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I don't know what a pension is



  • Registered Users Posts: 16,601 ✭✭✭✭Leg End Reject

    I get the issue with the (un)fair deal scheme, but when you pay into a pension you are hoping for the best - that you live long enough to enjoy a good standard of living when you retire.

    Same with insurance, you don't pay house insurance hoping it goes on fire so you "get your money back", you do it to protect your asset.

    I'd rather gamble on living well into my 80/90s and having a good standard of life, than scrimping through my later years and getting free care in a nursing home. Although I think they still take a cut of your state pension.

  • Registered Users Posts: 1,185 ✭✭✭Viscount Aggro

    There are ways to play the system, if you work on it.

    You may not need a pension, if you have enough money saved.

    Post edited by Viscount Aggro on

  • Registered Users Posts: 28,603 ✭✭✭✭AndrewJRenko

    If your employer is matching your pension contributions, you're getting a 100% return on your investment from day one, along with the considerable tax benefits. You'd be crazy to miss that opportunity unless you are extremely stretched financially.

  • Registered Users Posts: 1,830 ✭✭✭lisasimpson

    The way i look at it once the mortgage is paid and kids educated i hope to be in a position to retire and be healthy enough to enjoy it. Be it resume travelling, out meeting friends etc. Ill have worked long enough. Have been tipping away at a pension since 21 always had one through work. In the last 2 yrs ive decided to add 1% percent per month which my employer matches to give it a boast. Thinking of increasing my contribution if budget allows the next few months

  • Registered Users Posts: 28,603 ✭✭✭✭AndrewJRenko

    Any upcoming retirees who lost everything in the crash weren't paying attention. Any upcoming retiree should be moving their funds gradually from high-risk high-return equity funds to low-risk low-return bond/cash funds over the ten years up to retirement. Many fund managers will do this automatically, unless you specifically opt out.

    I don't believe most of the stories about upcoming retirees losing everything in their pension. Most likely, those who lost everything had tried to be cute hoors and put all their money into Anglo shares or similar, breaking all the rules of sensible investment diversification. They're the ones who lost everything by bad investment.

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  • Registered Users Posts: 4,787 ✭✭✭griffin100

    Exactly what happened to the father of a friend. Self made man with a successful business. Sold it all off at 65 and pocketed a couple of million in cash. Put the lot into BoI shares as a safe option even though advised not to do so. Lost pretty much everything including multiple properties he had yet to finish paying off (including his intended retirement home) when the banking crash hit about 6 months later. Had to start again from pretty much scratch and set up a brand new business. Its been very successful but he's still working in his seventies, not ideal.

  • Registered Users Posts: 32,634 ✭✭✭✭Graces7

    And we who have lived on eg disability allowances many years with no extra support, continue that very limited life housebound.... Be deeply glad that you have managed through your own hard work to provide yourselves with some freedoms and pleasures when you retire! AND VERY VERY WELL DONE! And I mean that sincerely. Enjoy it mightily!

  • Registered Users Posts: 1,585 ✭✭✭aero2k

    That's exactly the point I was trying to make Andrew, conservative investing over time with a 3-1 ratio on your costs vs actual contributions, can really amount to something. Usually the employer match is better than the employee contribution.

    @Frances McM: I'm not trying to give specific investment advice as I'm no expert and besides there's a forum for that. I also want to stay out of the private vs public sector debate, however back in the 50's when my father started in the co. co there were many private companies that had much better pension schemes than his, and most had better salaries. (The PS didn't catch up until the boom). Even if current private pensions aren't attractive these days, many companies will have life cover of 3-4x salary, people will have their own life cover which is very cheap if you start when you're young and healthy, and there's mortgage cover as well, all of which would add up to the same outcome as I described above re my father dying young with dependents. There are many ways to skin a cat.

    I'm not saying I did all this by the way, but it's definitely what I'd do if I was starting over in my 20's.

  • Registered Users Posts: 799 ✭✭✭niallers1

    Putting 100 euro a week gross into your pension at 25 years old will give you 1 million euros at 65.

    Don't be a dope, If you have the option to start a pension young then do it. ( P.S. I was a dope and left it late so have to contribute more now to get the same benefit)

    So kids, you can do it the easy way or the hard way but you have to do it one way or the other. Choose the easier way or have a crappy old age watching the pennies.

    State pension will pay for the basics, food, clothing, shelter. Private pension pays for the luxuries.

  • Registered Users Posts: 776 ✭✭✭Juran

    You are taxed on your pension once you're recieving more than €18k a year, right? ... someone might confirm this ?

    So lets say, once retire, you get 13k from your state pension and 12k from your private pension, that 25k subject to income tax and USC, and PRSI.

    Or if you get 20k a year private pension, thats 33k total subject to income tax and USC/PRSI.

    Is there a downside to ploughing too much money into a private pension, as you,ll be taxed on it. Is it better to spilt it, ie. Some in a private pension, some in a savings account (which will be 100% your tax free for the future).

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  • Registered Users Posts: 799 ✭✭✭niallers1

    You'll pay hardly any tax on your pension unless your pension is very large. Million euro plus fund

    Putting money into a pension is the best return you will get. It grows tax free. Nothing better .

  • Registered Users Posts: 28,603 ✭✭✭✭AndrewJRenko

    You'd need to take the tax savings of the pension into account in any such analysis. You can put €100 into your pension and only reduce your net salary by €60. Your savings account doesn't offer that boost.

