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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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Nermal

Varta wrote: »

I wonder what people's thoughts are on the tax aspect of pensions. Earlier some posters were none too happy at the prospect of people who did not have private pensions somehow gaining from those who do via a pension levy or through social insurance. How do those people balance this with the tax 'savings' they make on their pensions?

It takes a mind well steeped in socialism to see a tax relief as equivalent to a state benefit, if that's what you are suggesting.

Varta

Nermal wrote: »

It takes a mind well steeped in socialism to see a tax relief as equivalent to a state benefit, if that's what you are suggesting.

What else would you call it when tax that should be payed is forfeited by the state to bolster the private pensions of individuals? Those earning just enough to get by will never receive such largesse from the state. The same goes for private health care tax 'breaks'. Those who can afford private health care and private pension plans are subsidised by those who cannot. You don't have to be a socialist to see injustice in that.

GreeBo

KyussB wrote: »

Don't paraphrase me, thanks - I've pointed out the difficulty of identifying ethical investment funds - and I've even pointed out a specific pension fund (first result on Google for 'ethical pension') - which turns out to have a load of unethical investments - I haven't said all funds are unethical.

Asking someone to prove that your pension fund is unethical, when you don't even name the fund or the firm providing it, is retarded - and is just a childish level of obstruction, that identifies your posts as just rhetoric.

Ah ok, so you are specifically not saying they are all unethical then?

In that case you must be able to share with us which ones are ethical?

GreeBo

Varta wrote: »

What else would you call it when tax that should be payed is forfeited by the state to bolster the private pensions of individuals? Those earning just enough to get by will never receive such largesse from the state. The same goes for private health care tax 'breaks'. Those who can afford private health care and private pension plans are subsidised by those who cannot. You don't have to be a socialist to see injustice in that.

Public pensions don't come from tax, they come from "government expense"... Clearly you haven't been following the thread.

voldejoie

voldejoie wrote: »

My retirement age at work (presuming I stay in the same job for the next 33 years...) is 60, so I'm very aware that I will need to have a substantial pot set aside to keep me afloat from then. Even just the fact that 60 is in my head as a retirement age means it's my aim to be in a comfortable enough position financially to make it work, so given that I only started a pension halfway through last year I'm throwing in 15% of my salary and benefiting from a 10% employer contribution, with a plan to increase my contributions in line with the cut off for tax relief in each decade (or as close to that as possible)! With the tax breaks involved it's like free money, and as people have previously mentioned gives a return that you wouldn't find on any other investment. Just over €1000 a month goes into my pension, at a net cost to me of ~€360 per month!

I'm very lucky to be on a decent salary with even better prospects in the future, so can afford to contribute while also maintaining an emergency fund of 4 months' salary and starting to save for a deposit. I've seen my parents struggle with money all of my life and know that I don't want to end up in a similar situation. I don't want to be worried about money as I get older, and having a safety net is great because it means if I do retire at 60 I have so many more fun options for how to spend that time.

This thread has taken a bit of a turn :pac: so I'm just going to quote my previous post on the matter and add that paying into my pension gives me enormous peace of mind

high_king

Drumpot wrote: »

The statement “Retiring on an occupational pension” means nothing on its own. You need to differentiate between a guaranteed income (maybe a DB pension) and a defined contribution pension that can be an occupational pension.

Most people don’t get such a pension in their 50s so it’s mostly irrelevant. I don’t know anybody other then public servants who can have a guaranteed Pension of over €12,700 in their 50s and most defined benefit pensions are gone or don’t start that early.

This is the elephant in the room. There is nothing wrong with private pension schemes, the real issue is (despite the desperate denials), this is obviously the first step in doing away the contrib state pension by stealth . . death by 1000 cuts . . and leaving working people with a lot less that 248 a week. Meanwhile those on welfare who never paid a cent in prsi etc. or worked will get the full non contrib pension at workers expense. The fee structure going to the cronie companies is shrouded secrecy which also does not bode well for the ordinary worker.

Liam D Ferguson

KyussB wrote: »

Our GDP Per Capita has doubled over the last 20 years - well beyond our population growth (the population has not doubled in the last 20 years...) - and Ireland's GDP Growth rate consistently outpaces our population growth rate.

