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Pension

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  • Registered Users Posts: 17,922 ✭✭✭✭Bass Reeves


    McGaggs wrote: »
    If I had a salary of €333,334, I could take a lump sum of €500k and would only require a fund of €500k to do so. I would pay €60k in tax and have €440k in my pocket.

    Your point was that the 200k upper limit was available and that any one could avail of it. I pointed out that the the 200k is an upper limit. If your fund is 500k you can only take 25% of it 125k the test of the funds have to go back not am ARF or an AMRF. Read your own link

    Slava Ukrainii



  • Registered Users Posts: 1,220 ✭✭✭dublin49


    Cute Hoor wrote: »
    To the best of my knowledge (and I'm totally open to correction) there is no such thing as DB pensions any more, DB pensions have to be wound down (an interesting scenario in it's own right) but I don't think any company is offering DB to new entrants any more.

    With DC you effectively have control over where it is invested, in association with the fund providers obviously, it may not perform as well as you might like from time to time but I can't see how it would go fully belly-up.

    You are right,no employer in his right mind would introduce a DB scheme to new entrants as the risks are too great of funding calls etc.That said there are lots of DB pensions still in existence ,most closed to new entrants with the older members the only beneficiaries with all new recruits being placed on DC pensions.
    You might find an exception still offering DB but it would be very much the exception.


  • Registered Users Posts: 27,721 ✭✭✭✭AndrewJRenko


    mountai wrote: »
    In my initial post I pointed out the fact that not one Insurance sales man could give me the relevant figures I asked for . Why , I wondered . Many of my friends , have expressed their disappointment at the position they now find themselves in re pension payments . All my life I have been suspicious of " Greeks bearing gifts" . The Insurance business is founded on fear . Its well known , that an insurance company will do everything in its power to negate any claim and successive Governments refuse to grasp the nettle and bring about real reform . " Investments can fall " the bywords of the industry . Tell that to the members of failed funds , Irish Shipping comes to mind . Fancy brochures , " Millions" put into minds of ordinary people , by slick salesmen in suits , not for me , Thank God .

    1) Irish Shipping was a semi-state body. There was no "pension company" fund that went bust.

    2) I've no idea what kind of salesmen you hung around with, but pension projections are straightforward. The Pensions Authority and most pension providers have online calculators now so you can work it out for yourself. They don't have magic crystal balls so they don't know what future stock market returns will be.

    Honestly, it sounds like you really don't have a clue about how pensions work, so you've come up with these bluffs to hide your own ignorance.

    No pension company pension fund has failed leaving investors high and dry as you suggested. Have the decency to withdraw your false allegation.


  • Registered Users Posts: 1,220 ✭✭✭dublin49


    1) Irish Shipping was a semi-state body. There was no "pension company" fund that went bust.

    2) I've no idea what kind of salesmen you hung around with, but pension projections are straightforward. The Pensions Authority and most pension providers have online calculators now so you can work it out for yourself. They don't have magic crystal balls so they don't know what future stock market returns will be.

    Honestly, it sounds like you really don't have a clue about how pensions work, so you've come up with these bluffs to hide your own ignorance.

    No pension company pension fund has failed leaving investors high and dry as you suggested. Have the decency to withdraw your false allegation.



    Do you have any connection to the investment industry?You seem overly keen to protect its good name,if it has one.


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


    dublin49 wrote: »
    You are right,no employer in his right mind would introduce a DB scheme to new entrants as the risks are too great of funding calls etc.That said there are lots of DB pensions still in existence ,most closed to new entrants with the older members the only beneficiaries with all new recruits being placed on DC pensions.
    You might find an exception still offering DB but it would be very much the exception.

    Correct, I'd be very interested to hear if there is any DB scheme still open to new entrants, Banks?


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  • Registered Users Posts: 944 ✭✭✭mountai


    1) Irish Shipping was a semi-state body. There was no "pension company" fund that went bust.

    2) I've no idea what kind of salesmen you hung around with, but pension projections are straightforward. The Pensions Authority and most pension providers have online calculators now so you can work it out for yourself. They don't have magic crystal balls so they don't know what future stock market returns will be.

