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Why are people obsessed with getting a pension

Midlife crisis man

What's the point having one.

About myself: I don't have a pension. I came from a poor background and was never thought about the importance of financial awareness.

I struggled throughout the recession eventually going back to college. I'm in my mid 30s now recently started working in the public sector. I'm only on 25k per year. I'm not entitled to the public sector pension because I'm on a fixed term "trainee" contract in my field.

Also if I happen to stay in the public sector for the rest of my career I won't be long enough to get the cushty 40 year pension anyway.

So, in the next 30 years the retirement age will probably be closer to 70. Why save the bollox off myself just so I have a bit of cash when I'm an auld fella with (best case scenario) 10 years of life left. Who needs that much money at that age. Am I missing something here? You can't take it with you when you die.

I'm sure I'll have a good bit of regular savings by then but what's with the obsession of pumping as much money as you can into a pension (that'll end up getting raided by the government in subsequent recessions anyway)

I'm going to enjoy my money while I have health and vigour and the government can look after me when I'm an auld boy.

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The J Stands for Jay

Tacklebox wrote: »

I live in the moment, seen enough pensions go down the drain.
People who gamble on a high risk product, end up with one eight of what they invested in.
Trends change, but the pension sales person will pull the wool over your eyes with soundbites and fancy phrases...

I bought a big house with inheritance in 2002, off the plans, luckily its in a nice estate, detached 5 bedrooms and well insulated.

Ill sell it before I retire, buy something much smaller and have the rainy day money and leave the house to my son.

I know its a bit of a gamble but I think its a lot less of a risk than buying into a pension.

All your eggs in one investment basket. Property has done a lot worse than the usual diversified pension investment.

The J Stands for Jay

Steer55 wrote: »

But that is Switzerland totally different country!

The Irish were badly burned by bamk shares during the crash, Brendan Investments etc. Give me bricks and mortar any day.

Brendan investments was bricks and mortar...

Big Words

Vintage and sports cars was the way to go in the last bust. Will retire nicely now cashing in on these.

1874

dar_cool wrote: »

Im in private sector, I put 5% in my pension and my employer puts 10% in on top of that. Its free money. If I dont get to enjoy my retirement then my kids will get the use of it. Its a no brainer in my opinion

Will they? I didnt think it worked that way, I intend to up my pensions contributions but am probably already screwed on that front, my private pension contributions have not been enough and at times I did not have a private pension or could not afford to contribute.
I still didnt think it was transferable to children? Id rather put less in and live a little, than just give it all to a pension fund or kids, better to set them in other ways, ensure they start their own pension early so they can add a tiny amount to it and let it grow a bit, start them out with a small lump sum maybe?

Many people cant afford to put anything away, cant even afford to meet their current bills.

Heres Johnny

Basically if you are on 20k or so a year working then the drop in lifestyle when you just get the old age pension is not going to be huge and you probably can't afford to pay into a personal pension anyway.

If you are on 60k and enjoy spending it and don't put anything away the shock of dropping to 12k would be massive.

Remember this is yourself you're saving for, not a complete other person.

I'm retiring, or at least partially, at 60 the year my mortgage is due to finish. I've been in a pension fund since I'm 24 and it's worth a hell of a lot more than I've put in in those 14 years.

Never listen to someone that doesn't have one, they know they should be planning for the future and often don't want anyone else to either.

Hobosan

If you don't plan for old age you're a fool. My investments in Soylent Green will help look after me in my old age and will hopefully keep the grandkids fed.

Jim2007

gimli2112 wrote: »

It's like religion if you don't have it there's nothing to look forward to......like nothing

No that is not true, there is hell on earth in the form of very little social assistance to look forward to.

sabat

Do you own a house op? If not and you don't have any financial backup besides the state pension, and I'm being 100% serious here, you'll find yourself living in a men's shelter.

Jim2007

Steer55 wrote: »

But that is Switzerland totally different country!