Yes it is true that GDP per capita has (almost) doubled since 1999. However, in picking this timeframe you conveniently ignore the fact that during that period it also dropped. After 2007, it dropped back and took until 2015 to recover to pre-2015 levels. And yet you seem to be happy to continue making predictions based on the assumption that our GDP per capita will keep increasing and increasing forever and therefore future Governments will be awash with cash to pay us all our pensions. As my mother used to say - I hope it stays fine for you.

KyussB wrote: »

Unless Ireland's population growth starts skyrocketing (i.e. has high birth rates that reduce the future old age dependency ratio when those people start working...), or Ireland's GDP starts consistently decreasing/stagnating (i.e. we stay in permanent economic crisis) - then GDP Per Capita is set to keep on growing significantly.

If working people have less in the future than they do today, it will be due to the distribution of the economies resources - because the 'economic pie' will have grown more than enough, to give workers more than today, even despite higher old age dependency ratios.

More crystal-ball predictions presented as if they were facts.

Varta

GreeBo wrote: »

Public pensions don't come from tax, they come from "government expense"... Clearly you haven't been following the thread.

Clearly, you didn't read my post as your reply makes no sense.

Monokne

Midlife crisis man wrote: »

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.

Would you not like to have money to live off when you're retired though?

I would, that's why we've a pension.

bfa1509

GreeBo wrote: »

False.
You can withdraw €200,000 tax free, the next €300,000 at 20% and anything over €500,000 at your marginal rate.

But basically you decide how much you want access to.

How on earth do you think your savings will perform better than the 50% free money the government will give you for 45 years?

You literally just said "have my own savings"?
I'm not sure how you can have your own savings and yet not save...

Are you serious? Could you please share with us the name of the company that provides this pension scheme? Because it is nothing like the one I am forced to pay into. When I retire I will get two options:

Option 1: Receive €15,000 per annum
Option 2: Take a lump sum of €58,000 and then €10,000 per annum

I'm not sure why you are questioning what I will do about money when I retire. If you read my original post, I said it doesn't make sense to pay into a private pension when you are in your 20s. 50s and 40s is a different story. Then I would expect to be earning more and have better foresight on my retirement.

KyussB

Liam D Ferguson wrote: »

Yes it is true that GDP per capita has (almost) doubled since 1999. However, in picking this timeframe you conveniently ignore the fact that during that period it also dropped. After 2007, it dropped back and took until 2015 to recover to pre-2015 levels. And yet you seem to be happy to continue making predictions based on the assumption that our GDP per capita will keep increasing and increasing forever and therefore future Governments will be awash with cash to pay us all our pensions. As my mother used to say - I hope it stays fine for you.

More crystal-ball predictions presented as if they were facts.

Yea the worst economic crisis in a century, and it still doubled despite temporarily stallling.

Unless you think we're going to enter a state of permanent economic crisis and persistent negative or stagnant GDP - then it's going to keep on increasing.

There are many things about economies which are hard to predict - but the upward march of long term GDP growth is an easy one, for pretty much every country on the planet - and unless you think population growth is going to outstrip it (which is incompatible with the argument for increasing old age dependency), then it's a given that GDP Per Capita will keep on increasing.

It's simple stuff - don't make unnecessary debates out of things which are easy to see/figure-out like that.

Jim2007

bfa1509 wrote: »

If you read my original post, I said it doesn't make sense to pay into a private pension when you are in your 20s. 50s and 40s is a different story. Then I would expect to be earning more and have better foresight on my retirement.

Of course it makes sense to pay in from your 20s, otherwise you miss out on say 20 - 25 years savings and potential gains and you don't need much foresight to know your going to need plenty of savings in retirement.

Also there is no guarantee that you will be able to save in your 40s or 50s that you will be in a position to start saving and to some how make up for the lost years.. health, unemployment, unexpected financial commitments such as helping a parent, children etc.... or may be when you reach 50 - 55 you have just had enough and want to do something else....

Or you many need funds in retirement to make modify your home to make it more easy for you to live in in old age.

