Start pension at age 43?

Discussion in 'Pensions' started by Foodie1, Dec 20, 2016.

  1. Foodie1

    Foodie1 Registered User

    Posts:
    18
    Looking for advice on husband. Never paid into a pension. Due to start in new company and deciding whether to start one now? Comany will be paying 3% contribution. Is the general advice to start a pension no matter what age or save in an account etc?
    Wife will have very small Public sector pension and no other investments.
    Any advice appreciated.
     
  2. Gerry Canning

    Gerry Canning Frequent Poster

    Posts:
    2,430
    Foodie 1.

    New company has scheme in place , so set up costs are largely covered = plus.
    Company putting in3% = plus.
    You get tax relief on husbands payments= plus.
    Savings come out of after tax income = negative,

    Even a small (private) pension in 25 years would be a bonus.
    On retirement you get State Contributory old age pension(expect will be nuff to survive on)
    On retirement Public sector pension is small.
    On retirement 25 years into private pension , should be appreciable.

    Go for it !
     
  3. Conan

    Conan Frequent Poster

    Posts:
    562
    If the Employer is paying 3% I would certainly suggest that your husband also contributes something also. The Employer contribution is NOT a benefit-in-kind and any personal contribution is tax deductible. So for a top rate tax payer, a 5% contribution - for example - would cost 3% net of tax relief.
    Putting aside even a modest contribution will at least build up some fund which can be used to finance retirement. Otherwise his only benefit will be the State Pension (currently €238.30 percent).

    So yes, do start contributing.
     
  4. LS400

    LS400 Frequent Poster

    Posts:
    269
    I cant see the benefit of starting a pension at this stage unless you are prepared to contribute a substantial amount towards it. He is starting a new job, will he suit the company, will the company suit him..
    10 years ago, then probably. There are other ways to try an provide a pensionable income within a reasonably short time scale, if it were me, I would opt for an investment route.
     
  5. SBarrett

    SBarrett Frequent Poster

    Posts:
    1,879
    If you don't have any investments and a small public service pension, what's the plan for retirement? Keep working or live off the OAP? Is the OAP enough?

    There's never a perfect time to start a pension, there will always be demands on your money. Your husband should just start. He'll get used to the money going out of his pay pretty quickly. I echo what Conan says, he should contribute something himself, 3% is a pretty low employer contribution. Your husband needs to top this up himself.

    Steven
    www.bluewaterfp.ie
     
  6. Foodie1

    Foodie1 Registered User

    Posts:
    18
    Thanks to all. So a bit of a divide as to whether we should do it. We also feel the same way.
     
  7. Gordon Gekko

    Gordon Gekko Frequent Poster

    Posts:
    1,491
    It would be utterly insane to not fund a pension if one can.

    There is no divide.
     
  8. Gordon Gekko

    Gordon Gekko Frequent Poster

    Posts:
    1,491
    This really is quite serious. Someone who's 43, and likely to still have more career in front of him than behind him, even contemplating the idea that's it's too late to start a pension...

    "The best time to plant a tree was 20 years ago. The second best time is today."
     
  9. PyritePete

    PyritePete Frequent Poster

    Posts:
    379
    I was in a very similar situation a good while ago and I didn't start a pension and as per LS400's post, would have needed to pay in a huge amount to have funds at the end. I am still comfortable with my decision.

    I dont know how other posters can say there is no divide
     
  10. Sarenco

    Sarenco Frequent Poster

    Posts:
    3,079
    Why wouldn't you invest to supplement your retirement income through a tax-advantaged pension vehicle?
     
  11. Gordon Gekko

    Gordon Gekko Frequent Poster

    Posts:
    1,491
    With the greatest respect, what does that even mean?

    Having €100k is better than having nothing. Having €200k is better than having €100k.

    Doing something is better than doing nothing, and someone with 22 years to go to age 65 has scope to do something meaningful.
     
  12. PyritePete

    PyritePete Frequent Poster

    Posts:
    379
    It means that for the OP at 43 in my opinion, its too late because to put that much into a pension to me made/makes no sense.

    I chose differently, as LS400 has put it.
     
  13. LS400

    LS400 Frequent Poster

    Posts:
    269
    Most will be shocked how little their pension will be worth over a 25 year period in the private sector, really shocked, unless as I said, you are paying a massive amount into it. I have been paying to a Pension for best parts of 20 years, and contributing a not to insignificant amount, and think only for that increased payment, its value now, would be pretty useless.

    Pension are good to have, and start, but not at 43.
     
  14. Sarenco

    Sarenco Frequent Poster

    Posts:
    3,079
    So the answer is to rely on the State pension alone without any supplemental provision? Or invest outside a pension vehicle and suffer larcenous rates of taxation on any income or gains?

    That makes no sense to me. Surely half a loaf of bread is better than no bread at all?
     
  15. LS400

    LS400 Frequent Poster

    Posts:
    269
    At no point did anyone, anywhere here recommend the op to do nothing!
    This is about suggesting a route at this specific point in his life, and starting a pension now is not the way forward.
     
  16. Sarenco

    Sarenco Frequent Poster

    Posts:
    3,079
    Last edited: Dec 20, 2016
    Ok so what do you suggest by way of an alternative approach?

    At the end of the day, a pension is just a tax-advantaged investment vehicle.
     
    Last edited: Dec 20, 2016
  17. moneybox

    moneybox Frequent Poster

    Posts:
    717
    Put it under the matteess, better than the pension fund managers taking their big cut over the next 25 years.
     
  18. Gordon Gekko

    Gordon Gekko Frequent Poster

    Posts:
    1,491
    Take a 43 year old on a modest salary of €50,000 a year who's has a total of €10,000 a year going into the individual's pension, 3% of which (i.e. €1,500) is contributed by the employer. The other €8,500 would only cost the individual €5,000 a year because of the tax relief.

    Based on an average return of 5%, he/she would have circa €400,000 in their fund at age 65. €100,000 would come out by way of a tax-free lump sum. The other €300,000 would go into an ARF/AMRF from which €12,000 a year would typically flow.

    So the individual now has €100,000 in the bank and pension income equal to 50% of his salary. That's as good a position as a public servant.

    Eschewing pension at 43 is utterly insane.

    Try building wealth like that with after tax funds!
     
  19. moneybox

    moneybox Frequent Poster

    Posts:
    717
    How many 43 year olds will be able to contribute €5000 euro a year into a pension fund when most likely he will have mortgage commitments, teenagers, high health insurance premiums and god know what else on a modest salary f €50,000 a year.
     
  20. PyritePete

    PyritePete Frequent Poster

    Posts:
    379
    how many 43 year olds would be in a position to contribute €10000 or more a year into a pension fund ?

    Sarenco - no-one suggested doing nothing. Please read posts above again.

    I too was shocked at how little value a pension would be worth at the end IMHO. I sat down, looked at it rationally, spoke with friends and family and a local financial advisor and came to my conclusion.