The Irish were badly burned by bamk shares during the crash, Brendan Investments etc. Give me bricks and mortar any day.

No it most certainly is not nor is it different any one of the other EU states. They all face the same basic issues: a major gap in pension funding and a growing demand for social benefits. The only difference is who far along the path each country is.

And as for property.... the Irish lost the most in terms of household wealth in the last recession and they have absolutely nobody to blame but themselves because they ignored every single best practice of investing. And even worse they have they have learned nothing from the process as your statement demonstrates. Come the next recession they will be right back in the same situation.

KyussB

It's the financial sector that is constantly pushing to have everyones wages slashed, telling everyone their money is best invested with them.

The solution: Get better paying jobs, so you have money to save in the first place. Unionize, and improve your jobs and pay.

Then when you get that sorted, use the labour power built up from that, to force employers to offer Defined Benefit instead of the shity Defined Contribution pensions you get today.

When you hear all the news of future a pensions crisis etc., realize that it's the symptom of workers not getting as big a slice of the pie as before - and the whittling-away of pensions schemes that are actually good value - it's not an issue of people not putting enough into pensions...

You can barely put a fucking thing into a pension, when you're overpaying on rent or on a mortgage for an overpriced house, with a job that doesn't pay appropriately with regards to the cost of living. That's the 'pension crisis'. Just a symptom of how badly people are being screwed over, economically.

People don't even have a clue what they are investing in, either. Could be investing in oil companies or arms dealers, through their pension, for all they know.

PhilOssophy

....... wrote: »

Is that you Bertie?

No, sure Bertie didn't even have a bank account let alone a pension.......

PhilOssophy

Joking aside tax relief on pension contributions is just an absolute no-brainer to take advantage of. If you are in a position to take advantage of this, you should while it lasts, because it is already being viewed as the low-hanging fruit to be cut in a budget.

LincolnHawk

Pensions are not tax free. You pay the tax on the way out

granturismo

Midlife crisis man wrote: »

... I'm not entitled to the public sector pension because I'm on a fixed term "trainee" contract in my field.

Also if I happen to stay in the public sector for the rest of my career I won't be long enough to get the cushty 40 year pension anyway.

So, in the next 30 years the retirement age will probably be closer to 70. ...

I'm going to enjoy my money while I have health and vigour and the government taxpayercan look after me when I'm an auld boy.

If you work in the public service for 30 years you will get a pension.l

You do realise that you will eventually start paying into a pension scheme if you keep working in the civil service.

Its explained here

DaisysB wrote: »

Also if I happen to stay in the public sector for the rest of my career I won't be long enough to get the cushty 40 year pension anyway.

You should look up the Single Pension Scheme that applies to entrants since 2013, that cushty 40 year pension is long gone!

The J Stands for Jay

LincolnHawk wrote: »

Pensions are not tax free. You pay the tax on the way out

You can get a fair whack if it tax free at the end (some people get the whole thing as a tax free lump sum). Also, you're likely to have tax relief at 40% on the way in and then get taxed at 20% on the way out; you'll probably have less income, and older people get more tax credits or standard rate cut offs.

Henry Ford III

hmmm wrote: »

Wait till you get to 50, and things are creaking, and you're beginning to forget things, and younger people are getting promoted, and your job is beginning to be automated, and you wonder how you're going to keep working until you're well into your 60s.

It's too late then to start saving.

More than anything else, having savings gives you options. And a pension is a way to save tax-free until you need it.

It's never too late.

I'm advising a guy aged 64 who is only now investing in a pension. It's mainly tax driven but it's still effective.

Henry Ford III

Big Words wrote: »

Vintage and sports cars was the way to go in the last bust. Will retire nicely now cashing in on these.

You can't invest in these through a pension I think.

MarioLuigi

As said pensions with employer contributions are free money.

If you were really ballsy and like high risk high reward you could take the contribution amount per month from your wages and invest it to try and outperform the pensions.

But for christ sake don't do nothing.

