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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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Western_sean

GreeBo wrote: »

Why do you think they will tax your savings less than your pension though (in your communist future)

You know pension contributions are tax free right right now yes?

Perhaps he remembers how willing government was to expropriate private sector pension assets during the last recession?

Henry Ford III

Kilboor wrote: »

Your translation is my worry. I'd rather use my own savings to live and have the Government tax me less.

I didn't say I want someone else to pay for my pension? I said I'm saving with decade goals in mind, I'm not saving for retirement when 65. My savings goals are based on every few years and I reassess the situation at those years.

A pension is essentially a tax incentified savings account.

There is nothing comparable in overall efficiency.

Saving for a lump sum outside the pensions area is good also but with negative real returns on deposits it's hugely wasteful and inefficient.

Yellow_Fern

Henry Ford III wrote: »

A pension is essentially a tax incentified savings account.

There is nothing comparable in overall efficiency.

Saving for a lump sum outside the pensions area is good also but with negative real returns on deposits it's hugely wasteful and inefficient.

Needless to say, pensions are just a tax arrangement. Fundamentally most of everyone's wealth should be in assets, business, stocks and land. If it is in cash that is not a good idea at all, regardless of if the cash is in a pension or under ones bed.

Jim2007

Kilboor wrote: »

Don't trust the future generations to keep the current social-capitalist system we have (unfortunately and I say that as someone who is working up the ladder from basically nothing). As a 25 year old I see paying into a pension as a waste of money, I think the risk of us living in some sort of authoritarian communist system of equal distribution of wealth is a high possibilty and I'd rather work my savings out with decade goals in mind then have my hard earned money taken from me when I spent my life saving for it.

Thanks for making the case for mandatory pension enrolment. Pension reform all over Europe is moving to relying on the individual to make provision for retirement and society can't afford to finance your behaviour.

[Deleted User]

Yellow_Fern wrote: »

Needless to say, pensions are just a tax arrangement. Fundamentally most of everyone's wealth should be in assets, business, stocks and land. If it is in cash that is not a good idea at all, regardless of if the cash is in a pension or under ones bed.

Not many have their pension in cash.

Kilboor

Jim2007 wrote: »

Thanks for making the case for mandatory pension enrolment. Pension reform all over Europe is moving to relying on the individual to make provision for retirement and society can't afford to finance your behaviour.

I don't want help from the government for retirement, I've already stated this?

[Deleted User]

Kilboor wrote: »

I don't want help from the government for retirement, I've already stated this?

How much shall you save from your net wages to fund your retirement?
How much will you need to save?
Presumably you know the answers?

Kilboor

Augeo wrote: »

How much shall you save from your net wages to fund your retirement?
How much will you need to save?
Presumably you know the answers?

-I save 500-1k a month (average 700)
-I invest at an anuual return of 5-6%
-35-40 years is 600-700k (lowest estimate)

I have 0 net assets currently so we are probably all coming at this from a different view point. I have other priorities which I will achieve and those are to build an asset base first before I worry about my pension.

My concerns right now are being able to increase my income which I am in the process of doing, as well as continue to enjoy my life which I am also thankfully doing too. Ultimate goal is to own a house and not have to worry about rent, a security which I did not have growing up (we had to move every 6-9 months due to rent prices). So forgive me for thinking the pension and what I'll have at 67-70 is the least of my worries right now.

Yellow_Fern

Augeo wrote: »

How much shall you save from your net wages to fund your retirement?
How much will you need to save?
Presumably you know the answers?

I have to say that I dont think much of people who expect the gov to look after them in retirement.

[Deleted User]

Kilboor wrote: »

-I save 500-1k a month (average 700)
-I invest at an anuual return of 5-6%
-35-40 years is 600-700k (lowest estimate)

I have 0 net assets currently so we are probably all coming at this from a different view point. I have other priorities which I will achieve and those are to build an asset base first before I worry about my pension.

And doing that in a pension & getting tax relief along with tax free roll up doesn't appeal?

You are sure you can house yourself and continue to save at that rate?

With no assets you are presumably renting..... You'd be well advised to do some saving within a pension if not for solely diversification reasons.

Expecting 6% net roi every year over 4 decades is ambitious.

[Deleted User]

Kilboor wrote: »

......
-35-40 years is 600-700k (lowest estimate)

......... So forgive me for thinking the pension and what I'll have at 67-70 is the least of my worries right now.

Bit of a contradiction there.

Kilboor

Augeo wrote: »

And doing that in a pension & getting tax relief along with tax free roll up doesn't appeal?

