Pension

The J Stands for Jay · 02-03-2021 7:26pm

Cute Hoor wrote: »

Is that 3/80 per year for every year of service up to a max of 1.5 times salary, if I am reading that right

That's right

Bass Reeves · 03-03-2021 12:18am

2012paddy2012 wrote: »

In my case I saved for nearly 20 years in a prsa- I asked the broker at the start - can I get this out basically in a lump sum when I retire - he indicated yes but there may be other options

Well i could take a small amount between the revenue limits and superannuation limits etc etc - then go for another prsa or an ARF OTHER options - that would further tie up the money - it’s when you retire you want a few Bob not another 10 years out the road - I cashed mine In - no other option - returned near 50 percent - prsa usc all the gains made on tax relief etc -
I was in government work - all I’m saying is get proper advice from an independent accredited broker

PRSA's for people in your circumstances are often not explained clearly. It is similar to over investing in pensions unless you intend to try to use it as an inheritance vehicle and that is risky with nursing home charges

My own opinion is that when your pension fund is going to hit the high tax rate on drawdowns you are better off looking at other investment strategies. You also have to be mindful that taxation and other considerations may have to be taken into account.

It is quite likely that government may reduce pension contributions reliefs at some stage in the future or may tax employer contributions as BIK or place limits on these contributions. It may decide to standardise relief when compulsory pension come into effect to align taxation benefits for lower paid workers.

However on drawdowns it may decide to flat rate the lump-sum element instead of it being a set percentage of the pot or related to income averages as at present. These would have taxation effect on the rest of the pit.

PRSA for public sector workers were often misssold. They were really only apt where a worker either had substantial non pensionable pay in there wages such as overtime or non pensionable allowances. The other workers that PRSA's were applicable to was to workers that would not achieve a full pension before retiring or that intended to retire early.

However there is a sting in the tale. Most people assume that the cap on pensions is the two million max cap. There is however another revenue maximum that limits any pension that you can draw to a maximum of 2/3 of you averaged salary. In state pensions this is achieved when one hits max service and achieves a pension of half your wages and a lump sum of 1.5 years salary.

My understanding is revenue can take the excess funds. Some people consider that pension can be used as method of wealth accumulation and that is not strictly true.

AndrewJRenko · 03-03-2021 12:29am

McGaggs wrote: »

With the Revenue maximum being 2/3 of final salary, it doesn't matter what the salary is because it just takes 40 years service at 3/80 per year to hit the maximum. If there was something in the pension scheme that gave extra years that wouldn't count in the Revenue calculation, it'd take less than 40 years.

I was talking about the €200k maximum lump sum

https://www.pensionsauthority.ie/en/lifecycle/tax/tax_on_lump_sums_at_retirement/

jcon1913 · 03-03-2021 12:48am

McGaggs wrote: »

You're forgetting the property tax when you talk about raising of pensions.

Under funding on irrelevant to everyone except older people with their defined benefit pensions (which are a thing of the past). The risk of fraud affecting a pension is much less than the risk of a dodgy tenant. Not forgetting that property is a depreciating asset with a finite lifespan, requiring maintenance expenditure to keep it on a state capable of producing an income.

Someone looking to put away €400 is not in a position to buy a property without a loan. The repayments are not an allowable expense for tax (only the interest is allowable), meaning that, rather than producing an income, it may require additional funds to pay the costs.

I’ve met a lot of people in their 50s 60s and 70s with 500-1500 per month income from a rented house with the mortgage paid years ago.

Some heartache- but most will tell you “best decision I ever made “

Bass Reeves · 03-03-2021 1:13am

AndrewJRenko wrote: »

I was talking about the €200k maximum lump sum

https://www.pensionsauthority.ie/en/lifecycle/tax/tax_on_lump_sums_at_retirement/

The 200k is an overall limit. It is subject to one of two other limits. 25% of your fund is one limit on this case you need 800k in your fund before you can access 200k.

The other limit is on the case of where you are drawing a DB pension you are limited to 1.5 times the average of your best three years in the previous ten years.