    Honestly, it sounds like you really don't have a clue about how pensions work, so you've come up with these bluffs to hide your own ignorance.

    No pension company pension fund has failed leaving investors high and dry as you suggested. Have the decency to withdraw your false allegation.


    Yes i agree , projections using online calculators assuming growth ( which is one of the main selling points) are simple . So whats the problem with working backwards using the same formula I suggested ?? . Lets have your calculations as you seem to be an expert . No , I have no clue as to the mysterious working of pension funds . I do know however , that those that advise on investments are making huge money with no risk . So pensioners of Waterford Glass , Irish shipping et al would agree with you .


  • Registered Users Posts: 5,600 ✭✭✭The J Stands for Jay


    Your point was that the 200k upper limit was available and that any one could avail of it. I pointed out that the the 200k is an upper limit. If your fund is 500k you can only take 25% of it 125k the test of the funds have to go back not am ARF or an AMRF. Read your own link

    What is this link you're talking about? €200k is not an upper limit on the lump sum, it's a limit on the amount of the lump sum that will not be taxed. The 25% lump sum is only an option on occupational pensions; revenue limits allow lump sums to be calculated based on salary and service, up to a maximum of 1.5 times salary. This can be more than 25% of the fund, more than €200k and even more than is available in the fund. There's plenty of people every year who get to take their while pension fund as a lump sum. Of there's any balance, it has to go to an annuity (unless the balance is less than €20k. Then it can be taken as a taxed lump sum).


  • Moderators, Business & Finance Moderators Posts: 9,815 Mod ✭✭✭✭Jim2007


    mountai wrote: »
    In my initial post I pointed out the fact that not one Insurance sales man could give me the relevant figures I asked for . Why , I wondered . Many of my friends , have expressed their disappointment at the position they now find themselves in re pension payments . All my life I have been suspicious of " Greeks bearing gifts" . The Insurance business is founded on fear . Its well known , that an insurance company will do everything in its power to negate any claim and successive Governments refuse to grasp the nettle and bring about real reform . " Investments can fall " the bywords of the industry . Tell that to the members of failed funds , Irish Shipping comes to mind . Fancy brochures , " Millions" put into minds of ordinary people , by slick salesmen in suits , not for me , Thank God .


    You obviously know as little about the insurance industry as you do about pension..... For your information a well run insurance company is one that pays out less than 107% or there about of premiums collected.



    Now back to your original claim, where is this list???? If you feel like it you can also provide a list of insurance companies that lets say have an expense ration of around 90% if you think there are so many.


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


    This is a really serious topic, a pension (of whatever description) is something that you might have to live with/without for 30/40 years or more after your retirement, so this isn’t like a political argument or whatever. There is a serious amount of misinformation (including probably lots from me) being put forward on this topic imo and I would advise anybody planning their retirement fund to ignore much (if not all) of what you read here and above all to seek professional advice from an independent QFA, it will pay for itself in the long run.

    I’d be pretty confident that no QFA will advise buying a house to let with the rental income being the only source for your pension for those 30/40 years, one illiquid asset, bought with after tax income, open to all sorts of risks and costs, and requiring 0.25 personyears to manage on an ongoing basis, madness imo. How many people got so badly burned with that particular ‘pension plan’ in the late 2000s/early 2010s, left to survive on the contributory/non-contributory pension, if even that. Maybe a QFA will advise that route but if they did I’d be looking for a second opinion. I am not a QFA (or anything remotely close to it) and know little or nothing about this but seek professional advice is my advice.


  • Registered Users Posts: 5,600 ✭✭✭The J Stands for Jay


    Cute Hoor wrote: »
    Correct, I'd be very interested to hear if there is any DB scheme still open to new entrants, Banks?

    Civil service. They don't need to worry about doing it...


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


    McGaggs wrote: »
    Civil service. They don't need to worry about doing it...

