Why are people obsessed with getting a pension

Shedite27 · 04-08-2020 7:27am

Henry Ford III wrote: »

Any Broker who puts a lot of time into analysis, research and presentation in the hope of getting hired won't be around for long.

I'd meet someone for an hour max. without charging but would make it absolutely clear that from then on they'd be on the clock one way or another.

That's the model the CBI and most countries encourage. Countries where advisors charge for their time, they find customers are less likely to go meet a Financial Advisor, and as a result make worse financial decisions. The "free-advice" model allows access to free financial advice for all.

Henry Ford III · 04-08-2020 9:18am

Shedite27 wrote: »

That's the model the CBI and most countries encourage. Countries where advisors charge for their time, they find customers are less likely to go meet a Financial Advisor, and as a result make worse financial decisions. The "free-advice" model allows access to free financial advice for all.

The only free advice you'll get is from a tied sales agent pushing their own product. The product most likely won't be best advice, and most likely will have high charges and substandard investment options and management.

That free advice will almost inevitably be rather expensive.

Henry Ford III · 04-08-2020 9:18am

Shedite27 wrote: »

That's the model the CBI and most countries encourage. Countries where advisors charge for their time, they find customers are less likely to go meet a Financial Advisor, and as a result make worse financial decisions. The "free-advice" model allows access to free financial advice for all.

The only free advice you'll get is from a tied sales agent pushing their own product. The product most likely won't be best advice, and most likely will have high charges and substandard investment options and management.

That free advice will almost inevitably be rather expensive.

Henry Ford III · 04-08-2020 9:18am

Shedite27 wrote: »

That's the model the CBI and most countries encourage. Countries where advisors charge for their time, they find customers are less likely to go meet a Financial Advisor, and as a result make worse financial decisions. The "free-advice" model allows access to free financial advice for all.

The only free advice you'll get is from a tied sales agent pushing their own product. The product most likely won't be best advice, and most likely will have high charges and substandard investment options and management.

That free advice will almost inevitably be rather expensive.

Shedite27 · 04-08-2020 9:42am

Henry Ford III wrote: »

The only free advice you'll get is from a tied sales agent pushing their own product. The product most likely won't be best advice, and most likely will have high charges and substandard investment options and management.

That free advice will almost inevitably be rather expensive.

There's about 2000 brokers working in Ireland, with the recent CP116 legislation anyone that was fee-based had to declare it - there were 7. So there's 1993 brokers out there who you can call up, make an appointment to do a financial review, have a face to face, zoom, or phone call with them and chat through options, and walk away at the end of it without paying them a cent

The J Stands for Jay · 04-08-2020 10:17am

blindside88 wrote: »

The advice from most pension providers is free, unless you choose to go to a fee based advisor. You are under no obligation to go with them after receiving their advice.

If you do take a pension with them they will receive fees but that’s a different matter all together. The advice and consultation is free.

Some of the pension providers don't give advice to anyone.

The J Stands for Jay · 04-08-2020 10:20am

Shedite27 wrote: »

That's the model the CBI and most countries encourage. Countries where advisors charge for their time, they find customers are less likely to go meet a Financial Advisor, and as a result make worse financial decisions. The "free-advice" model allows access to free financial advice for all.

The UK did away with commission on financial products, and many brokers in Ireland (for some reason) are convinced that's the way it'll go here.

Shedite27 · 04-08-2020 11:00am

McGaggs wrote: »

The UK did away with commission on financial products, and many brokers in Ireland (for some reason) are convinced that's the way it'll go here.

Yeah, last October the CBI brought out new rules on commission, at the time many thought it would go that way, but CBI didn't ban at that stage. Their comment last October was that they didn't want to create a gap between those that could and could not afford to pay for advice.

Jim2007 · 04-08-2020 11:16am

McGaggs wrote: »

The UK did away with commission on financial products, and many brokers in Ireland (for some reason) are convinced that's the way it'll go here.

Shedite27 wrote: »

Yeah, last October the CBI brought out new rules on commission, at the time many thought it would go that way, but CBI didn't ban at that stage. Their comment last October was that they didn't want to create a gap between those that could and could not afford to pay for advice.

I made a comment some time back that retros rather than commission is the main income source between financial product producers and distributors.... giving up commissions is not a big issue.

Shedite27 · 04-08-2020 12:09pm

Jim2007 wrote: »

I made a comment some time back that retros rather than commission is the main income source between financial product producers and distributors.... giving up commissions is not a big issue.

Whats a retro?

Jim2007 · 04-08-2020 2:09pm

Shedite27 wrote: »

Whats a retro?

Payments made to the distributor of financial products that is associated with an individual product or transaction...

In a past life I worked on the design of software for calculating the amounts due and payable under such agreements. Last I heard the software is still doing well in the UK, although I no longer have any interest in it.