You are sure you can house yourself and continue to save at that rate?

With no assets you are presumably renting..... You'd be well advised to do some saving within a pension if not for solely diversification reasons.

Yes as I've stated I have no interest in the long term, my savings are based on the medium term, giving away 5% of my income would not be a good thing for me to do right now and I am certain of that. I am happy having my money available now.

Yes I am 100% sure in what I am currently building. Are you sure you would even care for the society that exists when you're 70? Are you sure our currency won't be extortionately devalued? Are you sure that the Government won't **** up the economy with no guarantees? Do you trust private pensions over the long term too?

I wish I could even afford renting more than a room but that would be financially foolish.

Kilboor

Augeo wrote: »

Bit of a contradiction there.

Not true, you asked me what my savings would be if I looked long term. I gave you an answer if I was to continue at the current rate. As I said my goals are to increase income as much as I can right now and develop an asset base in the medium term. My cash pile in 40 years is the least of my worries.

[Deleted User]

Kilboor wrote: »

Not true, you asked me what my savings would be if I looked long term. I gave you an answer if I was to continue at the current rate. As I said my goals are to increase income as much as I can right now and develop an asset base in the medium term. My cash pile in 40 years is the least of my worries.

So you might well have to rely on the government so... Despite you posting '
Originally Posted by Kilboor View Post
I don't want help from the government for retirement, I've already stated this?'

If you are sure you won't need government assistance you need a long-term plan.... Not a short-term one.

Basic stuff.

[Deleted User]

Augeo wrote: »

How much shall you save from your net wages to fund your retirement?
How much will you need to save?
Presumably you know the answers?

Kilboor wrote: »

Not true, you asked me what my savings would be if I looked long term. I gave you an answer if I was to continue at the current rate. As I said my goals are to increase income as much as I can right now and develop an asset base in the medium term. My cash pile in 40 years is the least of my worries.

There was no if in any of my questions.

Kilboor

Augeo wrote: »

So you might well have to rely on the government so... Despite you posting '
Originally Posted by Kilboor View Post
I don't want help from the government for retirement, I've already stated this?'

If you are sure you won't need government assistance you need a long-term plan.... Not a short-term one.

Basic stuff.

Look stop twisting words. I don't want nor expect any government help. The bottom line is I'm bearish (and hopefully I'm wrong) on what sort of economy and society we will have in 35-40 years.

We can argue all day about that philosophy and I understand completely why you and others take your tax free pension savings, that's fine, but the question was people's obsessions on pensions and I've stated my case for not being focused on pensions and they are my bearish outlooks. Don't assume I am looking for government assistance or that I am missing the "basic stuff". Right now I am more concerned with improving my current life as well as those who are older in my family who had and still have nothing.

Kilboor

Augeo wrote: »

There was no if in any of my questions.

You asked me how much will I need to save? That's a long term goal question which I gave you an answer for. Don't be a smart ass about it you know what you were getting at.

"Presumably you know these answers"

[Deleted User]

Kilboor wrote: »

You asked me how much will I need to save? That's a long term goal question which I gave you an answer for. Don't be a smart ass about it you know what you were getting at.

"Presumably you know these answers"

You are the smart arse declaring you won't rely on the government to support you in retirement yet you don't save into a pension despite saving net income & looking for year on year 6% growth.

If you are sure you won't need government help in retirement you need a long-term plan and not availing of tax relief and tax free growth in a pension is daft as fook.

GreeBo

Kilboor wrote: »

Yes as I've stated I have no interest in the long term, my savings are based on the medium term, giving away 5% of my income would not be a good thing for me to do right now and I am certain of that. I am happy having my money available now.

Yes I am 100% sure in what I am currently building. Are you sure you would even care for the society that exists when you're 70? Are you sure our currency won't be extortionately devalued? Are you sure that the Government won't **** up the economy with no guarantees? Do you trust private pensions over the long term too?

I wish I could even afford renting more than a room but that would be financially foolish.

I'm confused.
Most of your worries above would equally apply to your own savings... So other than some two fingers to the government idea by not availing of their tax benefits, what's the point in not using a pension to build your assets?

You go from saying you don't think long term to using what the world will look like when you are 70 as a reason to avoid a pension. I hope your savings plan has fewer holes than your explanation of it, otherwise I'm not looking forward to having to bail you out when it goes to pot.

howamidifferent

The answer to the pension time bomb is for the government to come out tomorrow and state that from the first of January 45 years from now the pension will no longer be available to anyone not already on it. So start saving for your retirement now. Of course you have to look after those who are incapable of work but everyone else gets 45 years notice. If you don't provide your on your own.