The J Stands for Jay

MarioLuigi wrote: »

As said pensions with employer contributions are free money.

If you were really ballsy and like high risk high reward you could take the contribution amount per month from your wages and invest it to try and outperform the pensions.

But for christ sake don't do nothing.

Or you could go for high risk investments inside your pension and keep the tax relief

MarioLuigi

McGaggs wrote: »

Or you could go for high risk investments inside your pension and keep the tax relief

Well yes but I mean swing/day trading to outperform the pension including 20% tax free lump sum.

El Tarangu

Tacklebox wrote: »

I bought a big house with inheritance in 2002, off the plans, luckily its in a nice estate, detached 5 bedrooms and well insulated.

Ill sell it before I retire, buy something much smaller and have the rainy day money and leave the house to my son.

I know its a bit of a gamble but I think its a lot less of a risk than buying into a pension.

And if the property market goes bang again the year before you retire(?) Or interest rates increase significantly (it's not as if they drop much further), house prices drop accordingly, and you end up getting a lot less for it than you planned(?)

Of course there are risks involved with pensions as well, but the fact that they are invested in lots of different areas mitigates the risk a bit.

KyussB wrote: »

... The solution: Get better paying jobs, so you have money to save in the first place. Unionize, and improve your jobs and pay.

Then when you get that sorted, use the labour power built up from that, to force employers to offer Defined Benefit instead of the shity Defined Contribution pensions you get today...

Defined Benefit pensions come from an era where people had a lot more kids, so there were always lots of workers to support a small number of pensioners. They were also conceived when people drank and smoke a lot more, so in most cases pensions were only paid out for a few years before the recipient shuffled off to the Great Beyond.

Those days ain't coming back, so you can either rage against the system, or take responsibility for your own future.

1874

Feeling the need to start approaching a pension advisor, at 44 am I too late, have some contributions, wanted to move house first and then max out pension contributions to avail of tax relief as a cost efficient means of saving, moving isnt looking like happening now, what percent am I likely to be contributing??

Pussyhands

I'm late 20's and I'm kind of the same opinion as OP although I have a private pension.

I wouldn't mind it so bad if I could access my funds any time. Now I have to face the facts that 5% I get this month won't been seen for at least another 40 years.

Then they say "you need a pension to have the same standard of living as today".

I save about 15k a year for future housing, kids, holidays etc.

When I'm 70 I won't be thinking about saving in the future or kids costs.

My grandparents have all just got the state pension, often they were only housewives, farmers yet they're doing alright. How much money do you need when you're 70? 250 a week (todays money) is pretty good for a 70 year old considering you'll have your house and kids paid off.

And they overstate the tax relief side of it too. Sure, your pension can grow before the tax is taken but you still have to pay tax when you withdraw it, you have to pay fees yearly and on drawdown plus if you take a lumpsum a big chunk is taken in fees right away. If you take the weekly payment you're going to have to stay alive for a good long time to avail of a good chunk of your money.

Pussyhands

hmmm wrote: »

Wait till you get to 50, and things are creaking, and you're beginning to forget things, and younger people are getting promoted, and your job is beginning to be automated, and you wonder how you're going to keep working until you're well into your 60s.

It's too late then to start saving.

More than anything else, having savings gives you options. And a pension is a way to save tax-free until you need it.

You can't access the pension until you're retirement age (at least in the pension I'm in)

Pussyhands

Heres Johnny wrote: »

Basically if you are on 20k or so a year working then the drop in lifestyle when you just get the old age pension is not going to be huge and you probably can't afford to pay into a personal pension anyway.

If you are on 60k and enjoy spending it and don't put anything away the shock of dropping to 12k would be massive.

Remember this is yourself you're saving for, not a complete other person.

I'm retiring, or at least partially, at 60 the year my mortgage is due to finish. I've been in a pension fund since I'm 24 and it's worth a hell of a lot more than I've put in in those 14 years.

