Why are people obsessed with getting a pension

TheMilkyPirate · 15-07-2020 10:58am

I'm a low income private sector worker (28k) I have no pension and there isn't an option for a pension in my workplace what's the best option for me if I want to start a pension now? I've just gone 30.

15-07-2020 11:09am

AnRothar wrote: »

https://www.fiscalcouncil.ie/%20long-term-sustainability-report/
Fiscal council would appear to agree.

Well they are unlikely to leave it as is.....

- Within pensions, ageing pressures could be managed by reducing benefits through indexing to prices (rather than wages as assumed in this report) or other changes, by raising the retirement age or by raising PRSI contributions. This could be supported by developing a second contributory pillar or by encouraging more private pension saving. Measures to boost growth could also raise revenues. However, given the scale of the challenges, a combination of measures is likely to be needed.

- Adjusting the pension age in line with rising life expectancy would make the system more sustainable. ....... average life expectancy at age 65 has risen from 79 in 1980 to almost 85 in 2016 and is projected to rise further to 89, by 2050.

- Timely action to reform the pension system, including pension age increases, would reduce the impact of ageing costs.

15-07-2020 11:12am

TheMilkyPirate wrote: »

I'm a low income private sector worker (28k) I have no pension and there isn't an option for a pension in my workplace what's the best option for me if I want to start a pension now? I've just gone 30.

There is an obligation on all employers to give each employee access to a PRSA........ this would facilitate tax relief at source etc.

Ideally a PRSA with a 1% management fee and no contribution fee ......... at €28k tax relief is at 20% so for every €100 you pay into your pension you get €80 less take home wages.

It's most definitely worth doing though ......... even if you got €1000/annum into it that could end up as a €100k pension fund which is infinitely better than nothing

TheMilkyPirate · 15-07-2020 12:00pm

Augeo wrote: »

There is an obligation on all employers to give each employee access to a PRSA........ this would facilitate tax relief at source etc.

Ideally a PRSA with a 1% management fee and no contribution fee ......... at €28k tax relief is at 20% so for every €100 you pay into your pension you get €80 less take home wages.

It's most definitely worth doing though ......... even if you got €1000/annum into it that could end up as a €100k pension fund which is infinitely better than nothing

Thanks for the reply. Is it simply a case of contacting HR to set it up and then setting my weekly contribution amount? If I change jobs does it follow me?

Do employers add anything to your PRSA?

15-07-2020 1:07pm

TheMilkyPirate wrote: »

Thanks for the reply. Is it simply a case of contacting HR to set it up and then setting my weekly contribution amount?..

They'll likely put you in touch with a representative from whatever provider they are using........ but in essence what you describe is high level what will happen. You'll be asked a few questions so they pension folk can advise what suits your risk appetite etc etc

TheMilkyPirate wrote: »

If I change jobs does it follow me? ..

It can, probably not automatically.

TheMilkyPirate wrote: »

......Do employers add anything to your PRSA?

Given that "there isn't an option for a pension in my workplace" they probably won't but lots of employers do contribute to their employees pension scheme, but more often that not that's into an Occupational Pension Scheme rather than a PRSA afaik.

Jim2007 · 15-07-2020 2:11pm

AnRothar wrote: »

https://www.fiscalcouncil.ie/%20long-term-sustainability-report/
Fiscal council would appear to agree.

It's not exactly a secret... every government in Europe know they are in a bind on this. They are just trying to put off having to deliver the bad news...

Dodge · 15-07-2020 2:19pm

Jim2007 wrote: »

It's not exactly a secret... every government in Europe know they are in a bind on this. They are just trying to put off having to deliver the bad news...

And some in Europe have moved the other way (Poland, Italy).

Politics will always trump fiscal advisory reports.

The prudent thing for individuals to do is prepare for their own future but as long as politicians need votes, they will always try not to upset too many.

