Pension if retire early

Happyhouse22

https://www.boards.ie/discussion/comment/122560771#Comment_122560771

isn’t it theoretically possible to move your pension to Spain? Maybe you would need to work in Spain for a year or two first before retirement, but I definitely feel like I’ve heard of people moving their pensions within the EU.

Wouldn’t this then no longer be considered Irish source income when drawing down?

*This probably only applies when it is still a pension and not yet an ARF as in the opening question,

Jim2007

https://www.boards.ie/discussion/comment/122563298#Comment_122563298

The fees for consulting aren't based on assets under management, but either hourly or fixed.

As for how much you might lose in moving your portfolio to another jurisdiction, best of course would be zero, but I have had people come to me after the fact having lost 20% or even 25%! There are many vultures out there offering all kinds of services in this area, so get good advice and move slowly.

In terms of growth, realistically you are probably looking at 4% to 6% on an annualised basis over the long haul.

bilbot79

https://www.boards.ie/discussion/comment/122564249#Comment_122564249

Why 4-6% growth? If stocks deliver circa 10-11% annualized growth and the pensions is invested in high risk equities why would it not be 10%?

cute geoge

https://www.boards.ie/discussion/comment/122564973#Comment_122564973

Did you go to the same school as seanie fitzpatrick

bilbot79

https://www.boards.ie/discussion/comment/122565013#Comment_122565013

Genuine question. You can get nearly 4% in a bunq savings account and probably 5+% on t-bills, all risk free. Why on earth would a pension fund offer risky equity options if not chasing higher returns?

I'd say folks from Seanie Fitz' school might be looking for 40% returns.

Edit: I understood the 4-6% suggestion to mean pre-retirement growth of a pension fund but perhaps Jim is referring to ongoing growth in e.g. an ARF.

cute geoge

Has the Celtic tiger crash given us any lessons if you are expecting annual growth in high risk pension investments of 10-12% .I am not going to be that sucker anyway,everyone would be multi millionaires if life was that simple!

Jim_Hodge

https://www.boards.ie/discussion/comment/122564973#Comment_122564973

Jesus Bilbot! For the umpteenth time, go and talk to a properly qualified independent financial or pensions advisor. It's becoming clearer with every post that you need one.

Jim2007

https://www.boards.ie/discussion/comment/122564973#Comment_122564973

Because stocks don't deliver anything like 10% - 11% for the average punter over the long haul, 8% would be considered exceptional. Calculating annualized returns is a complex exercise which most investors and many professionals get wrong.

bilbot79

https://www.boards.ie/discussion/comment/122565297#Comment_122565297

Well I will at some point but I'm interested in drawing on the experience of learned Boardsies too.

Perhaps you're overreacting just a smidge?

E.g. In Vanguards recent quarterly report they indicated an expectation that Emerging Market growth would be 6-8% so it would make sense to me that a high risk equity fund targeting that market could easily produce 8%.

Its a discussion forum, for discussion..

Jim2007

https://www.boards.ie/discussion/comment/122565077#Comment_122565077

Pension funds can't offer real high risk exposure, it's regulated to ensure they don't.

Jim2007

https://www.boards.ie/discussion/comment/122565414#Comment_122565414

That is a theoretical return that you are extremely unlikely to achieve - you don't even understand how it is calculated! There are probably a couple of hundred books on the subject of say 20 - 25 are worth reading to start with, then you need access to the market data which runs a couple of hundred dollars a month plus have the ability to build or buy the necessary computer models. At which point you'd be on a par with the professionals from a technical point of view when they try to achieve the market return in their portfolios and most don't do very well!

Whether you have the mentality for it is something else…. The only people I would bet on when it comes to achieving market returns is people with Asperger's Syndrome (my son is one), they are the only people I know who don't let their emotions interfere with their investing decisions and that alone gives them an incredible advantage. For the rest of us it is almost guaranteed that we'll let our emotions in and that will be expensive.

celtic_oz

https://www.boards.ie/discussion/comment/122565586#Comment_122565586

I've gone through 3 different emotions just reading this thread.. I'm doomed!

Jim2007

https://www.boards.ie/discussion/comment/122565711#Comment_122565711

You are not doomed, but you do need to recognise that transferring pension savings between jurisdictions is complex and people do tend to suffer unexpected losses when doing so both because they don't understand the complexities or unfortunately the somehow manage to team up with a transfer agency that takes a bigger than expected slice of the pie.

I personally can't think of a single good reason to move pension savings between first world jurisdictions before maturity unless there are legal obligations to do so or you have a very significant amount that you intend to put under active management (maybe).

bilbot79

https://www.boards.ie/discussion/comment/122565586#Comment_122565586

This reads more like direct stock-picking which I won't be doing.