GreeBo

bfa1509 wrote: »

Are you serious? Could you please share with us the name of the company that provides this pension scheme? Because it is nothing like the one I am forced to pay into. When I retire I will get two options:

Option 1: Receive €15,000 per annum
Option 2: Take a lump sum of €58,000 and then €10,000 per annum

Ok, how much are you paying in every month and for how many years?

I'm not sure why you are questioning what I will do about money when I retire. If you read my original post, I said it doesn't make sense to pay into a private pension when you are in your 20s. 50s and 40s is a different story. Then I would expect to be earning more and have better foresight on my retirement.

If you knew anything about pensions and how compound interest works you would know that starting as early as possible is what gives you the largest results in the end.

It's a marathon, you can't start your training the day before the race.

What more foresight are you going to need beyond "I want as much money as possible available to me to live on when I have no income and another 20 years to live"?

GreeBo

Varta wrote: »

Clearly, you didn't read my post as your reply makes no sense.

Clearly you haven't read the thread.

Varta

GreeBo wrote: »

Clearly you haven't read the thread.

I have read the thread. You made a reply to my post that was a complete non sequitur.

[Deleted User]

Starting your pension as early as possible is preferential.
Can't believe someone said otherwise. It's about as basic a fact you'll get when it comes to pensions

S.M.B.

It's preferential due to the benefits of compound interest but I can also see the reason as to why it's well down the list of priorities for someone in their 20s. I didn't contribute to any form of private pension in my 20s and it took auto enrolment and me hitting my mid 30s to really start taking a good hard look at my long term financial well being.

Do I regret not contributing more when I was younger? Yeah, a little. Making small regular payments at a young age that are matched by your employer is probably worth while. Would mean I've less catching up to do now.

The J Stands for Jay

bfa1509 wrote: »

Are you serious? Could you please share with us the name of the company that provides this pension scheme? Because it is nothing like the one I am forced to pay into. When I retire I will get two options:

Option 1: Receive €15,000 per annum
Option 2: Take a lump sum of €58,000 and then €10,000 per annum

I'm not sure why you are questioning what I will do about money when I retire. If you read my original post, I said it doesn't make sense to pay into a private pension when you are in your 20s. 50s and 40s is a different story. Then I would expect to be earning more and have better foresight on my retirement.

All pension companies provide this type of pension. You're either a public servant in an unfunded DB scheme, or you pension administrator hasn't told you about the ARF option. The only correction to make is that the 200k tax free and 300k at 20% tax are limited to 25% of your fund.

The J Stands for Jay

Varta wrote: »

I have read the thread. You made a reply to my post that was a complete non sequitur.

Both of you need to read.more carefully. 9ne of you is talking about the cost of tax relief on private pensions, and the other is talking about the unfunded nature of the state pension.

GreeBo

McGaggs wrote: »

Both of you need to read.more carefully. 9ne of you is talking about the cost of tax relief on private pensions, and the other is talking about the unfunded nature of the state pension.

Tbf, one of us is just taking the piss out of KyussB's magic free government money approach to pensions.:o

Robert_Beach

Talking around, I'm happy that a lot of Irish people are seeing sense. My sister said that she and her husband will be opting straight out of it. They're getting a deposit together so need the funds and apparently his Dad's pension was totally blown away in 2008/9. I hadn't even thought of bringing that up in this thread! Not to mention all the people who spent their lives paying in, only to find it was worth less than all the money poured in.

I mean have at it lads but I'm paying the house, savings in the credit union and don't have any guilt over funding the financial snakes and helping destroy the planet

Robert_Beach

Varta wrote: »

I wonder what people's thoughts are on the tax aspect of pensions.

Just another way for the rich to screw the poor. A mechanism to funnel their money tax free, while ordinary people can barely get accommodation.

GreeBo

Robert_Beach wrote: »

Just another way for the rich to screw the poor. A mechanism to funnel their money tax free, while ordinary people can barely get accommodation.

The real differential (other than cash) between the "rich" and the "poor" is access to financial information.
This thread is full of factual, useful information and advice about pensions, but its like some people don't want to be helped.

BTW, stories from your family are not really a good basis for making sound financial decisions that will massively impact your future.

Here is an an example.
My sister and her husband won the lotto, €2,745,000.

