Why are people obsessed with getting a pension

Tar.Aldarion · 15-03-2019 11:18am

jimmy456 wrote: »

Say you max out your pension. (The principle is the same either way)

You get the following:

440k into your hand on retirement with a tax leakage of 60k.
Tax free growth on all investments
You get tax relief at the highest rate on the way in and pay tax potentially lower effective rate on the way out
Even better contribution rates for business owners.

Its a great deal really. There is no other saving scheme that comes close to it.

For a lot of jobs employers will match up to a certain amount too, for instance my job matches 10% so if I put in €500 let's say, that would have been €300 more in my hand but instead it is €1000 I have invested for decades, and that happens every month. That then can accumulate far more with compound interest and will be taxed less when I eventually get it, not that the interest hasn't already likely covered all that tax anyway.

Say that money grew by 5% for 30 years it's now 4.5k, pretty decent for a 300 quid investment. €54k for a €3600 investment over a year. It's still a great deal without an employer matching anything.

It's way worse to invest yourself here, you pay tax straight away meaning you earn less over time as you start with less money invested. You then pay tax on your profit when selling and if holding shares you also still need to pay tax on your investments every 8 years.

jimmy456 · 15-03-2019 11:39am

Course! Free money if your employer contributes as well.

When investing personally you pay tax on the full income and gains as they arise or are realized. With income tax rates at up to 55% and CGT at 33% this creates a big drag on your wealth creation.

Conversely in a pension you will effectively only pay 4/5 or 6% imputed distribution after retirement from age 61. Ie all the income and gains pre retirement are compounded for your benefit. This is huge from a wealth creation point of view. Then in retirement from age 61 the tax you pay on gains and income is limited to 4/5 or 6% of the fund value. You are generally winning in this scenario too.

how.gareth · 15-03-2019 12:08pm

So here comes the big question, I’m 43, never had a pension, am married and earn about €25k. Is there any point in me paying into a pension which would only be a small pittance I could afford?

Bigbagofcans · 15-03-2019 12:15pm

how.gareth wrote: »

So here comes the big question, I’m 43, never had a pension, am married and earn about €25k. Is there any point in me paying into a pension which would only be a small pittance I could afford?

Definitely start a pension now. We'll probably all be working until we're 68 so you still have 25 years of paying into a pension. Even if you paid 5%, does your employer match it?

BailMeOut · 15-03-2019 12:16pm

how.gareth wrote: »

So here comes the big question, I’m 43, never had a pension, am married and earn about €25k. Is there any point in me paying into a pension which would only be a small pittance I could afford?

YES! It is never too late. At 43 you have 25 years of pension growth ahead of you. Start today! Call Davy and you will be up and running in about an hour.

....... · 15-03-2019 12:36pm

bilbot79 wrote: »

I agree. Something like 2.5mil is luxury. I think 1.5 mil is optimum especially knowing the state pension eventually kicks in too.

This is the best calculator I find

https://www.newireland.ie/pension-calculator/

According to this article:
https://www.irishtimes.com/business/personal-finance/90-of-workers-not-on-track-with-their-pension-savings-1.3560462

90% of workers are NOT on track with their pensions in Ireland.

So I cannot imagine too many people are going to have 1.5 mill in the pot either. Maybe the older gold plated public sector pensions.

Most people I know dont even have a pension because they cant afford one.

jimmy456 · 15-03-2019 12:44pm

how.gareth wrote: »

So here comes the big question, I’m 43, never had a pension, am married and earn about €25k. Is there any point in me paying into a pension which would only be a small pittance I could afford?

a small "pittance" can make all the difference especially with compounding. You should try and figure out what you want your retirement to look like first. ie how much of income do you need to replace in retirement.

Say this is 2/3rd of your income or €16,750.

The figure out where is this going to come from?

State Pension of €12,750
Balance of €4,000 from other sources. Say pension is the only other assets.

With 25 years of investing from now until retirement you could have this 4k of income for €150 contributions per month to a pension. Please note that these are very rough figures but illustrate the point.

It might seem pointless when you first think about pension but when you set the goal and break it down it doesn't seem as daunting. The best thing to do is to get a plan going and stick to it.

jimmy456 · 15-03-2019 1:03pm

....... wrote: »

According to this article:
https://www.irishtimes.com/business/personal-finance/90-of-workers-not-on-track-with-their-pension-savings-1.3560462

90% of workers are NOT on track with their pensions in Ireland.