Jim2007 · 15-07-2020 2:25pm

Augeo wrote: »

Well they are unlikely to leave it as is.....

It is already decided, although perhaps not well communicated nor understood.... they are going for the typical three pillar system that is being suggested all over Europe.

Plans to auto-enrol workers in pension schemes announced

Your employment pension (pillar 2) and your personal savings (pillar 3) will form the biggest part of your pension in retirement, while the state pension (pillar 1) will become more like a weekly pocket money allowance.

They started moving to the new system here in Switzerland about 30 years ago so we are now starting to see the impact. Yes it has ensured that we have avoided the problem, but the solution is not so great....

The Swiss state pension would need to be four times higher in order for someone to live off it. And the employer pension contributions are painful for may, it starts at 7% aged 25 and can go up to 19% or 20% after 55... And the personal savings element really depends on your disposable income and willingness to save...

That bottom line is that people retirement dreams are going to be harder to achieve going forward.

15-07-2020 5:11pm

Jim2007 wrote: »

..........

The Swiss state pension would need to be four times higher in order for someone to live off it. ..........

So it's like €60 over here?

donkey balls · 15-07-2020 9:29pm

If they go ahead and increase the retirement age pass 65, I can see a few issues with people that or not office based but do some form of manual work.
One part of my job can be demanding lifting pushing pulling weights upto 100kgs.
I'm fine with that at the moment as I work out as well but doing post 65 might be an other issue.Again it is people working behind desks that will collect their pension at 65 that be making the rules for the PAYE worker.

Padre_Pio · 15-07-2020 9:33pm

donkey balls wrote: »

If they go ahead and increase the retirement age pass 65, I can see a few issues with people that or not office based but do some form of manual work.
One part of my job can be demanding lifting pushing pulling weights upto 100kgs.
I'm fine with that at the moment as I work out as well but doing post 65 might be an other issue.Again it is people working behind desks that will collect their pension at 65 that be making the rules for the PAYE worker.

Professional weight lifter? :pac:

I suppose the hope is that strenuous work will be offset by technology.

The J Stands for Jay · 15-07-2020 9:40pm

donkey balls wrote: »

If they go ahead and increase the retirement age pass 65, I can see a few issues with people that or not office based but do some form of manual work.
One part of my job can be demanding lifting pushing pulling weights upto 100kgs.
I'm fine with that at the moment as I work out as well but doing post 65 might be an other issue.Again it is people working behind desks that will collect their pension at 65 that be making the rules for the PAYE worker.

That boat has sailed. The Pension age has already been raised past 65.

donkey balls · 15-07-2020 10:00pm

Padre_Pio wrote: »

Professional weight lifter? :pac:

I suppose the hope is that strenuous work will be offset by technology.

If only it could be done by machine some parts of other facilities have a form of automation but still needs humans to set up.

donkey balls · 15-07-2020 10:03pm

Maybe I should have said the increased age up to 68, Funny thing is it was Mary Hannifin who kick started the increased age only for FG to rubber stamp it.
Yet Hannifin was able to claim some of her pensions when she just turned 50 after signing off on the increased age for retirement.

The J Stands for Jay · 15-07-2020 10:21pm

donkey balls wrote: »

Maybe I should have said the increased age up to 68, Funny thing is it was Mary Hannifin who kick started the increased age only for FG to rubber stamp it.
Yet Hannifin was able to claim some of her pensions when she just turned 50 after signing off on the increased age for retirement.

The rules on payment of ministerial pensions are a joke, but anyone can claim their occupational pension from 50 as long as they've left that job.

donkey balls · 15-07-2020 10:24pm

McGaggs wrote: »

The rules on payment of ministerial pensions are a joke, but anyone can claim their occupational pension from 50 as long as they've left that job.

Yep I.have a pension that I.can draw.down on when turning 50, As for ministerial pensions a certain ex minister/tv radio host was claiming a pension simce 96 of about 70k.
Absolute madness.