    Ah yea, but that's different, outside of them I wonder are there any still in existence open to new entrants


  • Registered Users Posts: 5,600 ✭✭✭The J Stands for Jay


    mountai wrote: »
    Yes i agree , projections using online calculators assuming growth ( which is one of the main selling points) are simple . So whats the problem with working backwards using the same formula I suggested ?? . Lets have your calculations as you seem to be an expert . No , I have no clue as to the mysterious working of pension funds . I do know however , that those that advise on investments are making huge money with no risk . So pensioners of Waterford Glass , Irish shipping et al would agree with you .

    Why would a sales person, in any industry, try to convince an awkward customer, when there's easier sales to be made? They wouldn't have those numbers round with them, and would have to get them from someone. I'm not a fan of salesmen in any industry, they aren't going to work for a sale when them can spend their time in low hanging fruit elsewhere instead.

    No salesman promised Waterford glass or Irish shipping a pension, it was the employer.


  • Moderators, Business & Finance Moderators Posts: 9,815 Mod ✭✭✭✭Jim2007


    mountai wrote: »
    In my initial post I pointed out the fact that not one Insurance sales man could give me the relevant figures I asked for.


    Asking a daft question and not getting an answer only proves your capacity to ask daft questions.

    mountai wrote: »
    Many of my friends , have expressed their disappointment at the position they now find themselves in re pension payments .


    Of course, but then they are your friends and friends tend to be of a similar mind set. You need to actually compare your situation to an actual benchmark over the period, if you want to genuine comparison.


  • Registered Users Posts: 27,721 ✭✭✭✭AndrewJRenko


    dublin49 wrote: »
    Do you have any connection to the investment industry?You seem overly keen to protect its good name,if it has one.

    I have no connection to the investment industry. I have no actual interest in the investment industry.

    I do have an interest in knowing that people who read these threads and make important decisions about their future have actual facts to go on, not the ranting of barstool experts who really don't have a clue what they are talking about.


  • Registered Users Posts: 944 ✭✭✭mountai


    Jim2007 wrote: »
    Asking a daft question and not getting an answer only proves your capacity to ask daft questions.





    Of course, but then they are your friends and friends tend to be of a similar mind set. You need to actually compare your situation to an actual benchmark over the period, if you want to genuine comparison.

    Nothing daft about my question . Actual figures , rather than " Projected" figures should be easy to extract .

    I dont need to compare anything , Ive done very well thank you , managing my own resources .


  • Moderators, Business & Finance Moderators Posts: 9,815 Mod ✭✭✭✭Jim2007


    Cute Hoor wrote: »
    This is a really serious topic, a pension (of whatever description) is something that you might have to live with/without for 30/40 years or more after your retirement


    The biggest risk is that you can't change it after say 20 years, even if you discover you made a mistake.


    Cute Hoor wrote: »
    I’d be pretty confident that no QFA will advise buying a house to let with the rental income being the only source for your pension for those 30/40 years...


    I'd be very surprised if they did, but then a lot of people don't get the advice they wanted to hear and go do it in any case.


  • Registered Users Posts: 17,922 ✭✭✭✭Bass Reeves


    McGaggs wrote: »
    What is this link you're talking about? €200k is not an upper limit on the lump sum, it's a limit on the amount of the lump sum that will not be taxed. The 25% lump sum is only an option on occupational pensions; revenue limits allow lump sums to be calculated based on salary and service, up to a maximum of 1.5 times salary. This can be more than 25% of the fund, more than €200k and even more than is available in the fund. There's plenty of people every year who get to take their while pension fund as a lump sum. Of there's any balance, it has to go to an annuity (unless the balance is less than €20k. Then it can be taken as a taxed lump sum).

    I presume it's a PRSA you are talking about. The rules are quite clear 25% of fund maximum taken as a lump sum to a maximum of 200k. After that you pay the tax rate you indicated if your fund exceeds 800k. You can only access that rate if your fund exceeds 800k. That option is not open to DB there lump sum is set at 1.5 times wages.