So I cannot imagine too many people are going to have 1.5 mill in the pot either. Maybe the older gold plated public sector pensions.

Most people I know dont even have a pension because they cant afford one.

People dont have a pension because they don't prioritize it. There's a great book called Rich Dad Poor Dad by Robert T. Kiyosaki that explains the concept of paying yourself first.

Basically each month you gets paid and the following happens:

Pay Revenue
Pay the Bank
Pay living costs, entertainment etc etc
Save the balance

We all know what happens here. The day before pay day there is nothing left to save. All that happens each month is you make your boss rich, revenue rich and the bank rich. The only person not getting rich is the person doing all the work!! Madness really.

Robert T. Kiyosaki shows that we should do the following:

Pay ourselves first - ie contribute to the pension or personal savings
Pay Revenue- may not be possible for PAYE
Pay Bank
Pay living costs, entertainment etc etc

We still have nothing left at the end of the month but in this case you are building savings etc.

Its a principle that everyone should try to adopt

....... · 15-03-2019 1:09pm

jimmy456 wrote: »

People dont have a pension because they don't priorities it.

For a lot of people, there is no way of prioritising saving or pension because to do so would mean leaving something else (like bills) short.

Bigbagofcans · 15-03-2019 1:21pm

....... wrote: »

For a lot of people, there is no way of prioritising saving or pension because to do so would mean leaving something else (like bills) short.

Can people not even put 5% into a pension? Just say someone on €20,000, that's only €20 a week.

....... · 15-03-2019 1:41pm

Bigbagofcans wrote: »

Can people not even put 5% into a pension? Just say someone on €20,000, that's only €20 a week.

Im sure some can, but others cant.

The hardest part (from what I am told by non pension owning friends) is that it is impossible to now START a pension because all their earnings are already accounted for.

I think once people are a bit along in life as regards financial responsibilities and have mortgages/rent/bills etc - its difficult to start losing 5% of their salary - at that point. Different if they have been putting it in for years since they started earning.

I already do have a pension but if you asked me now, today, to contribute 5% of my salary to something new Id be hard pressed to find it.

I think they should, but for some its difficult if not impossible.

bilbot79 · 15-03-2019 2:40pm

....... wrote: »

According to this article:
https://www.irishtimes.com/business/personal-finance/90-of-workers-not-on-track-with-their-pension-savings-1.3560462

90% of workers are NOT on track with their pensions in Ireland.

So I cannot imagine too many people are going to have 1.5 mill in the pot either. Maybe the older gold plated public sector pensions.

Most people I know dont even have a pension because they cant afford one.

I'ma retire the minute my pension pot hits 1.5mil.

Mine is currently at 71k with 1300 going in a month in all. From next year t'will be 2300. I would say at around 60-61 I can quit work and go live in the sun. In the meantime I will eat healthy, not drink too much and exercise well inorder that I enjoy it all to the fullest.

Drumpot · 15-03-2019 3:15pm

I think for most people, their priorities determine if people can "afford" a pension or not. I include me in that, the difference is I don't lie to myself about my motives. I can come up with plenty of times when I prioritized spending on something now over saving on some capacity. Even recently I have prioritised house upgrades over throwing lump sums into my pension.

I probably wont ever buy a brand new car, unless I am rolling in the cash, all I need is a car that can get me from A-B. I don't drink or smoke so prob save a fortune on those sort of things and don't need a night out even once a month.

I meet very few people who are actually unable to afford to put money into a Pension but many of them have themselves convinced that they cant or shouldn't for numerous reasons. As I said, its usually their priorities, not their bank balance that determines this. There is nothing wrong with spending your money the way you want to spend it, but there are a lot of people that delude themselves as to the reason why they refuse to save.....

voldejoie · 15-03-2019 3:30pm

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.

AndrewJRenko · 15-03-2019 3:56pm

donkey balls wrote: »

It was private sector pensions that Noonan stole from, It finished a year or two ago from memory

By 'stole', you mean that he reclaimed a very small part of the very generous tax relief that you got on the way in, at a time when the country was verging on bankruptcy.