Jim2007 · 15-07-2020 10:25pm

Augeo wrote: »

So it's like €60 over here?

Not even close.... if you have uninterrupted contributions for 40 years (very few have) it comes to about 22k for a married couple and 12k for a single person. But because it is very rare for people to have the full number of contributions, its more like 17k or so for a married couple.

Jim2007 · 15-07-2020 10:28pm

donkey balls wrote: »

If they go ahead and increase the retirement age pass 65, I can see a few issues with people that or not office based but do some form of manual work.
One part of my job can be demanding lifting pushing pulling weights upto 100kgs.
I'm fine with that at the moment as I work out as well but doing post 65 might be an other issue.Again it is people working behind desks that will collect their pension at 65 that be making the rules for the PAYE worker.

But remember that the demographics will have changed, the voters will be older and politicians won't get elected if they don't look after the voters....

Look at how badly everything is funded for the young in Florida, schools etc for example....

donkey balls · 15-07-2020 10:59pm

Yep they are afraid of the grey vote, I've being paying into a pension from my early 20s and had it maxed out as I was paying a crazy amount of tax.
Ieft that company 17 years ago and just left the pension and AVC there, I'm playing catch up at the moment as I only got back into a pension scheme 13 years after my last one.
I have that maxed out with AVC and plan on up the AVC every 5 years or so when you can.
Myself personally think that the OAP will be there in a limited form, That anyone who was prudent with saving for a private pension will have to jump through hoops to probably get the state one.
Or the government will move the goal posts making it hard for a person to claim the OAP and they might go down the route of means testing.

AndrewJRenko · 15-07-2020 11:21pm

donkey balls wrote: »

Yep I.have a pension that I.can draw.down on when turning 50, As for ministerial pensions a certain ex minister/tv radio host was claiming a pension simce 96 of about 70k.
Absolute madness.

Those rules have changed now, pensions don't kick in until age 65 for current Ministers.

donkey balls · 15-07-2020 11:58pm

AndrewJRenko wrote: »

Those rules have changed now, pensions don't kick in until age 65 for current Ministers.

Yep they changed in 2011/2012 .

Klonker · 16-07-2020 8:23am

donkey balls wrote: »

Myself personally think that the OAP will be there in a limited form, That anyone who was prudent with saving for a private pension will have to jump through hoops to probably get the state one.
Or the government will move the goal posts making it hard for a person to claim the OAP and they might go down the route of means testing.

I fear you are right but I think there would be war with voters if the OAP was to be means tested. People will have worked all their life paying a lot of taxes and PRSI, the OAP is the one time they they get something back. To see a lad who didn't work a day in his life get more than someone paying all the contributions and taxes his full adult life would be a huge kick in the teeth and hard to take.

But in saying all of that I still think you are right that it'll happen.

Klonker · 16-07-2020 8:25am

Jim2007 wrote: »

It is already decided, although perhaps not well communicated nor understood.... they are going for the typical three pillar system that is being suggested all over Europe.

Plans to auto-enrol workers in pension schemes announced

Your employment pension (pillar 2) and your personal savings (pillar 3) will form the biggest part of your pension in retirement, while the state pension (pillar 1) will become more like a weekly pocket money allowance.

They started moving to the new system here in Switzerland about 30 years ago so we are now starting to see the impact. Yes it has ensured that we have avoided the problem, but the solution is not so great....

The Swiss state pension would need to be four times higher in order for someone to live off it. And the employer pension contributions are painful for may, it starts at 7% aged 25 and can go up to 19% or 20% after 55... And the personal savings element really depends on your disposable income and willingness to save...

That bottom line is that people retirement dreams are going to be harder to achieve going forward.

Do people who don't have savings or a personal pension have to survive on just the state pension? Just curious to how it works.

