Why are people obsessed with getting a pension

Midlife crisis man · 06-03-2019 7:17pm #1

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.

Addle · 06-03-2019 7:30pm

How do you/will you pay for a roof over your head?

dar_cool · 06-03-2019 7:34pm

Im in private sector, I put 5% in my pension and my employer puts 10% in on top of that. Its free money. If I dont get to enjoy my retirement then my kids will get the use of it. Its a no brainer in my opinion

adox · 06-03-2019 7:36pm

You need money to live. You won’t have any source of income in most cases when you retire.

It’s the best bang for buck at the moment.

Plumbthedepths · 06-03-2019 7:42pm

So you are in your 30's and you are assuming there will be a state pension there when you retire. At present the pension time bomb is being kicked down the road. Best to plan for no state pension.

MayoSalmon · 06-03-2019 7:43pm

Being young and poor is one thing...being old and poor is game over.

Heres Johnny · 06-03-2019 7:44pm

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.

SureYWouldntYa · 06-03-2019 7:48pm

There’s the tax incentives too

I dont know the exact rates, but putting €1000 in your pension pot might only cost €600 or so, again not sure of the exact rates but there are incentives

Also the earlier you start the better. Assuming a nominal rate of return and contributions across all years, your pension at pension age will be worth more if you invest from 25-35 and stop than if you start at 35 and go to 65, such is the power of compounding

Geuze · 07-03-2019 12:55am

Midlife crisis man wrote: »

What's the point having one.

About myself: I don't have a pension. I came from a poor background and was never thought about the importance of financial awareness.

I struggled throughout the recession eventually going back to college. I'm in my mid 30s now recently started working in the public sector. I'm only on 25k per year. I'm not entitled to the public sector pension because I'm on a fixed term "trainee" contract in my field.

Also if I happen to stay in the public sector for the rest of my career I won't be long enough to get the cushty 40 year pension anyway.

If you join the PS, you will join a PS pension scheme.

You will have to contribute.

The conts are good value, 6.5% of wages, plus ASC of 10%.

In return, you get a DB pension.

Look forward to it, don't complain about it.

Geuze · 07-03-2019 12:58am

Midlife crisis man wrote: »

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

No need to pump as much as you can.

Just make sure you have an income post 65.

bilbot79 · 07-03-2019 12:59am

You do realise pension saving is tax free but regular saving is not?

cormie · 07-03-2019 2:02am

I think if say for example, you're self employed with no dependents and think with that money you'd be putting away, you'd be able to generate more money for the future, by having that money available to invest now, and still have it available now should things get tight, or you find out you're terminally ill or something like that instead of not being able to touch it until you reach a certain age, then it makes a lot of sense not to put money towards a pension.

DaisysB · 07-03-2019 5:21pm

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.

You should look up the Single Pension Scheme that applies to entrants since 2013, that cushty 40 year pension is long gone!

AlmightyCushion · 07-03-2019 5:23pm

cormie wrote: »

I think if say for example, you're self employed with no dependents and think with that money you'd be putting away, you'd be able to generate more money for the future, by having that money available to invest now, and still have it available now should things get tight, or you find out you're terminally ill or something like that instead of not being able to touch it until you reach a certain age, then it makes a lot of sense not to put money towards a pension.

A pension isn't an all or nothing thing. You shouldn't put every spare penny you have into a pension. You need to keep some for emergencies (like illness as you mentioned) and various other situations. Putting every thing you have into a pension is a bad idea. Not putting anything into a pension is also a bad idea.

PhilOssophy · 07-03-2019 5:29pm

I want to live out my days lighting cigars with 50 euro notes and snorting coke on a yacht with a load of hookers around me, not unable to afford to turn on the heating......

....... · 07-03-2019 5:56pm

PhilOssophy wrote: »

I want to live out my days lighting cigars with 50 euro notes and snorting coke on a yacht with a load of hookers around me, not unable to afford to turn on the heating......

Is that you Bertie?

Jim2007 · 07-03-2019 7:54pm

cormie wrote: »

I think if say for example, you're self employed with no dependents and think with that money you'd be putting away, you'd be able to generate more money for the future, by having that money available to invest now, and still have it available now should things get tight, or you find out you're terminally ill or something like that instead of not being able to touch it until you reach a certain age, then it makes a lot of sense not to put money towards a pension.

No it does not. You are failing to take human nature into account. Given access to pension savings, people will always find a very good logical reason to spend it. If you look at countries that allow access such as the US 401K, IRA etc, you find that the people's total net worth on reaching retirement is very low.

Here in Switzerland pension funds are very tightly controlled both in terms of contribution and management. So much so that if a fund manager fails to return a predefined minimum return as set by the government, they are required to pay into the fund to bring it up to the expected level.