The Bishop Basher · 15-03-2019 4:12pm

AndrewJRenko wrote: »

By 'stole', you mean that he reclaimed a very small part of the very generous tax relief that you got on the way in, at a time when the country was verging on bankruptcy.

The government should never retrospectively tax people. Doing it with private pensions set a dangerous precedent.

how.gareth wrote: »

So here comes the big question, I’m 43, never had a pension, am married and earn about €25k. Is there any point in me paying into a pension which would only be a small pittance I could afford?

It’s never too late. You’d be amazed how quickly a pension adds up over the years. Starting now is better then starting next year or never starting at all. The peace of mind alone is worth it and if you’re emoloyer has a decent scheme it’s a complete no brainer. Just put in as much as you can afford and forget you ever had it.

Ace2007 · 15-03-2019 4:17pm

AndrewJRenko wrote: »

By 'stole', you mean that he reclaimed a very small part of the very generous tax relief that you got on the way in, at a time when the country was verging on bankruptcy.

If he really thought the country was on verge of bankruptcy, he could have closed the public sector DB pensions to future accrual and have everyone contributing to a DC pension instead. This would lead to billions in savings each year.

But my doing this it would lead to the unions organising a mass walk out and virtual shut down of public sector, so instead he raided the private pension funds.

Pensions in this country are a ticking timebomb, but those making decision aren't affected and so they don't care. There are many articles from many professional bodies outlining such.

If likes the board of the HSE/health department all have gold plated health insurance policies, so do you really think they are going to sort of the issues in the health industry.

Doniekp · 15-03-2019 4:19pm

Big Words wrote: »

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

did you pick any thing nice?

AndrewJRenko · 15-03-2019 4:30pm

Rennaws wrote: »

The government should never retrospectively tax people.

Why not?

AndrewJRenko · 15-03-2019 4:40pm

Ace2007 wrote: »

If he really thought the country was on verge of bankruptcy, he could have closed the public sector DB pensions to future accrual and have everyone contributing to a DC pension instead. This would lead to billions in savings each year.

But my doing this it would lead to the unions organising a mass walk out and virtual shut down of public sector, so instead he raided the private pension funds.

Pensions in this country are a ticking timebomb, but those making decision aren't affected and so they don't care. There are many articles from many professional bodies outlining such.

If likes the board of the HSE/health department all have gold plated health insurance policies, so do you really think they are going to sort of the issues in the health industry.

The problem with shutting down the DB scheme is the contractual obligation to existing staff. He would have been breaking the law by unilaterally changing terms and conditions. He'd also have been faced with doubling of funding for a generation - funding the DB payments to existing pensioners AND the DC contributions for the new scheme simultaneously. This would probably have bankrupted the State.

I'm not sure I'm getting your point about the HSE board. Seeing as they are all external experts, mostly at the top of their private sector careers, yeah, they probably do have private health insurance. Are you saying that this should bar them from the board role?

....... · 15-03-2019 4:40pm

Drumpot wrote: »

I think for most people, their priorities determine if people can "afford" a pension or not.

Yes I dont disagree with this.

One odd scenario I came across recently was a staff member in my office who was basically a job hopper. Because he moved job so often (like once or even twice a year), he often got a job, didnt stay past the probation period, or knew he was leaving just after the probation period and was therefore not able to join the company pension scheme most of the time. The odd time he did - he was only a few months in it til he moved on. He reckoned that in 10 years he had only been in a company pension scheme for about 2 years so he was basically missing 8 years worth of employers contributions.

Some of this job hopping was not his own doing (working in companies that ended up going bust during the recession years). And some of it was due to him changing career and moving onto better things as he gained experience.

Ace2007 · 15-03-2019 4:49pm

AndrewJRenko wrote: »

The problem with shutting down the DB scheme is the contractual obligation to existing staff. He would have been breaking the law by unilaterally changing terms and conditions. He'd also have been faced with doubling of funding for a generation - funding the DB payments to existing pensioners AND the DC contributions for the new scheme simultaneously. This would probably have bankrupted the State.

I'm not sure I'm getting your point about the HSE board. Seeing as they are all external experts, mostly at the top of their private sector careers, yeah, they probably do have private health insurance. Are you saying that this should bar them from the board role?

