any distinction in the classification - will I get the tax relief at source through payroll? Or do you need to claim back the AVCs separately at year - end?


  • Registered Users Posts: 1,945 ✭✭✭bilbot79


    I'm in the same boat been maxing my pension last couple of years paying the full 20 per cent in. Looking at the benefit statement the pension company classify 4 per cent as regular savings the remaining 16 as AVCs. Is there any distinction in the classification - will I get the tax relief at source through payroll? Or do you need to claim back the AVCs separately at year - end?

    Not sure I understand this? Are you in your thirties contributing 16% to occupational pension scheme while the company puts in 4% as standard? If that's true normally I think you don't have to do a tax reclaim yourself and would have scope to contribute 4% more


  • Registered Users Posts: 52 ✭✭Daddy Ireland


    Cute Hoor wrote: »
    Obviously past performance is no predictor of future performance, but here is an actual example of how a pension can accumulate, an actual example can be easier to get your head around.

    2003 to 2010 - €91k (Nett) invested in a pension – a very late start to be putting money into the pension fund obviously.
    2013 - €27k withdrawn tax free
    2013 - €175k invested in an ARF
    2014 to 2020 - €86k pension collected (5% pa), taxable obviously
    2021 - €266k – current value of ARF fund

    There is no need to micro manage, no worries about dodgy tenants, no requirements for expensive and time consuming repairs, no annual bills to organise and worry about, no late night phone calls, just sit back and relax and collect the pension annually.

    Any harm to ask what funds this superb return is invested in ?


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  • Registered Users Posts: 29 Moochy Pugh


    bilbot79 wrote: »
    Not sure I understand this? Are you in your thirties contributing 16% to occupational pension scheme while the company puts in 4% as standard? If that's true normally I think you don't have to do a tax reclaim yourself and would have scope to contribute 4% more
    I contribute 20 in total personally with my employer contributing a further percentage as well. Question is really whether there is a have to do anything to claim the tax relief or is it typically automatic through payroll? Had assumed automatic


  • Registered Users Posts: 1,972 ✭✭✭Smee_Again


    I contribute 20 in total personally with my employer contributing a further percentage as well. Question is really whether there is a have to do anything to claim the tax relief or is it typically automatic through payroll? Had assumed automatic

    Is your employer contribution based on your 4%? As in do they pay a multiple of your contributions up to a max of 4% and that’s why it’s split between regular and AVC?


  • Registered Users Posts: 1,298 ✭✭✭RedRochey


    I contribute 20 in total personally with my employer contributing a further percentage as well. Question is really whether there is a have to do anything to claim the tax relief or is it typically automatic through payroll? Had assumed automatic

    It's automatic through payroll, on your payslip there should be a line for pension contribution, tax is calculated after your pension contribution is subtracted from your gross pay


  • Registered Users Posts: 1,788 ✭✭✭Cute Hoor


    Any harm to ask what funds this superb return is invested in ?

    Zurich funds - not a recommendation for them. The return has been good in the last 8/9 years, but wasn't great before that (for obvious reasons)


  • Registered Users Posts: 1,298 ✭✭✭RedRochey


    AVCs are when you make one off contribution, so say you get paid a bonus at the end of the year and decide to put that into your pension, that's an AVC

    Pension contributions that are made monthly when you get paid are regular contributions

    The difference is your employer will probably only match your regular contributions


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  • Registered Users Posts: 20,839 ✭✭✭✭Stark


    Fund with lowest fees is generally the best one. Very very difficult to beat the market average over the long term.
    RedRochey wrote:
    AVCs are when you make one off contribution, so say you get paid a bonus at the end of the year and decide to put that into your pension, that's an AVC

    Pension contributions that are made monthly when you get paid are regular contributions

    The difference is your employer will probably only match your regular contributions

    Not quite, you can make AVCs on any schedule, not just once off. Anything you contribute extra to the employee contributions you need for your employer to match are considered AVCs.

    I make a monthly contribution which my employer matches and then I pay monthly AVCs in addition to that.


  • Registered Users Posts: 247 ✭✭phildub


    I'm 32 and ive no pension, work for a small firm they have never mentioned anything about it (I recently moved back to Ireland after living abroad since college) can I contribute to my own pension somehow or it needs to be set up through work?


  • Registered Users Posts: 5,601 ✭✭✭The J Stands for Jay


    AVCs are contributions that are additional to the amount that the scheme rules state members must pay, and they are voluntary. In a previous job, there was no contribution required by employees, so all employee contributions were AVCs.