There is another catch which can catch you earlier. If you worked in a company longterm and got a redundancy package( like the banks will do as they close branches) there is a tax relief on redundancy that is limited by the amount of your pension lump sum.

Cute Hoor · 03-03-2021 9:18am

jcon1913 wrote: »

I’ve met a lot of people in their 50s 60s and 70s with 500-1500 per month income from a rented house with the mortgage paid years ago.

Some heartache- but most will tell you “best decision I ever made “

500-1500 per month income - Is that after tax and expenses

The J Stands for Jay · 03-03-2021 9:19am

Bass Reeves wrote: »

My understanding is revenue can take the excess funds. Some people consider that pension can be used as method of wealth accumulation and that is not strictly true.

The balance goes to the employer of your pension (including lump sum) is greater than ⅔ of your salary. If you're over the €2m, revenue get 40% of the excess, then they can get a second do at the tax when you get your hands on it.

The J Stands for Jay · 03-03-2021 9:23am

AndrewJRenko wrote: »

I was talking about the €200k maximum lump sum

https://www.pensionsauthority.ie/en/lifecycle/tax/tax_on_lump_sums_at_retirement/

That's just the maximum that's tax free. Next €300k is taxed at 20% with no USC and prsi.

mountai · 03-03-2021 9:37am

My view on Pension Companies ---- Never trust them or have any dealings with them . The amount of these " Funds" that have gone bust , leaving the investors high and dry is criminal . When I started out in business , I was inundated by Insurance/Pension salesmen . Promises of vast amounts of cash were dangled before me . I asked this question ---- If I invested 15% of my income , taking the average industrial wage into consideration , index linked these payments for say 40 years , then tell me -- " What in todays figures , would the Pension figures be , using the same formula for someone who had invested 40 years ago ? " Guess what , not one of these geniuses came back to answer me . Depend on yourselves as I have done . Just my opinion .

Bass Reeves · 03-03-2021 10:14am

McGaggs wrote: »

That's just the maximum that's tax free. Next €300k is taxed at 20% with no USC and prsi.

That is only available in a PRSA it not available to DB scheme participants AFAIK, I may be incorrect

The J Stands for Jay · 03-03-2021 10:32am

Bass Reeves wrote: »

That is only available in a PRSA it not available to DB scheme participants AFAIK, I may be incorrect

It's the same limit for all pensions. DB schemes are unlikely to produce a lump sum that size, likely requiring 40 years servic and a salary of €300k.

dublin49 · 03-03-2021 12:09pm

mountai wrote: »

My view on Pension Companies ---- Never trust them or have any dealings with them . The amount of these " Funds" that have gone bust , leaving the investors high and dry is criminal . When I started out in business , I was inundated by Insurance/Pension salesmen . Promises of vast amounts of cash were dangled before me . I asked this question ---- If I invested 15% of my income , taking the average industrial wage into consideration , index linked these payments for say 40 years , then tell me -- " What in todays figures , would the Pension figures be , using the same formula for someone who had invested 40 years ago ? " Guess what , not one of these geniuses came back to answer me . Depend on yourselves as I have done . Just my opinion .

Bit harsh but yeah Pensions are risky business and people in general don't protect their pension pots to the same degree they would if it was cash,and in reality it is cash,Pension providers are no different to most fund managers ,the so called experts play with your money,if successful they share the bounty while taking a nice slice for themselves ,and if not they still line their pockets while you and your colleagues take the hit.Would much prefer to manage it myself but most work scenarios don't make that possible.

AndrewJRenko · 03-03-2021 2:01pm

mountai wrote: »

My view on Pension Companies ---- Never trust them or have any dealings with them . The amount of these " Funds" that have gone bust , leaving the investors high and dry is criminal . When I started out in business , I was inundated by Insurance/Pension salesmen . Promises of vast amounts of cash were dangled before me . I asked this question ---- If I invested 15% of my income , taking the average industrial wage into consideration , index linked these payments for say 40 years , then tell me -- " What in todays figures , would the Pension figures be , using the same formula for someone who had invested 40 years ago ? " Guess what , not one of these geniuses came back to answer me . Depend on yourselves as I have done . Just my opinion .