I didn't say close the DB scheme - I said close it to future accrual, or he could have set it up that instead of the CARE scheme that was introduce post 2013?, that it was just a DC scheme for future employees, but strangely he didn't do that - I wonder why?

The contributions to the DC scheme would be far less than the current notional contributions for the DB scheme. Given Ireland's birth rate's and that, they could afford to pay both for a generation or 2, however they will not be able to do it if they leave it for 20/30 years time.

My example of the HSE was proving that the system is broken, and a public system is never going to be truly fixed if those at the top aren't affected. Like pensions - if you are not in the public sector scheme, the chances are your pension will be inadequate at retirement for you, but although the government have a plan in place, they have missed numerous milestones and more than likely the automatic pension inclusion for all is going to be pushed out because no one in government is affected by it - so why would they care?

Lux23 · 15-03-2019 4:53pm

I want to spend my last few years drunk or high. That's going to cost a few quid.

AndrewJRenko · 15-03-2019 4:55pm

Ace2007 wrote: »

I didn't say close the DB scheme - I said close it to future accrual, or he could have set it up that instead of the CARE scheme that was introduce post 2013?, that it was just a DC scheme for future employees, but strangely he didn't do that - I wonder why?

The contributions to the DC scheme would be far less than the current notional contributions for the DB scheme. Given Ireland's birth rate's and that, they could afford to pay both for a generation or 2, however they will not be able to do it if they leave it for 20/30 years time.

My example of the HSE was proving that the system is broken, and a public system is never going to be truly fixed if those at the top aren't affected. Like pensions - if you are not in the public sector scheme, the chances are your pension will be inadequate at retirement for you, but although the government have a plan in place, they have missed numerous milestones and more than likely the automatic pension inclusion for all is going to be pushed out because no one in government is affected by it - so why would they care?

What CARE scheme?

I don't think you understand how public sector pensions work. There are no notional contributions to the current DB schemes. Zilch. Zero. The money deducted from current staff as 'pension contributions' and pension related deductions go straight into general taxation.

So any contributions to a DC scheme would be entirety new expenditure - billions of new expenditure. Where do you think this money will come from?

AndrewJRenko · 15-03-2019 4:58pm

Ace2007 wrote: »

My example of the HSE was proving that the system is broken, and a public system is never going to be truly fixed if those at the top aren't affected. Like pensions - if you are not in the public sector scheme, the chances are your pension will be inadequate at retirement for you, but although the government have a plan in place, they have missed numerous milestones and more than likely the automatic pension inclusion for all is going to be pushed out because no one in government is affected by it - so why would they care?

So what's your solution? That HSE board members can't have health insurance? And that those working on homelessness can't own a house? And those working on public transport can't own a car?

BrokenArrows · 15-03-2019 5:00pm

I cant image how someone can even start a thread like this, but anyway ill point out the obvious.

1. Average human life expectancy is very long. If you're 30 now you will very likely live into your late 80's if not longer.

2. Just because you are alive it doesn't mean you will be able to work. My retirement age is 68 in the UK, but im a software engineer and there is no way my mind will up to the task of developing whatever crazy **** they have in 35 years time, never mind those who work in physical jobs.

3. So when you are say 68 and cant work anymore how do you expect to eat, live, exist? Do you expect the state pension to pay for rent, food, heating, clothing. No chance.

4. Do you want to spend the 20 years where you are at your most vulnerable having to worry about spending a few euro to keep your house warm. Or having to constantly count pennies to feed yourself.

In summary, dont be a short sighted fool. Put 5% of your salary at least into a private pension starting now. Even on a low salary you will have a nice bit of cash to have when you retire and you will be glad that you dont have to fully rely on government handouts.

Geuze · 15-03-2019 5:14pm

how.gareth wrote: »

So here comes the big question, I’m 43, never had a pension, am married and earn about €25k. Is there any point in me paying into a pension which would only be a small pittance I could afford?

I would make a few points:

(1) your main focus should be on increasing your earnings. If you are doing full-time hours, 25k is a low wage. Average earnings in Ireland, incl. overtime and bonuses are 46k.

(2) Auto-enrolment is planned to happen in 2021 or 2022, so most workers without pensions will be automatically enrolled into a work pension then.