  • Registered Users Posts: 17,935 ✭✭✭✭Bass Reeves


    phildub wrote: »
    I'm 32 and ive no pension, work for a small firm they have never mentioned anything about it (I recently moved back to Ireland after living abroad since college) can I contribute to my own pension somehow or it needs to be set up through work?

    Yes you can. You can start immediately. As well you can make a lump sum contribution for last year and claim the tax back. Just check the fees on the lump sum contribution.

    Slava Ukrainii



  • Registered Users Posts: 13,519 ✭✭✭✭mrcheez


    Hi All

    I hope this is the right place for this topic.

    I'm very late starting a pension contribution and especially since my employer will match the amount. I won't have a chance to contribute until the end of this year in any case (the option is given in December). I'm 33 now so kind of kicking myself I hadn't started by now, I suppose retirment seemed a long way off.

    What do people usually contribute to their pension? Is there anyone here who started as late as me? Also what usually happens if a person leaves the job? Is the payment made then?

    Lol 33 isn't "late" starting a pension :)

    Started mine well after that and it's looking healthy so you'll be even better I imagine


  • Registered Users Posts: 247 ✭✭phildub


    Yes you can. You can start immediately. As well you can make a lump sum contribution for last year and claim the tax back. Just check the fees on the lump sum contribution.

    I just moved back in June and started work in September so I paid no tax last year but thanks for the advice. Do I just Google pension schemes and set one up? Any recommendations?


  • Registered Users Posts: 52 ✭✭Daddy Ireland


    Cute Hoor wrote: »
    Zurich funds - not a recommendation for them. The return has been good in the last 8/9 years, but wasn't great before that (for obvious reasons)

    Thanks but had to be high risk like Prisms 4 or 5. Is that where the funds are currently and did you ever switch within Zurich finds over the years ?


  • Registered Users Posts: 45,150 ✭✭✭✭Bobeagleburger


    Irish Life have a bunch of good pension products too.

    https://www.irishlife.ie/pensions/pension-products


  • Registered Users Posts: 1,788 ✭✭✭Cute Hoor


    Thanks but had to be high risk like Prisms 4 or 5. Is that where the funds are currently and did you ever switch within Zurich finds over the years ?

    Spread across Risk Rating 4, 5 & 6 funds. Never bothered switching although I had good intentions, might revisit it but as soon as you switch one you can be sure that the dropped one will then start to perform.


  • Registered Users Posts: 52 ✭✭Daddy Ireland


    Cute Hoor wrote: »
    Obviously past performance is no predictor of future performance, but here is an actual example of how a pension can accumulate, an actual example can be easier to get your head around.

    2003 to 2010 - €91k (Nett) invested in a pension – a very late start to be putting money into the pension fund obviously.
    2013 - €27k withdrawn tax free
    2013 - €175k invested in an ARF
    2014 to 2020 - €86k pension collected (5% pa), taxable obviously
    2021 - €266k – current value of ARF fund

    There is no need to micro manage, no worries about dodgy tenants, no requirements for expensive and time consuming repairs, no annual bills to organise and worry about, no late night phone calls, just sit back and relax and collect the pension annually.

    A couple of observations on these superb returns.
    You took tax free cash in 2013 but apparently not the full 25%. €27k plus €175k = total pot €203k in 2013. You would be unusual I think in not taking your full 25% tax free. Good tactical move considering the returns.
    2014 to 2020 7 years €86k drawn down 5% of pot.
    Your pot with growth roughly would have to equal on average roughly speaking €245k each year. Overall I think you have done exceptionally well and living up to your name.


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  • Registered Users Posts: 1,788 ✭✭✭Cute Hoor


    You took tax free cash in 2013 but apparently not the full 25%. €27k plus €175k = total pot €203k in 2013. You would be unusual I think in not taking your full 25% tax free.

    Very observant Daddy. You're absolutely right of course and it would be madness (imo) not to take the full 25% tax free if available. The 25% didn't really apply in my case though. Revenue allows you to take 1.5 times your final (think it might be best year from your 3 final years) annual income as a tax free lump sum (subject to a max of €200k), so I was taking the tax free lump sum from 2 pension pots, hence the reason that it doesn't equate to 25%. Even if your entitlement (1.5 times salary) goes above the €200k you should still take it imo as the additional amount (over €200k) is only taxed at 20%
    2014 to 2020 7 years €86k drawn down 5% of pot.
    Your pot with growth roughly would have to equal on average roughly speaking €245k each year.