As a result it is not unusual to find say an electrician retiring at 58 with 600K - 700K in their fund.... and the big shock provably for an Irish person is that the consider putting more the 7% of it into property as being a very foolish thing to do.

gimli2112 · 07-03-2019 7:59pm

It's like religion if you don't have it there's nothing to look forward to......like nothing

Tow · 07-03-2019 8:06pm

OP, every employee will be 'auto enrolled' into a pension next year 2020 at the earliest... Long term this will allow the government to reduce/drop the state pension.

hmmm · 07-03-2019 8:13pm

Wait till you get to 50, and things are creaking, and you're beginning to forget things, and younger people are getting promoted, and your job is beginning to be automated, and you wonder how you're going to keep working until you're well into your 60s.

It's too late then to start saving.

More than anything else, having savings gives you options. And a pension is a way to save tax-free until you need it.

Steer55 · 07-03-2019 8:21pm

They have auto enrolment in UK last few years. Most low paid workers are paying in a pittance, not a hope will they pay in e ough to even get back 20 pound a week in retirement. Low paid workers simple can't afford it. In the future no doubt contributify state pension will be means tested and that will remove all those with big private pension pots. Sadly they will be the ones who paid in the most.

Tacklebox · 07-03-2019 8:22pm

I live in the moment, seen enough pensions go down the drain.
People who gamble on a high risk product, end up with one eight of what they invested in.
Trends change, but the pension sales person will pull the wool over your eyes with soundbites and fancy phrases...

I bought a big house with inheritance in 2002, off the plans, luckily its in a nice estate, detached 5 bedrooms and well insulated.

Ill sell it before I retire, buy something much smaller and have the rainy day money and leave the house to my son.

I know its a bit of a gamble but I think its a lot less of a risk than buying into a pension.

SureYWouldntYa · 07-03-2019 8:27pm

Tacklebox wrote: »

I bought a big house with inheritance in 2002

So you could say that's your retirement investment, which you're lucky to have, that nestegg means you have some security for the future

A lot aren't though, that's what pensions are for

Steer55 · 07-03-2019 8:28pm

Jim2007 wrote: »

cormie wrote: »

I think if say for example, you're self employed with no dependents and think with that money you'd be putting away, you'd be able to generate more money for the future, by having that money available to invest now, and still have it available now should things get tight, or you find out you're terminally ill or something like that instead of not being able to touch it until you reach a certain age, then it makes a lot of sense not to put money towards a pension.

No it does not. You are failing to take human nature into account. Given access to pension savings, people will always find a very good logical reason to spend it. If you look at countries that allow access such as the US 401K, IRA etc, you find that the people's total net worth on reaching retirement is very low.

Here in Switzerland pension funds are very tightly controlled both in terms of contribution and management. So much so that if a fund manager fails to return a predefined minimum return as set by the government, they are required to pay into the fund to bring it up to the expected level.

As a result it is not unusual to find say an electrician retiring at 58 with 600K - 700K in their fund.... and the big shock provably for an Irish person is that the consider putting more the 7% of it into property as being a very foolish thing to do.

But that is Switzerland totally different country!

The Irish were badly burned by bamk shares during the crash, Brendan Investments etc. Give me bricks and mortar any day.

Mantis Toboggan · 07-03-2019 8:38pm

20% of people die in Ireland before they reach 65 so I'd slightly agree with the OP, chances are you'll never see that money. Life is short, enjoy it, we'll all be dead in 80 years anyway and a few years dead and you're long forgotten.

Jim2007 · 07-03-2019 8:44pm

Midlife crisis man wrote: »

What's the point having one.

About myself: I don't have a pension. I came from a poor background and was never thought about the importance of financial awareness.

Bit embarrassing having to explain this to a student of accounting.... but in any case.

Midlife crisis man wrote: »

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.

The state pension is a simple 'pay as you go' system meaning current contributions cover current pensions and no more. Now with the change in demographics this will not last because there will not be enough contributions to cover pensions so not only can you expect the pension age to go up, you can expect the weekly payout to go down.

Midlife crisis man wrote: »

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)

Yes you are leaving free money on the table.

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.[/QUOTE]

The problem is you will not be the only one... First of all in 30 years time the demographics will have flipped and there will be more people needing help than earning, so you can expect that government funds will be less on top of everything else.

Here in Switzerland we already have that situation. The annual state pension would cover your living costs for about 3 months, the other nine months is something you needed to finance out of your savings.

Yes there are Swiss state services to help those in need, but they have limited funds, so the very first think they do is look at your accommodation needs and tell you to downsize if possible and use the money to live, next person goods etc must go and so on. Only when you have exhausted all possibilities will you get access to state funds. Being old is one thing, but being poor as well... not what you want.

