Whats your private pension fund worth?

Elessar · 27-09-2016 6:13pm

McGaggs wrote: »

Why so little in equities?

Sorry I should have checked - it's actually 75% total. 45% of it is directly in equities and the other 55% in a company 'growth' fund which is a mix of equities, bonds and property. But in total 75%. Hoping for some solid growth over the next 20-30 years.

Lia_lia · 27-09-2016 7:15pm

Feck all at this stage, maybe about a grand! But I only started it a few months ago. I'm 27.

Zascar · 27-09-2016 8:14pm

So can anyone give any genuine advice as to how much you should have in your pension at a certain age? Are there any guidelines?

The J Stands for Jay · 27-09-2016 9:58pm

Zascar wrote: »

So can anyone give any genuine advice as to how much you should have in your pension at a certain age? Are there any guidelines?

You'd need about 25 times your annual expenses in order to be able to retire.

listermint · 27-09-2016 10:11pm

There's a lot of talk in here about lefty governments digging into funds to pay for other people.

I'm personally not sure what lefty government had to do with the crash in 2008 which wiped both by parents funds out to half their value.

It appears none of these folks who are maxing out their contributions and bingeing on free money are saying anything about this potential fly in the ointment?

What lefty government did that specifically?

Right2Write · 27-09-2016 10:28pm

"I never understood the mechanics of pensions, still don't ."

I think the general idea is that you put your money away with a pensions provider, who's general purpose is to invest same and get it to grow faster in value than inflation. In return, they feed off your savings, like leeches. But there's no comeback on them if they fail in their task.. And then other leeches like the present day government can also feed as well off same.

The only reason it's worth doing is because of the tax relief. Instead of likely paying 52% tax on earnings, you can salt it away and then most likely withdraw as a pension in years to come but paying a lower tax rate on it. It's deferred taxation and likely at a better rate.

ytpe2r5bxkn0c1 · 27-09-2016 10:30pm

The current upper annuity yield is about €5,000 per annum per €100,000 of fund - less any lump sum taken at retirement.

So, €1.2million gives a lump sum of €100,000 and a maximum of €55,000 per year.

Right2Write · 27-09-2016 10:35pm

"This isn't a thread about PS pensions, but I can't let this myth go unchallenged. PS pay, and always have paid, 6.5% contribution towards their work pension."

I'm not sure if this strictly correct. The pension contributions of PS workers are surely just a lower wage in reality. It's not as if PS earnings are put away by the government into some investment scheme. The gov. of the day just pays less, saves a few bob. Then when pensions have to be paid, the money comes from the general pool of annual spending. It's smoke and mirrors trickery.

However semi state bodies are required to have pension schemes I think. I recall looking at the accounts of one such and it was shocking just how much of the annual gov. subvention was simply going towards pension funds for retired workers. More smoke and mirrors.

TripleAce · 27-09-2016 10:36pm

Mine is worth just over 70k € (I am 39). Out of curiosity, should I decide to withdraw part of it (not even sure it is allowed), how much taxes would I pay on it (in %) ?

anewme · 27-09-2016 11:58pm

mine is worth about 82K...am 46...am thinking of saving...cash rather than put any more into pension when mortgage finishes....6 years time...need a pension of around 30K per year

steddyeddy · 28-09-2016 12:12am

I'm lucky enough to have a small biotech patent which will hopefully pay for my retirement. I'd like to get one or two more out in the next 15 years. No early retirement for me though. I could never stop doing what I love.

hmmm · 28-09-2016 12:24am

listermint wrote: »

I'm personally not sure what lefty government had to do with the crash in 2008 which wiped both by parents funds out to half their value.

A normal equity fund would have recovered all its losses since then. Even more when you consider investing in a pension is tax free.

People can choose how much risk they want to take in their investments. What they can't control is how much money an Irish government is going to look to steal.

Michellenman · 28-09-2016 12:52am

TripleAce wrote: »

Mine is worth just over 70k € (I am 39). Out of curiosity, should I decide to withdraw part of it (not even sure it is allowed), how much taxes would I pay on it (in %) ?

Assuming it's an occupational pension you can't withdraw any funds before age 50 unless in the case of an ill health early maturity claim. Assuming you've not previously waived your right to commute to lump sum at retirement then you could withdraw a portion tax free. This would be calculated on your years of service and final salary, balance after tax free payment would be put towards an annuity (ie guaranteed income for life) Or you could take 25% tax free and invest the balance in an A(M)RF.

Also, confused by the poster who said they're retired and drawing pension benefits by age 47...?

I know a lot of people who say that they don't need a private pension and would be happy to live on the state pension for the rest of their days as 12k a year would be more than enough to survive on after mortgages etc are paid. Would be important to take in to consideration that not all people are actually entitled to the full state pension when they retire. Longevity is also going to play a part here, people are living for longer, a bare minimum of 12k a year would put you just above the poverty line IMO, imagine retiring on the state pension at 65 and living for 25 years with no way to actually enjoy your retirement? Doesn't sound remotely appealing to me.