What pension funds used by Irish pensioners have gone bust please? I can't recall any such cases.

dublin49 · 03-03-2021 2:06pm

AndrewJRenko wrote: »

What pension funds used by Irish pensioners have gone bust please? I can't recall any such cases.

Waterford Crystal was the big one,I am sure there are loads with benefits written down you would never hear of.

mountai · 03-03-2021 2:40pm

AndrewJRenko wrote: »

What pension funds used by Irish pensioners have gone bust please? I can't recall any such cases.

Investments by fund managers are not confined to Ireland. Plenty of these companies have failed. Do a Google search and you will discover.

The J Stands for Jay · 03-03-2021 2:45pm

mountai wrote: »

Investments by fund managers are not confined to Ireland. Plenty of these companies have failed. Do a Google search and you will discover.

Googled it, and all I could find is stories about government pension schemes not putting on enough money to meet their promises.

The J Stands for Jay · 03-03-2021 2:48pm

dublin49 wrote: »

Waterford Crystal was the big one,I am sure there are loads with benefits written down you would never hear of.

That was an employer going bust without having funded the DB pension scheme fully. Not a pension scheme going bust.

Cute Hoor · 03-03-2021 3:11pm

Waterford Crystal & Independent Newspapers were 2 companies who had issues with their DB pension funds, I'm sure there are others but I can't remember, but these were issues of underfunding by the companies involved, and all were related to DB pensions. For better or worse DB funds went out with the Ark.

I'd like to hear who these DC Pension Funds who have failed are, obviously you will have ups and downs depending on financial performance, but failure? Examples please.

AndrewJRenko · 03-03-2021 3:19pm

dublin49 wrote: »

Waterford Crystal was the big one,I am sure there are loads with benefits written down you would never hear of.

That's not a pension company. It was a company pension - a defined benefit scheme. No one chooses to invest in a DB scheme.

AndrewJRenko · 03-03-2021 3:25pm

mountai wrote: »

Investments by fund managers are not confined to Ireland. Plenty of these companies have failed. Do a Google search and you will discover.

Go back over what you said, which was; ". The amount of these " Funds" that have gone bust , leaving the investors high and dry is criminal".

Can you point to one or two examples of this - funds gone bust leaving investors high and dry?

You seem to be shifting the goalposts now, talking about investments of those funds, which is a different story.

So have any pension funds actually gone bust, as you suggested?

dublin49 · 03-03-2021 3:28pm

McGaggs wrote: »

That was an employer going bust without having funded the DB pension scheme fully. Not a pension scheme going bust.

not much consolation to the workers ,Pension providers wont go bust as all the risk is taken by the pension fund not the pension company.

The J Stands for Jay · 03-03-2021 3:29pm

dublin49 wrote: »

not much consolation to the workers ,Pension providers wont go bust as all the risk is taken by the pension fund not the pension company.

They still have pensions, just not as high as their employer promised them.

dublin49 · 03-03-2021 3:39pm

AndrewJRenko wrote: »

Go back over what you said, which was; ". The amount of these " Funds" that have gone bust , leaving the investors high and dry is criminal".

Can you point to one or two examples of this - funds gone bust leaving investors high and dry?

You seem to be shifting the goalposts now, talking about investments of those funds, which is a different story.

So have any pension funds actually gone bust, as you suggested?

Waterford Crystals fund failed to meet commitments ,whether the company went bang or not ,the Fund failed,as I have said previously most funds don't fail but what does happen is Trustees make decisions about reducing payments and these would result in pensioners receiving less than they were expecting at retirement.

Cute Hoor · 03-03-2021 3:44pm

dublin49 wrote: »

Waterford Crystals fund failed to meet commitments ,whether the company went bang or not ,the Fund failed,as I have said previously most funds don't fail but what does happen is Trustees make decisions about reducing payments and these would result in pensioners receiving less than they were expecting at retirement.