    Pretty accurate, meandered up and down around that amount, but continuing to rise gradually (touch wood) in addition to the 5% annual withdrawal. That 5% has been reduced to 4% now by Revenue I think but I left it at the 5%. The 5% is just an arbitrary figure of course, I could have picked any % (once it's at least 4%).

    living up to your name.

    Don't know about that :D


  • Registered Users Posts: 5,601 ✭✭✭The J Stands for Jay


    Cute Hoor wrote: »
    Even if your entitlement (1.5 times salary) goes above the €200k you should still take it imo as the additional amount (over €200k) is only taxed at 20%

    Very wise. That 20% will have no PRSI or USC applying, so it's worth jumping on. I've seen people on here who intend stopping contributions to their pension when the fund hits 800k because they didn't want to pay that tax


  • Registered Users Posts: 52 ✭✭Daddy Ireland


    Just to add to Cute Hoor's postings.
    His pot dealt with the market falls of 2009 and Feb 2020.
    Great returns from a late starter and not a huge pot to begin with.
    Patience and being able to take a risk in medium to high risk funds were key.
    One has to wonder though about returns going forward.over the next decade.
    Cute Hoor's decision to leave funds in medium to high risk funds would not be typical of the majority of retirees I think.


  • Registered Users Posts: 45,150 ✭✭✭✭Bobeagleburger


    Cute Hoor's decision to leave funds in medium to high risk funds would not be typical of the majority of retirees I think.

    This is an important point. Most people would move the vast majority, if not all to cash before retirement.

    I'm assuming that can be done after retirement also?


  • Registered Users Posts: 1,788 ✭✭✭Cute Hoor


    His pot dealt with the market falls of 2009 and Feb 2020.

    February 2020 had minimal impact (big impact initially but a very quick recovery). The late 20s obviously had a significant negative impact, pension pots at the time took a 30+% hit, and took a good while to recover.

    Cute Hoor's decision to leave funds in medium to high risk funds would not be typical of the majority of retirees I think.

    Probably true, but too many retirees probably are thinking short term and looking for relative safety, I was looking at a 30/40 year timeframe.


  • Registered Users Posts: 1,788 ✭✭✭Cute Hoor


    6 wrote: »
    This is an important point. Most people would move the vast majority, if not all to cash before retirement.

    I'm assuming that can be done after retirement also?

    Yea, I could move it to cash at any stage.


  • Registered Users Posts: 5,601 ✭✭✭The J Stands for Jay


    Cute Hoor's decision to leave funds in medium to high risk funds would not be typical of the majority of retirees I think.

    The majority of retirees (and seemingly their advisors) are failing to recognise the massive popularity of ARFs compared to annuities, or the increase in life expectancy/longevity risk.

    The advise was always to reduce exposure to equities as you approach retirement, but that was based on buying an annuity, and no direct investing in retirement. In these days of ARFs and lifelong investment, that advice makes much less sense.


  • Registered Users Posts: 1,788 ✭✭✭Cute Hoor


    One has to wonder though about returns going forward.over the next decade.

    This is obviously the key issue, but you are never going to know what will happen in any next 10 year period, your only guidance is always going to be what has happened historically. However if you started investing now (in your mid 20s for example), doing it tax free, you would be seriously unlucky not to have had a reasonable return over those 50 years (assuming you will be able to retire at 75 by then, could be closer to 85), a young person doesn't need to be putting that much in, just get it moving and let the compounding hopefully take it from there. If your employer will match your contribution and you are investing tax free then it's a serious no-brainer imo.

    Of course pension investing shouldn't be at the expense of living, a reasonable balance required.


  • Registered Users Posts: 273 ✭✭Greenlights16


    If you’re contributing to company pension (5% by me gets 4% max from them) and own a property, do you believe you’re better off selling the property instead of renting it, and using that money for investment?

    For someone who would be taking their first jump into being a landlord and is quite reluctant about it


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  • Registered Users Posts: 17,935 ✭✭✭✭Bass Reeves


    If you’re contributing to company pension (5% by me gets 4% max from them) and own a property, do you believe you’re better off selling the property instead of renting it, and using that money for investment?

    For someone who would be taking their first jump into being a landlord and is quite reluctant about it

    Unless you forego tax relief you will have to trickled the money in over multiple years. Below 30 years of age you can only contribute 15% of you income into a pension, 30-40 its 20%, 40-50 its 25%. If the house is not mortgages it can be used for to secure borrowing in the future if required. The income of it can be used to fund other property purchase of you find you are happy with being a LL. Personally I hold.

    Slava Ukrainii



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