This, coupled with the likelihood of the state retirement age increasing in future years, and the tax benefits of making pension contributions kind of makes my mind boggle as to why you *wouldn't* join an employers pension plan?

I work in this industry though, maybe I'm biased..

I'm 27 and have had a pension for nearly 3 years. It's small now and not worth even representing as a % of my salary but my aim is to accumulate units at the moment and hope for growth. I've nearly 40 years until I retire so I would expect it to fluctuate wildly in the mean time but the funds I chose are structured for growth over a long term investment so I'm happy with that and don't concern myself with day to day values.. My employer makes 18% contribution and then I make AVCs.

Heater · 28-09-2016 1:07am

32 - self employed - no pension looks like I'm going to be working into my 70's !

BrokenArrows · 28-09-2016 7:49am

Heater wrote: »

32 - self employed - no pension looks like I'm going to be working into my 70's !

Seriously start one now.
A medium sized private pension is better than the state pension.

Elessar · 28-09-2016 8:21am

+1 on starting one now.

Does anyone know the recommended amounts you should put away per age group? I.e. someone in his/her early thirties

PaddyWilliams · 28-09-2016 8:23am

Elessar wrote: »

+1 on starting one now.

Does anyone know the recommended amounts you should put away per age group? I.e. someone in his/her early thirties

In the 30-39 age group you can put away up to 20% of your salary with full tax benefits.

I currently contribute 5% and employer 5% also. I plan to up this shortly to maybe 15% myself. I'm 35
http://www.pensionsauthority.ie/en/LifeCycle/Tax/Tax_relief_on_contributions/

Elessar · 28-09-2016 8:33am

PaddyWilliams wrote: »

In the 30-39 age group you can put away up to 20% of your salary with full tax benefits.

I currently contribute 5% and employer 5% also. I plan to up this shortly to maybe 15% myself. I'm 35
http://www.pensionsauthority.ie/en/LifeCycle/Tax/Tax_relief_on_contributions/

Yeah I know the max but what is recommended for a decent pension? I've heard even 15% is not enough to be putting away.

mahoganygas · 28-09-2016 8:43am

Elessar wrote:

Yeah I know the max but what is recommended for a decent pension? I've heard even 15% is not enough to be putting away.

It depends on several factors.
How risk averse you are, what year your mortgage is paid off, what sort of standard of living you would like at retirement.

Try to set a target annual income you would like at retirement. Plug it into the pension authority pension calculator along with existing contributions, current pension value and age.

It will tell you what % you need to put in at what age.

VinLieger · 28-09-2016 8:51am

listermint wrote: »

There's a lot of talk in here about lefty governments digging into funds to pay for other people.

I'm personally not sure what lefty government had to do with the crash in 2008 which wiped both by parents funds out to half their value.

It appears none of these folks who are maxing out their contributions and bingeing on free money are saying anything about this potential fly in the ointment?

What lefty government did that specifically?

No government has done it, but SF have it as a core economic policy regarding how they will prop up the public and state pensions schemes when they inevitably become unsustainable in their current forms.

http://www.independent.ie/opinion/analysis/thomas-molloy-sinn-fein-economic-policy-trots-out-the-old-unreliables-26858451.html

FG have done it to an extent already with the private levy but SF's musings on it during the election take it to a whole other level

seamus · 28-09-2016 8:59am

Elessar wrote: »

Yeah I know the max but what is recommended for a decent pension? I've heard even 15% is not enough to be putting away.

At the end of the day it depends on what kind of income you want when you've retired. A lot of people make the mistake of assuming they will need a generous income when they retire. They don't, in reality. You'll have no mortgage, no childcare. Just one or two adults and a home to maintain.

So the actual income required to live a comfortable life is really quite small, in comparison to what you may be earning now.

But figuring that out is the hardest part. Do a yearly budget, but assume that you have no mortgage or other loans and no child-related outgoings, and it will just be you and your partner. That's your base required income.

But obviously you're going to want to be comfortable, and you need extra funds to cover unforeseen expenses. So increase it by at least 20%. More if you think you'd like to have more available to you.

That's your target income. Obviously when you retire, you will need more than when you take inflation into account, but that's what the pension fund does, keeps your money tracked to inflation, at least.

Elessar · 28-09-2016 9:00am

mahoganygas wrote: »

It depends on several factors.
How risk averse you are, what year your mortgage is paid off, what sort of standard of living you would like at retirement.

Try to set a target annual income you would like at retirement. Plug it into the pension authority pension calculator along with existing contributions, current pension value and age.

It will tell you what % you need to put in at what age.

Bloody hell. To get a 30k pension (which includes the state pension) I'll need to drop another €600 per month into it :eek:

hmmm · 28-09-2016 9:10am

Elessar wrote: »

Bloody hell. To get a 30k pension (which includes the state pension) I'll need to drop another €600 per month into it :eek:

I think unfortunately most people don't realise how expensive it is to fund a pension - the companies that offer pension payouts have to invest the money somewhere, and most investments are currently paying low single digits at most.

