# Starting my pension what should I look out for?



## MrEBear (5 Nov 2010)

Hi all, I've decided it's about time I started my pension (I'm only 25 so only now thinking of the future). I was wondering if anyone had any personal advise on things I should look out for when choosing who to go with or what type of pension to do. I'm kinda clueless when it comes to these things so any (helpful) advise would be well appreciated. 

Thanks in advance. Bear


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## DB74 (5 Nov 2010)

Wait until the budget to see if the tax relief will be decreased

This will impact considerably on how much you can afford to put away each week/month


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## MrEBear (5 Nov 2010)

Thanks DB74, I had actually forgot that it was in the budget to be honest. I'll wait til it's all over and done with first then start looking at pensions again

Bear


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## MrEBear (10 Nov 2010)

Hi OnOff, just noticed your post now. Thanks for the advice I'll get that app later and take a look. I totally agree with you on the whole procrastination being your enemy, I'm currently waiting for some literature to be posted out for verious companies at the moment so don't plan on waiting too long to get the ball rolling. 

Thanks again. Bear


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## thlint (15 Nov 2010)

I am horrified -- At 25 you are far too young.  Think back 40 years, you could buy a house for 2-3000 pounds . 40 years ago if some told you that your pension would be 200.00 a week ( todays old age pension) a fund of more than 400,000 enough to buy 20 houses, you would think that you would be so rich when you retire. 40 years ago you would have been promised 50,000 --  a weekly pension of about 28.00 pounds. Tell me now, where would you be going with that princely sum ? Please for your own sake reconsider -- Pensions are the big scam of this century. Been there, did that, and bitter experience is a difficult pill to swallow.


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## marti18 (15 Nov 2010)

OnOff2011 said:


> Congratulations MrEBear - not too many youngsters are thinking about their pensions at your age. Tell your friends to do the same.
> Don't put it off too long - it can be very easy to wait until the next budget, then wait for another event (Christmas, Birthday, Holiday, etc). Procrastination is your enemy.
> 
> I found a great tool in the app store (the Money wizard) which I use all the time for these types of calculations. Using their Retirement tool, you can work out how much pension fund you need to build up. form there, it can help you work out how much you need to invest.
> ...


 
why o why would anyone even consider a pension. they are worthless!  they are not guaranteed unless you work as a civil servant etc and private pensions are a gamble as we all know. i know people may say that in 35 years it will all be different.....really!  i know people who have put massive amounts on pensions to be told that they are worthless. 

take my advise and enjoy your money because if you start a pension someone else will enjoy it for you!


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## thlint (15 Nov 2010)

marti18 said:


> why o why would anyone even consider a pension. they are worthless!  they are not guaranteed unless you work as a civil servant etc and private pensions are a gamble as we all know. i know people may say that in 35 years it will all be different.....really!  i know people who have put massive amounts on pensions to be told that they are worthless.
> 
> take my advise and enjoy your money because if you start a pension someone else will enjoy it for you!



Could not agree more !!


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## DB74 (15 Nov 2010)

OnOff2011 said:


> Whilst waiting for the budget may _seem_ like a good idea, it may not be! *Your pension requirement will not change* (budget or not), so starting now - even with a smaller amount - is a good idea. You can always adjust your contributions up or down depending on your circumstances at any time.


 
Really?

What if the State Pension becomes means-tested in the budget. Do you think that will change the amount that someone needs to start putting away?

What if the tax relief is reduced to 20% from 41%. So if you planned to put €1,000 Gross per month into a pension it would now cost you €800 after tax relief instead of €590 per month.

2 posts in and both of them plugging your iPhone App


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## kramer2006 (24 Nov 2010)

My advice: find a good broker - get a recommendation from someone. In my experience, if you go directly to one of the life companies they will rip you off on charges. I got screwed by doing this. When I realised what was happening, I wound up my policy and took out a new one.


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## kramer2006 (24 Nov 2010)

OnOff2011 said:


> I found a great tool in the app store (the Money wizard) which I use all the time for these types of calculations. Using their Retirement tool, you can work out how much pension fund you need to build up.





DB74 said:


> 2 posts in and both of them plugging your iPhone App



Agreed. Post reported.


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## MrEBear (24 Nov 2010)

Hi Kramer, thanks for the reply, I appreciate the advice. I've contacted the broker that deals with my life assurance (my mam insisted I have this) to see what he can do for me. 