Are you talking about DB or DC, can you give an example of a DC pension where Trustees make decision about reducing payments

AndrewJRenko · 03-03-2021 3:56pm

dublin49 wrote: »

Waterford Crystals fund failed to meet commitments ,whether the company went bang or not ,the Fund failed,as I have said previously most funds don't fail but what does happen is Trustees make decisions about reducing payments and these would result in pensioners receiving less than they were expecting at retirement.

The post I replied to was about pension companies : "Pension Companies ---- Never trust them or have any dealings with them . The amount of these " Funds" that have gone bust , leaving the investors high and dry is criminal .

Waterford Crystal is not a pension company. It is a glass and giftware company, entirely irrelevant to this issue.

The WC pension fund went bust because the committed benefits to retirees cost more than the employer was prepared to contribute. DB funds are generally unsustainable.

Now can we get back to Mountai's claim about numerous pension company funds going bust? It was nonsense, wasn't it?

dublin49 · 03-03-2021 4:23pm

AndrewJRenko wrote: »

T

Now can we get back to Mountai's claim about numerous pension company funds going bust? It was nonsense, wasn't it?

are you not conflating two separate entities there ,A pension Company is Mercers,Irish life,Canada life etc, Pension funds are the property of the individual company workers?

Bass Reeves · 03-03-2021 4:28pm

McGaggs wrote: »

It's the same limit for all pensions. DB schemes are unlikely to produce a lump sum that size, likely requiring 40 years servic and a salary of €300k.

No is not you should read the link you posted.

The 200k is an overall limit. However there is two other limits. If you have a PRSA, ARF or AMRF the limit is 25% of the fund. Unless you have a fund of over 800k you will not reach the 200k limit. To draw the 300k@20% tax you would need a fund of 2 million. The remainder of the money must remain in the ARF or AMRF.

In the case of a DB scheme this limit is set at 1.5 years wages of a lump sum. If your wages are 50k the biggest LS you can draw is 75k.

AndrewJRenko · 03-03-2021 4:33pm

dublin49 wrote: »

are you not conflating two separate entities there ,A pension Company is Mercers,Irish life,Canada life etc, Pension funds are the property of the individual company workers?

I'm not conflating anything. Pension companies do not manage defined benefit funds like Waterford.

So again, I'm asking Mountai for examples of the numerous funds going bust that he was talking about?

dublin49 · 03-03-2021 4:50pm

AndrewJRenko wrote: »

I'm not conflating anything. Pension companies do not manage defined benefit funds like Waterford.

So again, I'm asking Mountai for examples of the numerous funds going bust that he was talking about?

Thats not true,I am in a defined benefit Pension fund and it is managed by a Pension company in conjunction with the trustees of our fund.

mountai · 03-03-2021 4:54pm

AndrewJRenko wrote: »

I'm not conflating anything. Pension companies do not manage defined benefit funds like Waterford.

So again, I'm asking Mountai for examples of the numerous funds going bust that he was talking about?

Correct me if I'm wrong, did Irish Life get a Gubbetment bail out a few years ago??

AndrewJRenko · 03-03-2021 5:00pm

mountai wrote: »

Correct me if I'm wrong, did Irish Life get a Gubbetment bail out a few years ago??

You said that pension funds went bust. Is this your second attempt to shift the goalposts by talking about one pension company?

Again, do you have any actual examples of pension company pension funds going bust as you suggested earlier?

This might be good time to state that you just got that wrong.

The bailout given to Irish Life and Permanent related to the mortgage business of PTSB, nothing to do with pension funds or pension investments.

mountai · 03-03-2021 5:04pm

Well did IL get bailed out???. Yes one company, the biggest in the land!!!

AndrewJRenko · 03-03-2021 5:06pm

dublin49 wrote: »

Thats not true,I am in a defined benefit Pension fund and it is managed by a Pension company in conjunction with the trustees of our fund.

They don't manage it. They might be administrators for it but they don't manage it. The trustees manage it and the employer decides how much to contribute. If it goes bust, that's down to the employer and the trustees, not the administrators.

AndrewJRenko · 03-03-2021 5:07pm

mountai wrote: »

Well did IL get bailed out???. Yes one company, the biggest in the land!!!