  • Registered Users Posts: 10,523 ✭✭✭✭Jim_Hodge

    Firstly, you get tax relief on the pension contributions, plus usually a payment by your employer, so no big deal paying income tax when you access it. Savings incur DIRT tax and have no tax relief either. Then, consider the not insignificant tax free lump sum available on retirement. It's a no brainer. If you can afford to put the money in a pension go for it.

  • Registered Users Posts: 16,601 ✭✭✭✭Leg End Reject

    Inflation will eat away at the value of savings too, €50k had a lot more spending power 20 years ago than it does today.

  • Registered Users Posts: 10,676 ✭✭✭✭Furze99

    I'd reckon that's a fairly realistic scenario and will be made to sound like perfect sense.

    So by all means, save for a private pension and in my case, happy to work on (at a reduced level) anyway towards 70 and more. No intention of sitting around looking at four walls if can be helped.

    But quite likely, the state will look at those who have been prudent and say 'yous have enough and we need to help those with less'.

    On related matter, strikes in France this past week as French want to increase the retirement/ pension age from 62 I believe!!

  • Registered Users Posts: 7,252 ✭✭✭facehugger99

    This is almost guaranteed to happen.

    The prudent will be asked to subsidize the spendthrifts in their retirement because of 'fairness'.

    Remember the Irish Government stole around €2.4bn from private pensions during the last recession.

  • Registered Users Posts: 28,603 ✭✭✭✭AndrewJRenko

    Wait till you hear how much they stole from workers via Income Tax, and from shoppers as VAT.

  • Registered Users Posts: 6,582 ✭✭✭Allinall

    How much did all those people with pensions steal from taxpayers through the tax relief they got on their contributions?

  • Moderators, Business & Finance Moderators Posts: 10,066 Mod ✭✭✭✭Jim2007

    You are sick or dead, either way it won't matter much to you, so plan to make the best of your retirement....

  • Registered Users Posts: 27,121 ✭✭✭✭GreeBo

    This is the equivalent of saying that insurance is pointless since you never had to claim.

    The majority of people wont be in this situation, however everyone will get old and retire and need money.

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  • Registered Users Posts: 27,121 ✭✭✭✭GreeBo

    This really isn't accurate at all though. You only lost everything if you stupidly, against all advice left your fund in a volatile investment.

    If you followed the most basic of advice, you either moved it into cash since you were close to retirement OR you left it in stocks which have since rebounded and more and are better off than you were.

  • Registered Users Posts: 4,787 ✭✭✭Deeec

    You miss my point - he lived a very frugal life -old car, never done work to his house, never went on holidays in order to save for his old age. The person who spent all their money and never saved was looked after just the same due to (unfair) fair deal scheme. He could have enjoyed his life more and the outcome in his old age would have been just the same - the state would have stepped into look after him.

    Dont get me wrong - pensions are a great idea if you can afford it. But its pointless for alot of people on low incomes as it impacts their quality of living in the here and now. Nowadays you have to be able to contribute a large amount to a pension in order for it to give you a good payout in retirement - large contributions are out of reach for many nowadays.

  • Registered Users Posts: 27,121 ✭✭✭✭GreeBo

    So in one tiny scenario, where both end up in nursing homes it turned out the same?

    If you cant afford it now when you are earning, you sure as hell wont be able to afford to live when you retire. Sure your costs might be lower, but the cost of everything will be higher.

  • Registered Users Posts: 632 ✭✭✭squidgainz

    A shite tonne of people have inheritance coming to them. Inheritance , a paid off mortgage and public pension is grand , I'd imagine that's most people's thinking.

  • Registered Users Posts: 632 ✭✭✭squidgainz

  • Registered Users Posts: 937 ✭✭✭swimming in a sea

    Not very original but I always thought I'd sell up and move to Spain or Portugal when I retire to help stretch the budget and hopefully that means I can call it a day a few years earlier. I've heard others talk about Thailand, etc. but I don't think I'd go that far as I suppose the kids will be working in Europe so would be easier to still see them.

  • Registered Users Posts: 155 ✭✭windowcills

    I get very depressed when i am not working

    Have no interest in a pension or retiring, i dont even like long weekends

    I know loads of wealthy businness men who like me enjoy working long hours everyday and are over 75, infact my own financial advisor is 73

  • Registered Users Posts: 13,147 ✭✭✭✭Geuze

    Correct, the 25k is subject to tax, but.....

    People over 66 don't pay PRSI.

    People over 70 often have medical cards, and so pay lower rates of USC.

    As an example, my retired parents on 48-49k gross combined incomes, pay 8%-9%-10% direct income taxes, and get:

    35 pm off elec bill

    free TV licence

    free travel pass

    two full medical cards

  • Registered Users Posts: 776 ✭✭✭Juran

    I was in Puket Thailand in January. A 1 bed modern apartment near the beach for €175 a month, includes electricity and all bills .. had AC, hot water, washing washing, parking. Place was full of Russians staying there for winter 6 months. You'd live well there on an irish pension. Bit of foid which is very cheap and a moped to get around. I can totally see why its so attractive. We have an apartment in Spain for winter stays, but Spain is getting expensive to live in year on year.

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  • Registered Users Posts: 10,676 ✭✭✭✭Furze99

    Carry on, but don't be giving out if your time comes to need a nursing home, when the state hoovers up 80% of your income and 30% of your property value etc., or whatever applies then. All quite legal of course! I'm not complaining about this, just observing the reality that you may build up whatever nest eggs and so on, but Revenue ultimately has it's eyes on them!