    There may be slightly different rules if you are self-employed but for the average worker who is on the PAYE tax system the rules are as above

    https://www.pensionsauthority.ie/en/i_want_to_start_a_pension_prsa/prsas/

    Go into PRSA,s a consumer guide section 8

    Revenue rules

    https://www.pensionsauthority.ie/en/lifecycle/tax/tax_on_lump_sums_at_retirement/

    Slava Ukrainii



  • Moderators, Business & Finance Moderators Posts: 9,815 Mod ✭✭✭✭Jim2007


    mountai wrote: »
    =
    I dont need to compare anything , Ive done very well thank you , managing my own resources .


    If you have not been tracking it, you have no idea how well you did in comparison to what you could have achieved.


  • Registered Users Posts: 3,144 ✭✭✭Buddy Bubs


    mountai wrote: »
    Nothing daft about my question . Actual figures , rather than " Projected" figures should be easy to extract .

    I dont need to compare anything , Ive done very well thank you , managing my own resources .

    The software I had when in pensions and life products could have calculated this for you handy.
    All you do is use the historical returns for the previous 40 years and use those returns as projected growth. Used it all the time when doing comparisons. It's still a projection though, just assuming identical returns from the past as in the future.

    Only caveat is that it would have to assume reduction in yield from charges in the future would be known with certainty.


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


    I'd take a bit of risk if I were you. Check with this calculator to see the impact of a good rate on compound interest


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  • Registered Users Posts: 27,721 ✭✭✭✭AndrewJRenko


    Jim2007 wrote: »
    The biggest risk is that you can't change it after say 20 years, even if you discover you made a mistake.
    This isn't entirely correct. Most fund managers give you a range of options of low, medium and high risk, and you can generally move your funds around without penalty.

    Also, many pension funds from private employers will allow access to those funds once you're over 50 if you state that you retire, provided you have left that employment. You don't have to stop working (just as in any retirement scenario). So if like many people, you moved through a few employers in your 20s, 30s and 40s, once you get over 50, you can probably get access to your money in pension funds of previous employers. You'll need to check each fund rules to be certain.
    mountai wrote: »
    Nothing daft about my question . Actual figures , rather than " Projected" figures should be easy to extract .

    I dont need to compare anything , Ive done very well thank you , managing my own resources .


    Pension fund returns are widely published;

    https://www.irishtimes.com/business/personal-finance/pensions-deliver-decade-best-growth-of-20-6-in-2019-1.4132985

    It's not hard to work out gains over the years, though I can see why a salesperson might not be prepared to put the work in for you, given the attitudes you've displayed here. If you need calculations done, then pay a professional advisor to do those calculations and see where you end up.

    Either way, there are still no scenarios of pension company funds going bust leaving investors high and dry.

    How much time and effort did you have to put into managing your own resources btw? The usual alternative to a formal pension is residential property. This isn't really a fair comparison. Renting a property is like running a small business, and takes a fair degree of human effort. Your pension fund manager won't be ringing you at 10pm on a Saturday night to tell you that the gas boiler has broken down and you need to fix it.


  • Registered Users Posts: 5,600 ✭✭✭The J Stands for Jay


    I presume it's a PRSA you are talking about. The rules are quite clear 25% of fund maximum taken as a lump sum to a maximum of 200k. After that you pay the tax rate you indicated if your fund exceeds 800k. You can only access that rate if your fund exceeds 800k. That option is not open to DB there lump sum is set at 1.5 times wages.

    There may be slightly different rules if you are self-employed but for the average worker who is on the PAYE tax system the rules are as above

    https://www.pensionsauthority.ie/en/i_want_to_start_a_pension_prsa/prsas/

    Go into PRSA,s a consumer guide section 8

    Revenue rules

    https://www.pensionsauthority.ie/en/lifecycle/tax/tax_on_lump_sums_at_retirement/

    The pensions authority wouldn't be the best resource for pension information. The best link to look at would be this: https://revenue.ie/en/tax-professionals/tdm/pensions/chapter-07.pdf

    The 25% ARF option is discussed here: https://revenue.ie/en/tax-professionals/tdm/pensions/chapter-23.pdf

    PAYE workers in a pension scheme can choose 25% or 1.5 times salary. The example being discussed earlier of a PRSA AVC to a civil service scheme would be 1.5 times salary, potentially allowing the full PRSA to be taken as a lump sum.