The bailout given to Irish Life and Permanent related to the mortgage business of PTSB, nothing to do with pension funds or pension investments.

Any sign of any pension company pension funds that have actually gone bust?

The J Stands for Jay · 03-03-2021 5:07pm

Bass Reeves wrote: »

No is not you should read the link you posted.

The 200k is an overall limit. However there is two other limits. If you have a PRSA, ARF or AMRF the limit is 25% of the fund. Unless you have a fund of over 800k you will not reach the 200k limit. To draw the 300k@20% tax you would need a fund of 2 million. The remainder of the money must remain in the ARF or AMRF.

In the case of a DB scheme this limit is set at 1.5 years wages of a lump sum. If your wages are 50k the biggest LS you can draw is 75k.

If I had a salary of €333,334, I could take a lump sum of €500k and would only require a fund of €500k to do so. I would pay €60k in tax and have €440k in my pocket.

Jim2007 · 03-03-2021 5:09pm

mountai wrote: »

Correct me if I'm wrong, did Irish Life get a Gubbetment bail out a few years ago??

Yes you are absolutely wrong.

First there was not bailout, the government took a stake in the company - not one single shareholder received government money.

And second not one single pension fund went to the wall.

Now it is up to you to decide how long you want to continue being wrong.... but on a forum where the people deal in facts, you don't get far spouting unsubstantiated nonsense, you just get called out and found wanting.

Cute Hoor · 03-03-2021 5:11pm

mountai wrote: »

Well did IL get bailed out???. Yes one company, the biggest in the land!!!

When was that?

The J Stands for Jay · 03-03-2021 5:11pm

mountai wrote: »

Well did IL get bailed out???. Yes one company, the biggest in the land!!!

ILAC did not get bailed out.

dublin49 · 03-03-2021 5:18pm

AndrewJRenko wrote: »

They don't manage it. They might be administrators for it but they don't manage it. The trustees manage it and the employer decides how much to contribute. If it goes bust, that's down to the employer and the trustees, not the administrators.

The pension company advise/outline on the investment strategy and in reality most trustees just follow their advice,the trustee involvement is minimal from my experience and one of the main reasons a fund would fail or come under pressure would be an disastrous investment strategy.Lack of funding is obviously the biggest issue,press reports suggest all the time that Irish Pensions are under funded and there is a major problem there.

AndrewJRenko · 03-03-2021 5:29pm

mountai wrote: »

Well did IL get bailed out???. Yes one company, the biggest in the land!!!

From https://en.m.wikipedia.org/wiki/Permanent_TSB

"During the Irish banking crisis the group was split. The profitable Irish Life Group was purchased by the government for €1.3 billion, and subsequently sold to Great-west Lifeco in July 2013.[7]"

Still waiting for examples of these number of pension company pension funds that went bust....

AndrewJRenko · 03-03-2021 5:34pm

dublin49 wrote: »

The pension company advise/outline on the investment strategy and in reality most trustees just follow their advice,the trustee involvement is minimal from my experience and one of the main reasons a fund would fail or come under pressure would be an disastrous investment strategy.Lack of funding is obviously the biggest issue,press reports suggest all the time that Irish Pensions are under funded and there is a major problem there.

Don't blame the administrators if your trustees are wasters.

Has any Irish investment management company given a "disastrous investment strategy" relative to their peers in the market? There all fairly conservative and fairly samey.

Cute Hoor · 03-03-2021 5:47pm

dublin49 wrote: »

The pension company advise/outline on the investment strategy and in reality most trustees just follow their advice,the trustee involvement is minimal from my experience and one of the main reasons a fund would fail or come under pressure would be an disastrous investment strategy.Lack of funding is obviously the biggest issue,press reports suggest all the time that Irish Pensions are under funded and there is a major problem there.

Are you talking about DB or DC pensions?

Geuze · 03-03-2021 5:47pm

mountai wrote: »

Correct me if I'm wrong, did Irish Life get a Gubbetment bail out a few years ago??

I will correct you.

During the financial crises, PTSB, which owned IL at the time, sold IL to the State.