Shedite27 · 04-08-2020 3:33pm

Jim2007 wrote: »

Payments made to the distributor of financial products that is associated with an individual product or transaction...

That's what I call "Commission".

What's the difference between Commission and Retro?

Henry Ford III · 04-08-2020 5:14pm

Shedite27 wrote: »

There's about 2000 brokers working in Ireland, with the recent CP116 legislation anyone that was fee-based had to declare it - there were 7. So there's 1993 brokers out there who you can call up, make an appointment to do a financial review, have a face to face, zoom, or phone call with them and chat through options, and walk away at the end of it without paying them a cent

Any Broker can be fee or commission based or a combination thereof.

Mandatory fee and/or commission disclosure has been around a long time.

As I said earlier only a fool would allow a situation whereby a potential client would get all the relevant information and advice and then go to a discount broker for execution only services.

sweet_trip · 04-08-2020 7:50pm

Dodge wrote: »

Your contract isn’t vague about it at all. Every PS contract is very forthright in its pension obligations. You just need to read it

Just to follow up on this. I looked at my contract.
The only section that covers pensions states the following.

11. Superannuation/Pension.
You will be covered by the terms of the single public service pension scheme. You will be required to contribute to the scheme.

I'm looking at https://singlepensionscheme.gov.ie/for-members/scheme-information/single-scheme-estimator-tool/
It's very confusing tbh.

But I downloaded that excel file and put in what I think is right. (my yearly gross pay before overtime and subsistence and 100% WTE because I'm a full time worker). Presuming this I did this right, and I retire at 66 years of age with 44 years service.

I'll come out with

lump sum: € 50,457
yearly pension: € 7,804
or weekly that works out at €187.

Not sure how that works out compared to other industries. Any good?
Thing about my line of work though is that very few manage to stick at it for more than 30 years, and by the time people are in their 60's the physical effects of the job generally put them out of work before 66.

Jim2007 · 04-08-2020 8:35pm

Shedite27 wrote: »

That's what I call "Commission".

What's the difference between Commission and Retro?

Disclosure.... or more the lack of it.

AndrewJRenko · 04-08-2020 8:44pm

sweet_trip wrote: »

Just to follow up on this. I looked at my contract.
The only section that covers pensions states the following.

I'm looking at https://singlepensionscheme.gov.ie/for-members/scheme-information/single-scheme-estimator-tool/
It's very confusing tbh.

But I downloaded that excel file and put in what I think is right. (my yearly gross pay before overtime and subsistence and 100% WTE because I'm a full time worker). Presuming this I did this right, and I retire at 66 years of age with 44 years service.

I'll come out with

lump sum: € 50,457
yearly pension: € 7,804
or weekly that works out at €187.

Not sure how that works out compared to other industries. Any good?
Thing about my line of work though is that very few manage to stick at it for more than 30 years, and by the time people are in their 60's the physical effects of the job generally put them out of work before 66.

You'd need to at least give an idea of your salary level before anyone can comment.

It's really difficult to compare against private sector pensions, as these would rely on investment returns. You could do a very broad comparison using some of the private sector pension calculators and see what you come out with.

sweet_trip · 04-08-2020 8:50pm

AndrewJRenko wrote: »

You'd need to at least give an idea of your salary level before anyone can comment.

It's really difficult to compare against private sector pensions, as these would rely on investment returns. You could do a very broad comparison using some of the private sector pension calculators and see what you come out with.

edit: dont want this in my history.

Geuze · 04-08-2020 8:54pm

sweet_trip wrote: »

€32,000 gross
€40,000 gross with overtime and subsistence. No idea if the OT is pensionable

7804 work pension

plus 12,896 State pension

= 20,700

Sounds good for somebody on 32k.

AndrewJRenko · 04-08-2020 9:41pm

sweet_trip wrote: »

€32,000 gross
€40,000 gross with overtime and subsistence. No idea if the OT is pensionable

OT is generally not pensionable, but you could use some of this income to buy and AVC to top up your pension.

Try https://www.pensionsauthority.ie/en/lifecycle/useful-resources/pension-calculator/ to see what you might be getting with a private sector pension.

The J Stands for Jay · 05-08-2020 9:06am

Jim2007 wrote: »

Disclosure.... or more the lack of it.

Aren't those included in the table of remuneration in new business quotes? Even nil commission cases show a payment to the broker.

Tow · 05-08-2020 10:31am

On the subject of commissions and retros, what are people views on Pension Auto Enrollment and the effects on brokers. I can see it causing a lot of churn with people who have private pensions joining their company pension scheme. Currently it looks like employers will have to contribute as well, so this will be the driving force for change. Some the brokers (older ones) relying on recurring income maybe badly bit, while others may seize the opportunity and do very well.