16-07-2020 9:28am

Jim2007 wrote: »

Not even close.... if you have uninterrupted contributions for 40 years (very few have) it comes to about 22k for a married couple and 12k for a single person. But because it is very rare for people to have the full number of contributions, its more like 17k or so for a married couple.

Doesn't seem too bad tbh ........... considering they moved to it 30 years ago and we've yet to actually move to the 3 pillar system.

GreeBo · 16-07-2020 9:39am

Klonker wrote: »

Do people who don't have savings or a personal pension have to survive on just the state pension? Just curious to how it works.

Where else do you think they should be able to get money from?

Klonker · 16-07-2020 9:45am

GreeBo wrote: »

Where else do you think they should be able to get money from?

I'm not expecting anything, I'm just asking a question as I'm curious about it.

The poster mentioned that in Switzerland the state pension is about quarter what it is here as you are expected to have an employers pension and savings. I was just wondering if people did not have either of those are they expected to live on the small state pension or if there might be an extra means tested payment.

Like if it was here in Ireland, could you expect people to be on about 200 a week dole and then when pension age to be in 50 a week? I'm just wondering who it all works because I know the irish version will need to change in some way as unsustainable.

Bass Reeves · 16-07-2020 10:01am

Klonker wrote: »

Do people who don't have savings or a personal pension have to survive on just the state pension? Just curious to how it works.

The state pension is made up of two types, the contributory and non-contributory. The NC is means tested. If you qualify for the Contributory pension you can have any amount of other income with it. There are differencet rates depending on amount of contribution you have made over your lifetime. While not exact (as now it Avery contribution/ working year) 10 years will get you about 100/week, 15 years about 160, 20 years about 200 and 40 years full pension 240/ year.

If you have a partial contributory pension you are entitled to top up with NC provided you pass the means test. The differencate between NC and C type pensions is minimal. The main difference is the N.C part is means tested.

However the issue for the state is if workers that make contributions who even if they have a private pension are means tested it will discourage these people to save for there retirement.

16-07-2020 10:02am

Jim2007 wrote: »

.................

The Swiss state pension would need to be four times higher in order for someone to live off it. ......................

Jim2007 wrote: »

Not even close.... if you have uninterrupted contributions for 40 years (very few have) it comes to about 22k for a married couple and 12k for a single person. But because it is very rare for people to have the full number of contributions, its more like 17k or so for a married couple.

A married couple needs 88k to live off and a single person 48k ?

16-07-2020 10:06am

Klonker wrote: »

Do people who don't have savings or a personal pension have to survive on just the state pension? Just curious to how it works.

Klonker wrote: »

I'm not expecting anything, I'm just asking a question as I'm curious about it.

The poster mentioned that in Switzerland the state pension is about quarter what it is here as you are expected to have an employers pension and savings. I was just wondering if people did not have either of those are they expected to live on the small state pension or if there might be an extra means tested payment.

.............

Klonker is querying the Switzerland situation.

Bass Reeves wrote: »

The state pension is made up of two types, the contributory and non-contributory. The NC is means tested. If you qualify for the Contributory pension you can have any amount of other income with it. There are differencet rates depending on amount of contribution you have made over your lifetime. While not exact (as now it Avery contribution/ working year) 10 years will get you about 100/week, 15 years about 160, 20 years about 200 and 40 years full pension 240/ year.

If you have a partial contributory pension you are entitled to top up with NC provided you pass the means test. The differencate between NC and C type pensions is minimal. The main difference is the N.C part is means tested.

However the issue for the state is if workers that make contributions who even if they have a private pension are means tested it will discourage these people to save for there retirement.

The above is for Ireland.

16-07-2020 10:09am

Bass Reeves wrote: »

..............

However the issue for the state is if workers that make contributions who even if they have a private pension are means tested it will discourage these people to save for there retirement.

Expecting folk to pay PRSI all of their working life and to end up on a low or no contributory state pension while wasters enjoy a NC pension after not contributing all of their lives will simply not work.

Why are people obsessed with getting a pension

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