Some Swiss people can not even afford to live here all year around, so they have had to move to Spain, Portugal, Morocco, Thailand etc. to try and manage on their pension. At the state to have to leave your local community, friends etc not something most people want to do.

And the other thing is why would you even want to work until you're 70 for heavens sake. I'm 55 and most of my friends are about the same age and we are all very happy that we'll be pulling the plug on it in the next year or two, I already have. And I can tell there are a lot more interesting things to be doing at 55 than having to deal with office politics etc...

SureYWouldntYa · 07-03-2019 8:46pm

Mantis Toboggan wrote: »

20% of people die in Ireland before they reach 65 so I'd slightly agree with the OP, chances are you'll never see that money. Life is short, enjoy it, we'll all be dead in 80 years anyway and a few years dead and you're long forgotten.

And 80% will live past 65. But sure why save for anything. Could be hit by a bus tomorrow, why not spend €800 in the pub.

Tacklebox · 07-03-2019 8:51pm

SureYWouldntYa wrote: »

So you could say that's your retirement investment, which you're lucky to have, that nestegg means you have some security for the future

A lot aren't though, that's what pensions are for

I totally understand that, im not a big earner so I don't think I could afford a pension, ill probably end up with something similar to someone who can afford a trustworthy pension.

If things changed I'd probably invest in filtration systems or renewable energy, because clean energy and water conservation will be the future in my lifetime anyhow I think.

Maybe horticulture could become popular again too.

Steer55 · 07-03-2019 9:17pm

Spain and Portugal are simply fantastic places to retire to during our long, dark cold winter months, and alot cheaper than Ireland too.

cormie · 08-03-2019 12:20am

Jim2007 wrote: »

No it does not. You are failing to take human nature into account.

It probably makes sense for the majority of workers, but that's not to say there are others who would be better off having that money available now to use to create opportunities for an even more comfortable future and present.

08-03-2019 12:25am

Mantis Toboggan wrote: »

20% of people die in Ireland before they reach 65 so I'd slightly agree with the OP, chances are you'll never see that money.

fantastic sentence.

The J Stands for Jay · 08-03-2019 12:39am

Tacklebox wrote: »

I live in the moment, seen enough pensions go down the drain.
People who gamble on a high risk product, end up with one eight of what they invested in.
Trends change, but the pension sales person will pull the wool over your eyes with soundbites and fancy phrases...

I bought a big house with inheritance in 2002, off the plans, luckily its in a nice estate, detached 5 bedrooms and well insulated.

Ill sell it before I retire, buy something much smaller and have the rainy day money and leave the house to my son.

I know its a bit of a gamble but I think its a lot less of a risk than buying into a pension.

All your eggs in one investment basket. Property has done a lot worse than the usual diversified pension investment.

The J Stands for Jay · 08-03-2019 12:42am

Steer55 wrote: »

But that is Switzerland totally different country!

The Irish were badly burned by bamk shares during the crash, Brendan Investments etc. Give me bricks and mortar any day.

Brendan investments was bricks and mortar...

Big Words · 08-03-2019 12:49am

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

08-03-2019 12:59am

dar_cool wrote: »

Im in private sector, I put 5% in my pension and my employer puts 10% in on top of that. Its free money. If I dont get to enjoy my retirement then my kids will get the use of it. Its a no brainer in my opinion

Will they? I didnt think it worked that way, I intend to up my pensions contributions but am probably already screwed on that front, my private pension contributions have not been enough and at times I did not have a private pension or could not afford to contribute.
I still didnt think it was transferable to children? Id rather put less in and live a little, than just give it all to a pension fund or kids, better to set them in other ways, ensure they start their own pension early so they can add a tiny amount to it and let it grow a bit, start them out with a small lump sum maybe?

Many people cant afford to put anything away, cant even afford to meet their current bills.

Heres Johnny · 08-03-2019 1:08am

Basically if you are on 20k or so a year working then the drop in lifestyle when you just get the old age pension is not going to be huge and you probably can't afford to pay into a personal pension anyway.

If you are on 60k and enjoy spending it and don't put anything away the shock of dropping to 12k would be massive.

Remember this is yourself you're saving for, not a complete other person.

I'm retiring, or at least partially, at 60 the year my mortgage is due to finish. I've been in a pension fund since I'm 24 and it's worth a hell of a lot more than I've put in in those 14 years.

Never listen to someone that doesn't have one, they know they should be planning for the future and often don't want anyone else to either.

Hobosan · 08-03-2019 2:43am

If you don't plan for old age you're a fool. My investments in Soylent Green will help look after me in my old age and will hopefully keep the grandkids fed.