Never listen to someone that doesn't have one, they know they should be planning for the future and often don't want anyone else to either.

I'd be like that. I earn 45k but my lifestyle is probably the same as someone on 25k or similar. I'm saving loads for a mortage and I don't have lavish lifestyle.

I have a pension through work though. One thing though, I can't access it until I reach retirement age. I wish I could access it earlier if I wanted, I could retire earlier

Eric Cartman

PhilOssophy wrote: »

I want to live out my days lighting cigars with 50 euro notes and snorting coke on a yacht with a load of hookers around me, not unable to afford to turn on the heating......

no pension product in Ireland will ever pay for that. You'd be better off investing your money in businesses or other assets that make a propper return that tracks inflation. As much as I hate property as a 'pension scheme' atleast the rental income will always be in line with peoples earnings .

Could you imagine piling a million quid into a pension to wind up that thats what a used car costs in 30 years time.

Drumpot

Haven’t seen an answer to the question “how will you fund your retirement?”. Presuming you could very well be dead is not planning or a rational reason to not put aside provisions for your retirement. Most people seem to be able to find money for a night out or some other thing that they want now but there’s always an Excuse when it comes to putting aside savings that won’t be used for decades.

If you want to save for long term use or even invest in a rental property (you need a big pension pot for this) a pension is generally the cheapest and most cost effective method to do it, particularly if you are on the higher rate of tax. People get their knickers in a twist about fees and fund performances with little understanding of what they are talking about TBH. There is usually soap boxing on these forums with default righteous indignation towards pensions or investments with little insight into why there this is perception.

I was chatting with somebody who wants to retire as soon as they can and they were fortunate enough to be able to throw an extra 600e a month off their mortgage which would save them 30k interest and chop 5.5 years off their mortgage.. They are paying top tax so effectively 50% tax. I showed them the benefits of throwing 1200k a month into a pension (same net cost) for the same term and they would get a tax free lump sum to pay off their mortgage earlier and still have a couple of hundred thousand left over. It’s not guaranteed but it’s most definitely a more tax efficient way of them saving. Not just that , this person has a serious medical condition so if they die with their pension it all goes to their estate tax free. Even if the fund dropped 50% which is highly unlikely they would be no worse off then if they had saved it in a savings plan.

All investments are a risk. Putting money in a bank is a risk. When investing money you should make sure you understand the risk of your investment. Some of The questions you should always consider are:

- why am I investing my money?
- How much time have I got to invest my money ?
- how much would I be comfortable losing?

People should never presume it’s a straight line to retirement or maturity of their investment. Do you automatically presume a flight from A-B will not have turbulence? Even the best financial adviser/broker does not control the markets and does not have a crystal ball. We can only try and guide people along the way, like a pilot. You don’t bang down the pilots door when there is turbulence on a plane , you trust he will help you get from A to B. Some pilots are less reliable then others but most are good competent professionals. Its the same in the financial industry.

You only ever hear of the bad experiences people have with investments/pensions because most people have Positive or neutral experiences. If you don’t like your adviser/ sales person then use somebody else. Don’t use that as an excuse to avoid taking out a pension. And don’t let other people’s experience or prejudice have so much weight to your decision. Do your own research and validate/clarify your concerns.

witchgirl26

Pussyhands wrote: »

I'm late 20's and I'm kind of the same opinion as OP although I have a private pension.
I wouldn't mind it so bad if I could access my funds any time. Now I have to face the facts that 5% I get this month won't been seen for at least another 40 years.

That's kinda the point - putting money aside for your future that you can't decide to use for a holiday or a house now. And you don't have to put in 5%. If you're in your 20's, you could opt for a slightly smaller % now and increase as you age.

Pussyhands wrote: »

Then they say "you need a pension to have the same standard of living as today".
I save about 15k a year for future housing, kids, holidays etc.
When I'm 70 I won't be thinking about saving in the future or kids costs.