Ace2007 · 15-03-2019 5:25pm

AndrewJRenko wrote: »

What CARE scheme?

I don't think you understand how public sector pensions work. There are no notional contributions to the current DB schemes. Zilch. Zero. The money deducted from current staff as 'pension contributions' and pension related deductions go straight into general taxation.

So any contributions to a DC scheme would be entirety new expenditure - billions of new expenditure. Where do you think this money will come from?

The "new" Single public sector Pension scheme which was set up for new members of public sector post 2013. It is a CARE scheme.

I don't think you saw the word notional. I am well aware that they public sector pensions are unfunded, but equally am aware the values are placed on the liabilities and the government know how much the pension are costing them each year, the money in turn is taken from the tax receipts that you and I and everyone else pays.

For the DC Scheme, the government would pay a % in contribution as would the employee, just like in private sector scenarios, and the employee is in control of how they want the funds invested themselves. The cost of the DC scheme and the closed DB scheme, would be higher in the initial years, but the overall cost would significantly reduce in the future. The initial cost would depend on the design of the new DC scheme etc. Where would the extra money come from you ask - there are many ways the government could do this - for example increasing corporation tax by 1.5%, would be a extra billion for instance. They could reduce USC and introduce a pension levy tax for everyone.

Like I said, there are many ways for it to be done, but if it's not in the interest of those at the top, or if those at the top are negatively affected, they will be unlikely to do it.

downtheroad · 15-03-2019 5:27pm

....... wrote: »

Yes I dont disagree with this.

One odd scenario I came across recently was a staff member in my office who was basically a job hopper. Because he moved job so often (like once or even twice a year), he often got a job, didnt stay past the probation period, or knew he was leaving just after the probation period and was therefore not able to join the company pension scheme most of the time. The odd time he did - he was only a few months in it til he moved on. He reckoned that in 10 years he had only been in a company pension scheme for about 2 years so he was basically missing 8 years worth of employers contributions.

Some of this job hopping was not his own doing (working in companies that ended up going bust during the recession years). And some of it was due to him changing career and moving onto better things as he gained experience.

Auto enrolment being brought in soon will allow this person to accrue a pension. Australia have it set up quite well, the salary package includes a pension contribution that is mandatory. Salary packages there are described as X plus Super, meaning you get pension contributions from Day 1 of any employment.

You can also very easily move your contributions to another fund if you change employer, by just providing the equivalent of a PPS number to the new employer's pension provider.

I hope that the system we bring into Ireland in 2021 will be modelled on the Australian system.

Teddy Daniels · 15-03-2019 10:04pm

Heres Johnny wrote: »

1 - I want to retire early, at about 60
2 - I don't care what age I am, I don't want to be on 33% of the average industrial wage. Or about 15% of my current income at the moment.

Planning is the only way I can avoid this.

Well on your wages (€63,000) you can afford to plan

Teddy Daniels · 15-03-2019 10:06pm

downtheroad wrote: »

Auto enrolment being brought in soon will allow this person to accrue a pension. Australia have it set up quite well, the salary package includes a pension contribution that is mandatory. Salary packages there are described as X plus Super, meaning you get pension contributions from Day 1 of any employment.

You can also very easily move your contributions to another fund if you change employer, by just providing the equivalent of a PPS number to the new employer's pension provider.

I hope that the system we bring into Ireland in 2021 will be modelled on the Australian system.

Auto enrolment is crap, I manage my own financial affairs so I hope there is an opt out.

Monife · 15-03-2019 10:33pm

Teddy Daniels wrote: »

Auto enrolment is crap, I manage my own financial affairs so I hope there is an opt out.

You can still manage them when auto-enrolled. Think the current proposal is you can opt out after 8 months, but if you change jobs you'll be auto-enrolled again.

Jim2007 · 15-03-2019 11:12pm

downtheroad wrote: »

I hope that the system we bring into Ireland in 2021 will be modelled on the Australian system.

The Australian system is the same basic three pillar system favor in most Europe countries addressing pension reform. I’d expect Ireland will do the same.

Jim2007 · 15-03-2019 11:25pm

Teddy Daniels wrote: »

Auto enrolment is crap, I manage my own financial affairs so I hope there is an opt out.