Jim2007 · 08-03-2019 3:16am

gimli2112 wrote: »

It's like religion if you don't have it there's nothing to look forward to......like nothing

No that is not true, there is hell on earth in the form of very little social assistance to look forward to.

sabat · 08-03-2019 3:38am

Do you own a house op? If not and you don't have any financial backup besides the state pension, and I'm being 100% serious here, you'll find yourself living in a men's shelter.

Jim2007 · 08-03-2019 3:43am

Steer55 wrote: »

But that is Switzerland totally different country!

The Irish were badly burned by bamk shares during the crash, Brendan Investments etc. Give me bricks and mortar any day.

No it most certainly is not nor is it different any one of the other EU states. They all face the same basic issues: a major gap in pension funding and a growing demand for social benefits. The only difference is who far along the path each country is.

And as for property.... the Irish lost the most in terms of household wealth in the last recession and they have absolutely nobody to blame but themselves because they ignored every single best practice of investing. And even worse they have they have learned nothing from the process as your statement demonstrates. Come the next recession they will be right back in the same situation.

KyussB · 08-03-2019 4:22am

It's the financial sector that is constantly pushing to have everyones wages slashed, telling everyone their money is best invested with them.

The solution: Get better paying jobs, so you have money to save in the first place. Unionize, and improve your jobs and pay.

Then when you get that sorted, use the labour power built up from that, to force employers to offer Defined Benefit instead of the shity Defined Contribution pensions you get today.

When you hear all the news of future a pensions crisis etc., realize that it's the symptom of workers not getting as big a slice of the pie as before - and the whittling-away of pensions schemes that are actually good value - it's not an issue of people not putting enough into pensions...

You can barely put a fucking thing into a pension, when you're overpaying on rent or on a mortgage for an overpriced house, with a job that doesn't pay appropriately with regards to the cost of living. That's the 'pension crisis'. Just a symptom of how badly people are being screwed over, economically.

People don't even have a clue what they are investing in, either. Could be investing in oil companies or arms dealers, through their pension, for all they know.

PhilOssophy · 08-03-2019 9:41am

....... wrote: »

Is that you Bertie?

No, sure Bertie didn't even have a bank account let alone a pension.......

PhilOssophy · 08-03-2019 9:45am

Joking aside tax relief on pension contributions is just an absolute no-brainer to take advantage of. If you are in a position to take advantage of this, you should while it lasts, because it is already being viewed as the low-hanging fruit to be cut in a budget.

LincolnHawk · 08-03-2019 10:05am

Pensions are not tax free. You pay the tax on the way out

granturismo · 08-03-2019 10:15am

Midlife crisis man wrote: »

... 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. ...

I'm going to enjoy my money while I have health and vigour and the government taxpayercan look after me when I'm an auld boy.

If you work in the public service for 30 years you will get a pension.l

You do realise that you will eventually start paying into a pension scheme if you keep working in the civil service.

Its explained here

DaisysB wrote: »

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.

You should look up the Single Pension Scheme that applies to entrants since 2013, that cushty 40 year pension is long gone!

The J Stands for Jay · 08-03-2019 10:20am

LincolnHawk wrote: »

Pensions are not tax free. You pay the tax on the way out

You can get a fair whack if it tax free at the end (some people get the whole thing as a tax free lump sum). Also, you're likely to have tax relief at 40% on the way in and then get taxed at 20% on the way out; you'll probably have less income, and older people get more tax credits or standard rate cut offs.

Henry Ford III · 08-03-2019 10:44am

hmmm wrote: »

Wait till you get to 50, and things are creaking, and you're beginning to forget things, and younger people are getting promoted, and your job is beginning to be automated, and you wonder how you're going to keep working until you're well into your 60s.

It's too late then to start saving.

More than anything else, having savings gives you options. And a pension is a way to save tax-free until you need it.

It's never too late.

I'm advising a guy aged 64 who is only now investing in a pension. It's mainly tax driven but it's still effective.

Henry Ford III · 08-03-2019 10:52am

Big Words wrote: »

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

You can't invest in these through a pension I think.

MarioLuigi · 08-03-2019 12:46pm

As said pensions with employer contributions are free money.

If you were really ballsy and like high risk high reward you could take the contribution amount per month from your wages and invest it to try and outperform the pensions.

But for christ sake don't do nothing.

The J Stands for Jay · 08-03-2019 12:48pm

MarioLuigi wrote: »

As said pensions with employer contributions are free money.

If you were really ballsy and like high risk high reward you could take the contribution amount per month from your wages and invest it to try and outperform the pensions.

But for christ sake don't do nothing.

Or you could go for high risk investments inside your pension and keep the tax relief

MarioLuigi · 08-03-2019 12:52pm

McGaggs wrote: »

Or you could go for high risk investments inside your pension and keep the tax relief

Well yes but I mean swing/day trading to outperform the pension including 20% tax free lump sum.

Why are people obsessed with getting a pension

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