This was part of the efforts to re-capitalise the bank.

IL did not receive a "bail-out".

The State subsequently sold IL.

dublin49 · 03-03-2021 5:50pm

AndrewJRenko wrote: »

Don't blame the administrators if your trustees are wasters.

Has any Irish investment management company given a "disastrous investment strategy" relative to their peers in the market? There all fairly conservative and fairly samey.

you are probably right ,they tend to make the same mistakes in unison like Lemmings over a cliff,

dublin49 · 03-03-2021 6:04pm

Cute Hoor wrote: »

Are you talking about DB or DC pensions?

My experience is primarily with DB,where there is a global pool of investment cash and I am aware that in DC pensions you tailor your own investment strategy but normally the choice is fairly limited along the lines of High,Medium or low risk.

mountai · 03-03-2021 6:12pm

In my initial post I pointed out the fact that not one Insurance sales man could give me the relevant figures I asked for . Why , I wondered . Many of my friends , have expressed their disappointment at the position they now find themselves in re pension payments . All my life I have been suspicious of " Greeks bearing gifts" . The Insurance business is founded on fear . Its well known , that an insurance company will do everything in its power to negate any claim and successive Governments refuse to grasp the nettle and bring about real reform . " Investments can fall " the bywords of the industry . Tell that to the members of failed funds , Irish Shipping comes to mind . Fancy brochures , " Millions" put into minds of ordinary people , by slick salesmen in suits , not for me , Thank God .

Cute Hoor · 03-03-2021 6:16pm

dublin49 wrote: »

My experience is primarily with DB,where there is a global pool of investment cash and I am aware that in DC pensions you tailor your own investment strategy but normally the choice is fairly limited along the lines of High,Medium or low risk.

To the best of my knowledge (and I'm totally open to correction) there is no such thing as DB pensions any more, DB pensions have to be wound down (an interesting scenario in it's own right) but I don't think any company is offering DB to new entrants any more.

With DC you effectively have control over where it is invested, in association with the fund providers obviously, it may not perform as well as you might like from time to time but I can't see how it would go fully belly-up.

Cute Hoor · 03-03-2021 6:17pm

mountai wrote: »

In my initial post I pointed out the fact that not one Insurance sales man could give me the relevant figures I asked for . Why , I wondered . Many of my friends , have expressed their disappointment at the position they now find themselves in re pension payments . All my life I have been suspicious of " Greeks bearing gifts" . The Insurance business is founded on fear . Its well known , that an insurance company will do everything in its power to negate any claim and successive Governments refuse to grasp the nettle and bring about real reform . " Investments can fall " the bywords of the industry . Tell that to the members of failed funds , Irish Shipping comes to mind . Fancy brochures , " Millions" put into minds of ordinary people , by slick salesmen in suits , not for me , Thank God .

Are you confusing Pension with Insurance?

The J Stands for Jay · 03-03-2021 6:21pm

mountai wrote: »

In my initial post I pointed out the fact that not one Insurance sales man could give me the relevant figures I asked for . Why , I wondered . Many of my friends , have expressed their disappointment at the position they now find themselves in re pension payments . All my life I have been suspicious of " Greeks bearing gifts" . The Insurance business is founded on fear . Its well known , that an insurance company will do everything in its power to negate any claim and successive Governments refuse to grasp the nettle and bring about real reform . " Investments can fall " the bywords of the industry . Tell that to the members of failed funds , Irish Shipping comes to mind . Fancy brochures , " Millions" put into minds of ordinary people , by slick salesmen in suits , not for me , Thank God .

Irish Shipping, from a quick Google, seems to be a case where the government shafted the employees. Nothing about a pension fund going belly up.

The J Stands for Jay · 03-03-2021 6:23pm

Cute Hoor wrote: »

Are you confusing Pension with Insurance?

I think they're one of those people who think pensions are 'magic', rather than an investment in equity and bond markets with a tax break and drawdown restrictions added. Friends complained, but no-one thought that it might have something to do with the dot com bubble, or the credit crunch or whatever recession came at the wrong time for them.

Pension

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