Very short sighted of you. First of all most people think they are good at managing money, but the reality is that very few actually are. But let’s suppose that you are as good as you say and you do accumulate a nice pot on reaching retirement age while the others do not. Guess who’s pot they will come after? Supported by the politicians who are their representatives.

The best way to safeguard your pot is to make sure everyone has a pot of their own.

AndrewJRenko · 15-03-2019 11:30pm

Ace2007 wrote: »

The "new" Single public sector Pension scheme which was set up for new members of public sector post 2013. It is a CARE scheme.

I don't think you saw the word notional. I am well aware that they public sector pensions are unfunded, but equally am aware the values are placed on the liabilities and the government know how much the pension are costing them each year, the money in turn is taken from the tax receipts that you and I and everyone else pays.

For the DC Scheme, the government would pay a % in contribution as would the employee, just like in private sector scenarios, and the employee is in control of how they want the funds invested themselves. The cost of the DC scheme and the closed DB scheme, would be higher in the initial years, but the overall cost would significantly reduce in the future. The initial cost would depend on the design of the new DC scheme etc. Where would the extra money come from you ask - there are many ways the government could do this - for example increasing corporation tax by 1.5%, would be a extra billion for instance. They could reduce USC and introduce a pension levy tax for everyone.

Like I said, there are many ways for it to be done, but if it's not in the interest of those at the top, or if those at the top are negatively affected, they will be unlikely to do it.

The 'initial years' would be a generation - about 50 years of funding both the DB pensions of current pensioners AND the DC contributions of future pensioners, at a cost of billions. Good luck with persuading politicians to put their future election chances on financial benefits for 50 years in the future, when we're crying out for funding for basic infrastructure and services.

screamer · 15-03-2019 11:34pm

Don’t worry OP, people in their thirties to forties won’t get to retire. Americanization of Ireland / overpaid defined benefit pensions and the lack of children in working class families to pay into the revenue pot will insure we’ll all be employed packing bags in the supermarket at 70+
Besides, retirement, Jesus boring, I’d rather stay working.

Ace2007 · 16-03-2019 12:34am

AndrewJRenko wrote: »

The 'initial years' would be a generation - about 50 years of funding both the DB pensions of current pensioners AND the DC contributions of future pensioners, at a cost of billions. Good luck with persuading politicians to put their future election chances on financial benefits for 50 years in the future, when we're crying out for funding for basic infrastructure and services.

The overall cost would be less than leaving the DB schemes the way they are.

Like I said it's not in their interest to do it so they won't. And hence individuals should be obsessed with getting their finances in order for when they retire, instead of hoping that the state pension will be available and will meet their needs. For instance given how bad the health system is now, when we have 5 workers for every pensioner, how worse is it gong to be around 2050, when we only have 2 workers for every pensioner. State won't be able to afford the DB pensions, yet alone the health case system for all these pensioners who never bothered saying for their retirement.

how.gareth · 16-03-2019 12:44am

Thanks for all the positive replies folks, I work for a small employer so I presume they are not obliged to contribute anything to a pension? So if I put €100 a month into one and retired when I hit 70 what would I be looking at roughly? And would it be on top of whatever state pension was available at that time?

Zamboni · 16-03-2019 1:54am

how.gareth wrote: »

Thanks for all the positive replies folks, I work for a small employer so I presume they are not obliged to contribute anything to a pension? So if I put €100 a month into one and retired when I hit 70 what would I be looking at roughly? And would it be on top of whatever state pension was available at that time?

Give this a go.
https://www.pensionsauthority.ie/en/LifeCycle/Useful-Resources/Pension-Calculator/

AndrewJRenko · 16-03-2019 10:58am

Ace2007 wrote: »

The overall cost would be less than leaving the DB schemes the way they are.

Like I said it's not in their interest to do it so they won't..

Any cost savings would result from the reduced benefits to pensioners. This isn't a pain-free option. Public servants aren't dumb, and know when they're being sold a pup. Any reduction in benefits would need to be balanced out by increased basic salary, or public service posts become considerably less attractive to strong candidates, resulting in worsening public services.

And you still have the challenge of paying on the double for pensions for 50 years or so.