  • Registered Users Posts: 1,220 ✭✭✭dublin49


    I see investment experts Davy Stockbrokers specilaizing in retirement planning were fined 4 million yesterday.Its more than bar stool experts you would want to look for.


  • Registered Users Posts: 27,721 ✭✭✭✭AndrewJRenko


    dublin49 wrote: »
    I see investment experts Davy Stockbrokers specilaizing in retirement planning were fined 4 million yesterday.Its more than bar stool experts you would want to look for.

    Yet again, nothing to do with pension company pension funds supposedly going bust.

    020g.png


  • Registered Users Posts: 22 Midlands2007


    Cute Hoor wrote: »
    Yea you dictate the level of withdrawal, there is an artificial minimum of 4% (you would be taxed on that anyway so makes sense to withdraw at least that per annum), after that it's up to you what you want to withdraw per annum.
    The 12000 from other income, does this have to be from another pension source? Say by age 64 you wanted to work part-time and top up from ARF would this income qualify or would 63,000 of pension have to be tied up in an AMRF? Anywhere I read says 12,000 has to be another pension income.


  • Registered Users Posts: 2,650 ✭✭✭cooperguy


    mountai wrote: »
    Yes i agree , projections using online calculators assuming growth ( which is one of the main selling points) are simple . So whats the problem with working backwards using the same formula I suggested ?? . Lets have your calculations as you seem to be an expert . No , I have no clue as to the mysterious working of pension funds . I do know however , that those that advise on investments are making huge money with no risk . So pensioners of Waterford Glass , Irish shipping et al would agree with you .

    If you invested 15% of the Average Industrial Wage since 1980 into an S&P index fund you would retire in the year 2020 with a pension pot of approx €1,044,953.73 going by my rough estimate using an online investment calculator


  • Registered Users Posts: 944 ✭✭✭mountai


    cooperguy wrote: »
    If you invested 15% of the Average Industrial Wage since 1980 into an S&P index fund you would retire in the year 2020 with a pension pot of approx €1,044,953.73 going by my rough estimate using an online investment calculator

    Thanks for that cooperguy . Just goes to prove my point . I retired early in 2005 with an equivalent income that that sum would yield . I was very lucky according to some , strange thing was , the harder I worked , the luckier I got .


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


    mountai wrote: »
    Thanks for that cooperguy . Just goes to prove my point . I retired early in 2005 with an equivalent income that that sum would yield . I was very lucky according to some , strange thing was , the harder I worked , the luckier I got .

    How does that prove your point? What even is your point?


  • Registered Users Posts: 2,650 ✭✭✭cooperguy


    mountai wrote: »
    Thanks for that cooperguy . Just goes to prove my point . I retired early in 2005 with an equivalent income that that sum would yield . I was very lucky according to some , strange thing was , the harder I worked , the luckier I got .

    Im not sure that adds up. For one that person would have been able to do that tax free. The 15% would have cost them much less in post-tax income and they'd have a lump sum tax free on the far side. With an €1m ARF retirement 10 years ago you could have an income of 40k a year and you would still have a million in the bank today, not sure you're doing a reasonable comparison here...

    It also of course is entirely passive investing, not the day job. So for example a self employed person could take 7% of their post tax income and invest as above have a million euro at the end of it and a profit from a business.

    The other thing is I have no idea what you did or how much you spent to earn 1m by 2005. Thats possible with a pension too, no way to know if thats a fair comparison or not based on what you've said


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  • Registered Users Posts: 591 ✭✭✭the butcher


    Demographics don't look too promising in 30 years time based on past and current birth rates...there's a pensions timebomb that keeps being pushed down the road, will all this be addressed by 2040/2050? Will these tax incentives still be as "juicy" when it comes to cashing out later on? No guarantee from what I can see.


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