S.M.B.

howamidifferent wrote: »

The answer to the pension time bomb is for the government to come out tomorrow and state that from the first of January 45 years from now the pension will no longer be available to anyone not already on it. So start saving for your retirement now. Of course you have to look after those who are incapable of work but everyone else gets 45 years notice. If you don't provide your on your own.

You may as well go one step further and give 55 years notice as the 13 year olds would be a little less bothered than the 23 year olds who can at least vote.

howamidifferent

S.M.B. wrote:

You may as well go one step further and give 55 years notice as the 13 year olds would be a little less bothered than the 23 year olds who can at least vote.

I don't understand what you said?

Henry Ford III

Kilboor wrote: »

Yes as I've stated I have no interest in the long term, my savings are based on the medium term, giving away 5% of my income would not be a good thing for me to do right now and I am certain of that. I am happy having my money available now.

Yes I am 100% sure in what I am currently building. Are you sure you would even care for the society that exists when you're 70? Are you sure our currency won't be extortionately devalued? Are you sure that the Government won't **** up the economy with no guarantees? Do you trust private pensions over the long term too?

I wish I could even afford renting more than a room but that would be financially foolish.

Auto enrollment (assuming it happens) will derail your plans it seems.

GreeBo

Western_sean wrote: »

Perhaps he remembers how willing government was to expropriate private sector pension assets during the last recession?

You mean the 0.75% levy?

Yeah, seems logical to avoid 40%+ of tax relief on pension contributions so you can dodge 0.75% levy, yep jump straight in front of 35% DIRT or maybe CGT or enforced disposal of your investments every 8 years for tax purposes?

Whew! Lucky you avoided that temporary 0.75% levy!:rolleyes:

Kilboor

Henry Ford III wrote: »

Auto enrollment (assuming it happens) will detail your plans it seems.

I eagerly await that day so, saves me from stating my case for having my extra 5 percent income every month

Appreciate everyone's points.

What's the earliest (general) cash out on a pension and the tax penalty for doing so as a matter of interest.

Bass Reeves

Kilboor wrote: »

I eagerly await that day so, saves me from stating my case for having my extra 5 percent income every month Appreciate everyone's points.

What's the earliest (general) cash out on a pension and the tax penalty for doing so as a matter of interest.

On an income of 50K/year a pension contribution of 5% allowing tax relief will take about 27/28 euro of net income. You do not have to stop working to cash in on a pension. If you decide to go ARF route 25% can be cashed in when you hit 50 years with no tax liability. The rest can be put in an ARF and drawn down tax efficiently. The cost is equivilent to the takeaway and taxi home after a night out. Skip these and walk home and live to enjoy your pension

Diarmuid

GreeBo wrote: »

You mean the 0.75% levy?

Yeah, seems logical to avoid 40%+ of tax relief on pension contributions so you can dodge 0.75% levy, yep jump straight in front of 35% DIRT or maybe CGT or enforced disposal of your investments every 8 years for tax purposes?

Whew! Lucky you avoided that temporary 0.75% levy!:rolleyes:

I tend to agree but putting those two numbers beside themselves is misleading. The 0.75% levy was on the total amount of the pot. The 35% DIRT is on the gain only. One of those is vastly larger than the other

GreeBo

Diarmuid wrote: »

I tend to agree but putting those two numbers beside themselves is misleading. The 0.75% levy was on the total amount of the pot. The 35% DIRT is on the gain only. One of those is vastly larger than the other

Yeah but the tax free contributions are also effectively on the total amount of the pot (they are on every contribution which makes up the pot)

One of the costs is definitely vastly larger than the other, its not the pension levy though.

Jim2007

howamidifferent wrote: »

The answer to the pension time bomb is for the government to come out tomorrow and state that from the first of January 45 years from now the pension will no longer be available to anyone not already on it. So start saving for your retirement now. Of course you have to look after those who are incapable of work but everyone else gets 45 years notice. If you don't provide your on your own.

Certainly not. The answer is to follow the best advice available and implement a version of the three pillar system being taken around the rest of the EU.

The J Stands for Jay

Bass Reeves wrote: »

You do not have to stop working to cash in on a pension. If you decide to go ARF route 25% can be cashed in when you hit 50 years with no tax liability.

Just be careful on this point. You have to have stopped working in the employment that funded the contributions to the pension you're cashing in.

You could quit the rat race, cash in the pension, and take on a new job, with less hours and less pay somewhere closer to home for example.