Ace2007 · 16-03-2019 11:08am

AndrewJRenko wrote: »

Any cost savings would result from the reduced benefits to pensioners. This isn't a pain-free option. Public servants aren't dumb, and know when they're being sold a pup. Any reduction in benefits would need to be balanced out by increased basic salary, or public service posts become considerably less attractive to strong candidates, resulting in worsening public services.

And you still have the challenge of paying on the double for pensions for 50 years or so.

As you have already eluded to, current DB pension are being paid out of general taxation, which is grand when the model has 5 paying tax workers for every pensioner.

Fast forward to 2050, when we will have 2 paying tax workers for every pensioner and tell me how all of these public backed DB pensions are going to be paid? As well as providing benefits to the hundred of thousands of private section people who didn’t bother saving for retirement?

There are two choices - act now - set up DC pensions for all in society, close public sector DB schemes to future, or kick the can down the road, when someone else will have to deal with it. Regardless of what way you do it - a government minister or senior civil servant, will not be adversely affected, because even if you cut their pensions through some innovated new regulation, Their pension will be so big that it won’t affect them, however cutting the pension of a normal public sector worker will affect them - but there will be no other option - unless your happy for your children and grand children to be paying 60/70% tax?

AndrewJRenko · 16-03-2019 1:02pm

Ace2007 wrote: »

As you have already eluded to, current DB pension are being paid out of general taxation, which is grand when the model has 5 paying tax workers for every pensioner.

Fast forward to 2050, when we will have 2 paying tax workers for every pensioner and tell me how all of these public backed DB pensions are going to be paid? As well as providing benefits to the hundred of thousands of private section people who didn’t bother saving for retirement?

There are two choices - act now - set up DC pensions for all in society, close public sector DB schemes to future, or kick the can down the road, when someone else will have to deal with it. Regardless of what way you do it - a government minister or senior civil servant, will not be adversely affected, because even if you cut their pensions through some innovated new regulation, Their pension will be so big that it won’t affect them, however cutting the pension of a normal public sector worker will affect them - but there will be no other option - unless your happy for your children and grand children to be paying 60/70% tax?

There are actually a lot more choices than that. We had a nice pension reserve fund building up until it had to be redirected to bailing out our banks and property developers, so that's another option for funding future pensions deficit. Either way, it's just one more part of public expenditure, just like health and transport and education.

Any switch to DC schemes would require double-funding of pensions for 50 years or so. Where's that money going to come from?

kippy · 16-03-2019 1:23pm

Ace2007 wrote: »

If he really thought the country was on verge of bankruptcy, he could have closed the public sector DB pensions to future accrual and have everyone contributing to a DC pension instead. This would lead to billions in savings each year.

But my doing this it would lead to the unions organising a mass walk out and virtual shut down of public sector, so instead he raided the private pension funds.

Pensions in this country are a ticking timebomb, but those making decision aren't affected and so they don't care. There are many articles from many professional bodies outlining such.

If likes the board of the HSE/health department all have gold plated health insurance policies, so do you really think they are going to sort of the issues in the health industry.

It wasn't an "instead" it was an "as well as".
There were significant structural changes made to public sector pensions in the same time period which reduced greatly in a number of ways the benefits to the employees, so it wasn't just private sector pensions that were "raided". It was a balancing act to keep public sector on side while saving money for the state.

Don't get me wrong. There are major pension issues ahead of us. As a state we should be ensuring all citizens have a decent pension and more needs to be done in this area.
Its annoying to see Canadian Teachers benefiting from the national lottery, multiple vulture funds getting assets at knock down prices to benefit from long term income, as well as various operators operate toll roads etc etc when one would think the state could and should use these types of things as long term investments for a universal pension scheme but people would no doubt have issues with that as well.

Ultimately people need to take some responsibility for their income in their later years while balancing that with current requirements for spending.
No point letting a house go to ruin to save for a pension.

Ace2007 · 16-03-2019 2:57pm

kippy wrote: »

It wasn't an "instead" it was an "as well as".
There were significant structural changes made to public sector pensions in the same time period which reduced greatly in a number of ways the benefits to the employees, so it wasn't just private sector pensions that were "raided". It was a balancing act to keep public sector on side while saving money for the state.