And on the 4-6% projection for pension funds in equities I'm not sure I agree on that, reason being that when I left my last job 8.5 years ago I had 30k in the pension and it was left in the 'Do it for me' safe but low growth blend of equities, cash and bonds yet today it's worth 52k.

If the 'safe' choice gets the 4-6% then I have to be confident that a 100% equity choice will reflect higher returns in the long run.

Jim_Hodge

https://www.boards.ie/discussion/comment/122568624#Comment_122568624

I give up.

It's called 'safe' for a reason. And it isn't because people just prefer a lower return.

cute geoge

https://www.boards.ie/discussion/comment/122568728#Comment_122568728

Let him at it cause all he is missing is winkers I would say!!

Jim2007

https://www.boards.ie/discussion/comment/122568624#Comment_122568624

One thing I have learnt over the last 35+ is that you can't protect people from themselves. Looks like the thread has run it's course, you have received some good insights here, but at the end of the day you will do what you are going to do.

bilbot79

Ok. But just to note, this is one of the equity funds that I am in and the 10 year annualized performance is 8.56%

https://www.morningstarfunds.ie/ie/funds/snapshot/snapshot.aspx?id=F00000SKJL&tab=1

cute geoge

https://www.boards.ie/discussion/comment/122570172#Comment_122570172

That is excellent return but you must bear in mind past returns are no guarantee in the future, AFAIR the ftse tracker gained 0 in the period 2000 - 2020 so nearly all them funds are guesswork, you can get lucky or end up losing your shirt.

AndrewJRenko

https://www.boards.ie/discussion/2058341206/pension-if-retire-early

At risk of stating the obvious, you can only retire at 50 if you've left the employment of the pension in question.

Jim2007

https://www.boards.ie/discussion/comment/122570172#Comment_122570172

And if you go back through the post you'll find that 8% or thereabouts is the top end of a well diversified portfolio… but annualized out over say 30 years it is going to be somewhere between 6% - 8%.

I did not spend much time looking at it, but it seems to be reasonably well constructed in term of geographic and sector allocations, maybe a bit skewed in term of capitalization. But unless you're pumping in say 500k+ or more I'm not sure what other equity funds you'd need… unless you're trying to to some kind of tactical allocations, but even then the extra fees will bite.

FlipFlopAgain

Is that 8.56% return before the management fee? If the pension provider is charging a 1% management fee, then that will have a significant impact on the actual achieved return.

Regarding double taxation, in general, if you take your pension as an annuity and move abroad, you don't have to pay Irish tax on the income, assuming there is a double-tax agreement in place with the other country.

If you take your pension as an ARF, it's completely different, and much more complicated.

A good summary of retiring abroad at

https://www.bluewaterfp.ie/pensions/private-pensions-and-not-living-in-ireland/

And more detail on taxation of ARFs abroad from PWC at https://www.pwc.ie/services/workforce/insights/non-irish-residents-approved-retirement-funds.html

Bass Reeves

https://www.boards.ie/discussion/comment/122570250#Comment_122570250

That should not be an issue if you keep transferring your pension to your new employer scheme.

AndrewJRenko

https://www.boards.ie/discussion/comment/122580499#Comment_122580499

It's an issue if you're planning on still working for the same employer.

micks_address

sort of a side question if you don't mind - if you have two pensions - lets say one from a previous employer. You can take a lump sum from that at age 50 and continue working / contributing to your other pension till retirement age. My question is the remainder of the fund that you take the lump sum from at 50, can you then 'roll' that into your existing employers pension?

AndrewJRenko

I'm far from expert, but I don't think you can roll the money over directly. If you retire using that fund, you have to start drawing down 4% of the remaining fund value each year, which is taxable income. You could use the after tax remaining income to buy additional AVCs, subject to the usual limits.

micks_address

https://www.boards.ie/discussion/comment/122580653#Comment_122580653

ill talk to a financial advisor before doing anything.. few years away yet

FlipFlopAgain

If you take the 25% tax free lump sum from your previous employer's pension at 50, AFAIK, the rest has to be used to purchase an annuity or put in an ARF. If you put it in an ARF, I think you don't have to start drawing down 4% per year until you reach the age of 61. But check with a qualified advisor.

Henry Ford III

AFAIK isn't very helpful.

JPup

Comments to OP:

Make sure you know the total expense ratio of the two funds you are invested in. Cheaper generally better obviously with some caveats. If you're not sure, post here for further advice.

Otherwise your strategy is sound as long as you are leaving yourself enough money to enjoy life and meet your goals (buy house etc) in the meantime!