The J Stands for Jay · 05-08-2020 12:38pm

Tow wrote: »

On the subject of commissions and retros, what are people views on Pension Auto Enrollment and the effects on brokers. I can see it causing a lot of churn with people who have private pensions joining their company pension scheme. Currently it looks like employers will have to contribute as well, so this will be the driving force for change. Some the brokers (older ones) relying on recurring income maybe badly bit, while others may seize the opportunity and do very well.

I'd be worried on the effects on existing schemes. Will some employers reduce their contributions of they're higher than the auto enrolement

Tow · 05-08-2020 1:05pm

McGaggs wrote: »

Will some employers reduce their contributions of they're higher than the auto enrolement

I don't see that happening to existing employees, unless they want a strike on their hands. It is always possible they do it to new starters, as time goes on there are fewer and fewer companies with decent schemes.

It is the smaller employer it will effect most. Many don't have a company scheme and if they do (legal requirement if employee(s) ask) they don't make an employer contribution.

Jim2007 · 05-08-2020 1:34pm

McGaggs wrote: »

I'd be worried on the effects on existing schemes. Will some employers reduce their contributions of they're higher than the auto enrolement

We'll have to wait and see... Here in Switzerland, where the population is older, it has become a key recruiting perk, even for younger people.

There have been several articles and news reports about old people living under the poverty line, have to go and live in Spain/Portugal/Italy and even some going care homes in Thailand. So as my old accounting professor used to say: handing concentrates the mind.

hmmm · 06-08-2020 2:59pm

Tow wrote: »

On the subject of commissions and retros, what are people views on Pension Auto Enrollment and the effects on brokers. I can see it causing a lot of churn with people who have private pensions joining their company pension scheme. Currently it looks like employers will have to contribute as well, so this will be the driving force for change. Some the brokers (older ones) relying on recurring income maybe badly bit, while others may seize the opportunity and do very well.

I don't mean this in any harsh way, but brokers add a layer of unnecessary cost which can hopefully be avoided in an auto-enrollment scheme, and can be part of paying for the scheme.

If the government seize the initiative they would offer 3 or 4 funds as part of an auto-enrollment default option, and outsource the management of what would be large funds to some of the big international fund management companies (particularly the indexers like Vanguard).

Jim2007 · 06-08-2020 6:36pm

hmmm wrote: »

If the government seize the initiative they would offer 3 or 4 funds as part of an auto-enrollment default option, and outsource the management of what would be large funds to some of the big international fund management companies (particularly the indexers like Vanguard).

Nope, the should follow Switzerland and leave it open, but mandate:
- No transaction or other fees
- Asset allocation and blue book of approved instruments
- Minimum rate of return
- Management firm on the hook for a failure to meet the return
- Single management fee

We have 92 pension manners in Switzerland and not one of them have got into difficult nor failed to deliver up the minimum annual return over the past 50 years.

The J Stands for Jay · 06-08-2020 6:40pm

Jim2007 wrote: »

Nope, the should follow Switzerland and leave it open, but mandate:
- No transaction or other fees
- Asset allocation and blue book of approved instruments
- Minimum rate of return
- Management firm on the hook for a failure to meet the return
- Single management fee

We have 92 pension manners in Switzerland and not one of them have got into difficult nor failed to deliver up the minimum annual return over the past 50 years.

What is the minimum rate of return?

hmmm · 06-08-2020 8:31pm

Jim2007 wrote: »

Nope, the should follow Switzerland and leave it open, but mandate:
- No transaction or other fees
- Asset allocation and blue book of approved instruments
- Minimum rate of return
- Management firm on the hook for a failure to meet the return
- Single management fee

We have 92 pension manners in Switzerland and not one of them have got into difficult nor failed to deliver up the minimum annual return over the past 50 years.

How does the asset manager make money, and how do they possibly guarantee a return?

The J Stands for Jay · 06-08-2020 8:33pm

hmmm wrote: »

How does the asset manager make money, and how do they possibly guarantee a return?

Usually guaranteeing a return on a fund will have a drag on the performance as it will have a larger allocation to fixed interest assets

Tow · 07-08-2020 1:09pm

hmmm wrote: »

I don't mean this in any harsh way, but brokers add a layer of unnecessary cost which can hopefully be avoided in an auto-enrollment scheme, and can be part of paying for the scheme.

The Irish Scheme is appears to be a free for all between the existing pension companies. It currently looks like DEASP want an independent private company to act as a collator, collecting all the payments from employers and sending them out to an employees elected pension provider. Largely duplicating what Revenue already do with their PAYE Modernisation system. Auto enrollment is currently due to be introduced in 2022, which is date already pushed forward a few years.

Why are people obsessed with getting a pension

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