What significant structure changes were made to existing public section pensions? nothing, they simple introduced law stating new joiners from 2013 would go into a new scheme. it didn't affect anyone already in a scheme. For instance, they didn't close the final salary DB pension scheme, and move everyone into the CARE scheme, which would have been fairer system, than have 2 distinct schemes now in existence

kippy · 16-03-2019 3:03pm

Ace2007 wrote: »

What significant structure changes were made to existing public section pensions? nothing, they simple introduced law stating new joiners from 2013 would go into a new scheme. it didn't affect anyone already in a scheme. For instance, they didn't close the final salary DB pension scheme, and move everyone into the CARE scheme, which would have been fairer system, than have 2 distinct schemes now in existence

The are at least three distinct schemes, as well as the myriad of specific terms and conditions within various sub schemes.
The significant structural change introduced outside of the one that affected new entrants was the introducing of the PRD which significantly increased the cost of a pension for a public sector worker.

Moving all schemes to a standard worse scheme for everyone would have resulted in massive industrial unrest.

AndrewJRenko · 16-03-2019 3:08pm

Ace2007 wrote: »

For instance, they didn't close the final salary DB pension scheme, and move everyone into the CARE scheme, which would have been fairer system, than have 2 distinct schemes now in existence

What would have been 'fairer' about breaching existing contracts of existing employees?

Ace2007 · 16-03-2019 3:30pm

AndrewJRenko wrote: »

What would have been 'fairer' about breaching existing contracts of existing employees?

You mean the same contracts that members in private schemes had?
You seem to think there are no way out of these contracts. The ordinary joe soap in the PS doesn't even appreciate how much of a benefit their pension is - they are reliant on the unions fighting for them. Yet in the private sector - who educates people that they need to look after their pension needs? Like I keep telling you - unless those at the top are negative effected, or incentivsed to fix a problem, it will never get fixed.

kippy · 16-03-2019 3:37pm

Ace2007 wrote: »

You mean the same contracts that members in private schemes had?
You seem to think there are no way out of these contracts. The ordinary joe soap in the PS doesn't even appreciate how much of a benefit their pension is - they are reliant on the unions fighting for them. Yet in the private sector - who educates people that they need to look after their pension needs? Like I keep telling you - unless those at the top are negative effected, or incentivsed to fix a problem, it will never get fixed.

One of the major benefits of unions is the ability to fight this type of thing.
Public Sector still ended up paying significantly more for their pensions than prior to when the changes were made.

Those new entrants on the lower scales are not getting anywhere near a gold plated pension once COAP is taken into account.

I know a bit about pensions as both my parents and theirs before them ended up with very little after working extremely hard all their lives.

Again, I'd like to see a higher than COAP for every worker in the country. A mandatory scheme from when you start paying income tax. Funds are invested in state capital programmes or programmes that will return year in year. But there are two many vested interests in the pensions industry involved.

AndrewJRenko · 16-03-2019 3:38pm

Ace2007 wrote: »

You mean the same contracts that members in private schemes had?
You seem to think there are no way out of these contracts. The ordinary joe soap in the PS doesn't even appreciate how much of a benefit their pension is - they are reliant on the unions fighting for them. Yet in the private sector - who educates people that they need to look after their pension needs? Like I keep telling you - unless those at the top are negative effected, or incentivsed to fix a problem, it will never get fixed.

I doesn't matter who else did or didn't have those contracts. They're still contracts, and one side doesn't get to unilaterally walk away from the contracts. And you'd be surprised how well the 'ordinary Joe Soap' in the public sector appreciates their benefits, and how well they make sure their paid representatives in the unions fight to hang onto those benefits.

Maybe the members of private schemes should take a few lessons about how to not join the race to the bottom?

Ace2007 · 16-03-2019 3:54pm

AndrewJRenko wrote: »

I doesn't matter who else did or didn't have those contracts. They're still contracts, and one side doesn't get to unilaterally walk away from the contracts. And you'd be surprised how well the 'ordinary Joe Soap' in the public sector appreciates their benefits, and how well they make sure their paid representatives in the unions fight to hang onto those benefits.

Maybe the members of private schemes should take a few lessons about how to not join the race to the bottom?

And the fact that despite court cases, private pension schemes wind up and close to future accrual all the time. It doesn't matter if a private company members' go on strike or not.

Why are people obsessed with getting a pension

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