But you have to start somewhere - ideally early in your working career so your money has time to grow. Oddly enough, it's easier to predict how investments will do over the longer term than the shorter term.

Call me Al · 28-09-2016 10:13am

hmmm wrote: »

I think unfortunately most people don't realise how expensive it is to fund a pension - the companies that offer pension payouts have to invest the money somewhere, and most investments are currently paying low single digits at most.

But you have to start somewhere - ideally early in your working career so your money has time to grow. Oddly enough, it's easier to predict how investments will do over the longer term than the shorter term.

My husband and I have been looking at this recently and are planning on maximising the contributions from his salary. We are in our early 40s and worked out that to get the pot we (as a one-income couple) will need, a few hundred a month isn't going to peovide anything approaching enough.
But I don't think people think that far ahead.. And it's unsurprising really with low wage levels and high rental prices in most of the big towns and cities. I think the most important thing to focus on when you're starting your working life is getting a property and home of your own. I'd absolutely dread still being in the private rental market as I approached retirement.

suicide_circus · 28-09-2016 10:41am

GET ON THE LADDER

vg88 · 28-09-2016 10:45am

22, but I'm split if I should bother starting a pension this year. Just finished my bachelors and doing my masters in smurfit next year so all my savings are going towards this. Have nothing so far.

ShaunC · 28-09-2016 11:05am

Don't bother with a pension, have lots of children and let them pay for your foreign holidays and new cars when you retire. Also take turns calling to them for free dinners etc. make sure one of them moves to Spain or somewhere else nice(free holiday for you).
Just one caveat, you have to be nice to them when they are young

(remember that they will be choosing your nursing home)

BrokenArrows · 28-09-2016 12:52pm

Elessar wrote: »

Yeah I know the max but what is recommended for a decent pension? I've heard even 15% is not enough to be putting away.

Depends on what you want to do when you retire.

Lets assume you sit down now and work out that you want. 4 foreign space holidays a year

, eat out regularly and not have to really monitor your spending and generally just have fun.
Assuming you have no mortgage or rent to pay then you might want a 45k a year pension which will leave you very comfortable.

Thats 45k a year in TODAYS money.
Now lets assume that you plan to retire in 30 years time at an inflation rate of 3% on average, that means you will need a yearly pension of €109,226

Now lets assume that you retire at 60 and Ireland life expectancy is 78 years for men, so you need 18 years of a pension.

18 x €109,226 = €1,966,068

So thats your pension requirement roughly for 18 years. However dont forget that the money doesnt stop growing as soon as you retire.

Say you only had a pension of €1 million and invested it in a very safe fund which returned 3% per year. That would return to you 30k per year.

So you take out €109k a year, but earn 30k in returns (which obviously reduces the more you take out)

So in reality id like to retire with a fund of a minimum of 1 million. Ideally aiming for 1.5-2million for retirement in 30 years.

How much do you need to save per month??

Well lets say you have nothing right now and want a pension fund of 1.5 - 2million to have a very comfortable retirement then the following would need to be true.

1. Put away €1000 per month. Increase the 1000 by the rate of inflation each year. eg. 3%. 1000 is assumed to be the total contribution, both yours and your employers.
2. Gain a return rate of at least 7% after fees.
3. Have it growing for 30 years.

That should get you over 1.5 million and if you do well on the interest rates it will be much more.

This Fat Girl Runs · 28-09-2016 12:59pm

I'm 40 and only just started paying into a pension late last year. It had been on my mind for the last 10 years but I could only afford to start one now. It's frustrating to be further behind in savings than I wanted, but also a relief to know at least I've started. I'd never recommend anyone leave it this late to start one.

Sleepy · 28-09-2016 1:08pm

Does that pension calculator take inflation into account? I.e. if I say I want 45k as a pension, does that calculate for 45k of that figure as the payout or does it calculate a Time Value of Money for that and calculate what you'd need for a yearly pension of approx 100k

Either way, I'm pretty much ****ed. I'm 36, the sole income earner in our family and have no pension. According to the Pension Authority's calculator, to have a 45k pension at 68 I'd need to be putting in 1,647 a month! And that assumes the current state pension will be in place too... I would be able to claim for my wife as a dependent adult under the current rules which would nearly double the state contribution but it's pretty unlikely the state pension will even be a thing in 2048... Looks like my best hope is that my parents leave me something in their respective wills around the time I'm looking to retire!

I'm hoping to start a pension in January but pretty confused as to where to get a simple index tracking, low fee pension. I won't be able to contribute anything near the level I should be putting in but I reckon if I could at least chuck a couple of hundred a month in, it'd be a start and I can increase it as my salary increases or my expenses fall.

Whats your private pension fund worth?

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