I don't think they mean it in the sense of saving for housing or kids but rather that you can go on holidays, continue to live in your home and generally enjoy your retirement years rather than watching the pennies continuously.
I'd like to still be able to go on holidays when I'm retired. In fact I'd like to go on more considering I'll have more free time but that requires money to fund.

Pussyhands wrote: »

My grandparents have all just got the state pension, often they were only housewives, farmers yet they're doing alright. How much money do you need when you're 70? 250 a week (todays money) is pretty good for a 70 year old considering you'll have your house and kids paid off.

Yes but there's no guarantee that the state pension will be the same or even there in 40 years so you can't guarantee that you'll have the same. And great if they're doing well on it. My mam is in her 60's, retired and has the state pension, a small amount of her own and half my dad's (because he paid into a specific scheme). It's a good thing her house is paid off but it's not all easy going. Any works that are needed to be done to the house have to be really thought about a costed well. Buying a new car (new to her not new new) was a massive deal. Bills and general living still isn't cheap.

Pussyhands wrote: »

And they overstate the tax relief side of it too. Sure, your pension can grow before the tax is taken but you still have to pay tax when you withdraw it, you have to pay fees yearly and on drawdown plus if you take a lumpsum a big chunk is taken in fees right away. If you take the weekly payment you're going to have to stay alive for a good long time to avail of a good chunk of your money.

The tax incentive is sometimes a little overblown at the now rather than looking down the road, however if think about what age you retire at and how long you'll most likely be alive, then you'll get a fair chunk of that cash back. Essentially if you retire at 65 and live till your 81 (the WHO estimation of life expectancy in Ireland) that's 832 weekly payments. If you take the state pension being approx €250 a week and you wanted to match that with your private pension you'd need a pot of €208,000 to cover just that without taking into account tax. For 40 years that means saving €5,200 a year (again without the tax element) which isn't a lot. But then neither is €250 a week to live on.

Tacklebox wrote: »

I live in the moment, seen enough pensions go down the drain.
People who gamble on a high risk product, end up with one eight of what they invested in.
Trends change, but the pension sales person will pull the wool over your eyes with soundbites and fancy phrases...

I bought a big house with inheritance in 2002, off the plans, luckily its in a nice estate, detached 5 bedrooms and well insulated.

Ill sell it before I retire, buy something much smaller and have the rainy day money and leave the house to my son.

I know its a bit of a gamble but I think its a lot less of a risk than buying into a pension.

But what if the property market crashes? That's it all gone in one fell swoop. Yes people lost a huge amount on their pensions in the economic crash but you are allowed to change the risk profile of your pension if it's a private one normally. The idea being that you can go with a higher risk profile when you're younger to build the pot and then reduce the risk as you get closer to retirement age so that the chances of incurring large losses are lowered.
Especially now as the low risk aspects don't rely on construction or banking and have a more even spread across industries so as to try to protect about a large crash in one particular industry causing a massive problem.

Pussyhands

witchgirl26 wrote: »

That's kinda the point - putting money aside for your future that you can't decide to use for a holiday or a house now. And you don't have to put in 5%. If you're in your 20's, you could opt for a slightly smaller % now and increase as you age.

I don't think they mean it in the sense of saving for housing or kids but rather that you can go on holidays, continue to live in your home and generally enjoy your retirement years rather than watching the pennies continuously.
I'd like to still be able to go on holidays when I'm retired. In fact I'd like to go on more considering I'll have more free time but that requires money to fund.

If I had a free house today I could live off 250 a week for sure.

Even people on the dole who rent go on holidays.

I have yet to see a 70 year old who is as picky with quality/condition as young people. I can't see myself spending big money when I'm 70 on cars, holidays etc.

I don't even do that now!

In any case I have my private pension for now....I can always cancel it after 10 years I suppose.

PhilOssophy

250 quid to heat your house, pay the bills, keep a car on the road, enjoy some sort of standard of living, you could live on it but I can assure you, it'd be absolutely a poxy way to live out the end of your life!