Do you think it would make sense for everyone to stop saving and instead play the lotto?

As for the pensions being "blown away"...how often does that happen versus people live happily ever after on their pension I wonder. I'm guessing you have done that research since you are using that single anecdote to govern your financial decisions?

GreeBo

Varta wrote: »

I wonder what people's thoughts are on the tax aspect of pensions. Earlier some posters were none too happy at the prospect of people who did not have private pensions somehow gaining from those who do via a pension levy or through social insurance. How do those people balance this with the tax 'savings' they make on their pensions?

I'm not sure I follow the questions tbh.

If person A chooses not to avail of tax relief via their pension but person B does, what right does person A have to then whine about B's tax savings?
The exact same relief is there for Person A.

I really cant see the leap between not wanting to pay for someone who decided to ignore their future and availing of tax "savings" that are available to all....can you elaborate?

Varta

GreeBo wrote: »

Tbf, one of us is just taking the piss out of KyussB's magic free government money approach to pensions.:o

Then can you please do that in response to KyussB's posts? My post had nothing to do with that. As you know.

Varta

GreeBo wrote: »

I'm not sure I follow the questions tbh.

If person A chooses not to avail of tax relief via their pension but person B does, what right does person A have to then whine about B's tax savings?
The exact same relief is there for Person A.

I really cant see the leap between not wanting to pay for someone who decided to ignore their future and availing of tax "savings" that are available to all....can you elaborate?

Sure. 'Available to all' is a lovely term that sounds true but in fact is far from true. Although it is regularly trotted out when it comes to the tax relief on private health care and private pensions. But private health care and private pensions are only available to those who can afford them. Therefore the tax relief is not available to all and is, in fact, a handout to the better off.

The case against tax relief for private healthcare is even more stark. Take a worker who cannot afford private healthcare and is waiting over a year for surgery compared to a worker who has private healthcare and gets that surgery within weeks. The one waiting has had every penny of his tax due taken by the state while the one who had instant access to healthcare is receiving a handout from the state. You don't have to be a socialist to see the injustice in that.

Saying it is available to all is a handy catchphrase but it doesn't negate the misappropriation of state funds that has just taken place.

Varta

GreeBo wrote: »

The real differential (other than cash) between the "rich" and the "poor" is access to financial information.
This thread is full of factual, useful information and advice about pensions, but its like some people don't want to be helped.

BTW, stories from your family are not really a good basis for making sound financial decisions that will massively impact your future.

Here is an an example.
My sister and her husband won the lotto, €2,745,000.

Do you think it would make sense for everyone to stop saving and instead play the lotto?

As for the pensions being "blown away"...how often does that happen versus people live happily ever after on their pension I wonder. I'm guessing you have done that research since you are using that single anecdote to govern your financial decisions?

The piece in bold makes no sense. When you are poor, information on finances such as pension planning is irrelevant as you don't have the money to invest.

S.M.B.

But one of those surgeries is being funded privately and the other is being funded by the state. People are being incentivised with tax relief to get private health care to relieve the burden on the HSE?

Edit : what is ridiculous and is happening in the UK (not sure in Ireland) is that private health care is then incentivising people to use the NHS instead of their private health care for a cash reward.

Robert_Beach

There should be no private health insurance or private pensions. We can (and should) combine our national interests to ensure the State provides both of these, and does so in a manner which is ethically consistent with the health and future of the nation in mind.

Varta

S.M.B. wrote: »

But one of those surgeries is being funded privately and the other is being funded by the state. People are being incentivised with tax relief to get private health care to relieve the burden on the HSE?

Edit : what is ridiculous and is happening in the UK (not sure in Ireland) is that private health care is then incentivising people to use the NHS instead of their private health care for a cash reward.

I think you are being very naive. The tax relief on private health care and private pensions was introduced as a result of lobbying by private healthcare and pension providers. The reason being that without tax relief their products would be unaffordable to most people. In the case of pensions, the products would also be so unattractive as to make them almost redundant.

As for relieving the burden on the HSE: (a) If the tax forgone were spent on the HSE it could provide a better service to more people, and (b) Private healthcare regularly dumps its more difficult cases onto the HSE.