Thanks to those who offered creative advice and to those who only belittled the question I asked please remember, if you don't have anything nice to say don't say anything at all. Bear


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## circle (24 Nov 2010)

MrEBear said:


> I've contacted the broker that deals with my life assurance (my mam insisted I have this) to see what he can do for me.


 
It would be unusual for a 25 year old to have a life assurance policy - do you have dependants?


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## marti18 (24 Nov 2010)

MrEBear said:


> Hi Kramer, thanks for the reply, I appreciate the advice. I've contacted the broker that deals with my life assurance (my mam insisted I have this) to see what he can do for me.
> 
> Thanks to those who offered creative advice and to those who only belittled the question I asked please remember, if you don't have anything nice to say don't say anything at all. Bear


 
Bear you must face the facts..  a broker will sit with you and smile like a cat knowing that he will get a percentage for the first year while you on the other hand may not see the full value of your pension EVER!  trust me i know people who lost years of paying into a pension with nothing to show for it.

you may think my advice is unconstructive but sadly its the truth. if i were to put away X amount a week at the minute i would buy a house as you can get excellent value in houses ATM     at least after x amount of years its worth something which cannot be said for a pension.........


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## LDFerguson (25 Nov 2010)

marti18 said:


> Bear you must face the facts.. a broker will sit with you and smile like a cat knowing that he will get a percentage for the first year while you on the other hand may not see the full value of your pension EVER! trust me i know people who lost years of paying into a pension with nothing to show for it.
> 
> you may think my advice is unconstructive but sadly its the truth. if i were to put away X amount a week at the minute i would buy a house as you can get excellent value in houses ATM at least after x amount of years its worth something which cannot be said for a pension.........


 
You sound like someone who had a bad experience with a pension policy and are now throwing the baby out with the bathwater. If you had a bad experience with buying and selling shares, due to bad advice, excessive stockbroker fees or simply bad luck on your investments, would you therefore conclude that buying in shares was a bad idea?

I've been working in financial services for twenty one years (latterly as a broker) and have never come across a single person who has lost all their money in a pension policy. I have come across those who got out less than what they put in. This is usually down to one or several factors: - 

(1) Excessive charges. You should always check with the broker or salesperson as to what exactly the charges are before you sign up. If you're not happy to pay these charges, don't sign up. 

(2) Investments that go down in value. There are many many pension funds to choose from. Some are guaranteed never to fall in value. Some will fall as well as rise from time to time. If you don't understand or accept why funds fall from time to time, you should opt for ones that don't. 

My own pension fund is currently worth about 90% of what I've put in. I'm perfectly happy with that performance as it includes a significant drop during 2008 and I'm looking forward to the recovery. When you take into account the tax relief at 41% I'm well ahead, even if I get taxed at a lower rate when I retire. 

I'm interested to hear that you'd invest in Irish residential property at the moment, with no tax relief, the NPPR, a looming property tax, tax on rental income etc. If you did that and it transpired that Irish house prices fell further from when you bought, would you conclude that buying a house is a bad idea too?


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## marti18 (25 Nov 2010)

LDFerguson said:


> You sound like someone who had a bad experience with a pension policy and are now throwing the baby out with the bathwater. If you had a bad experience with buying and selling shares, due to bad advice, excessive stockbroker fees or simply bad luck on your investments, would you therefore conclude that buying in shares was a bad idea?
> 
> I've been working in financial services for twenty one years (latterly as a broker) and have never come across a single person who has lost all their money in a pension policy. I have come across those who got out less than what they put in. This is usually down to one or several factors: -
> 
> ...


 

OK where shall i start......

1- how can a company like irish life canada life etc predict what your pension maybe in say 2045 when you retire?    have they a crystal ball?

2- tax relief is great but also the cut for the broker is also great as the first year goes to the broker!  corect or not?

3- when you do achieve the magical day and your pension is ready to collect and is not sufficent enough for your needs you will be accessed if applying for additional help from welfare....so in other words you will miss out on medical card etc etc

4- as i explained previously in my posts' - yes buying property is far far more superior than buying a pension. at the end of the day the property is worth something to you or your partner dead or alive    a pension on the other hand.......hmmmm what % does your partner get when you die.......after busting your backside for years to pay into an unknown investment!!!?

5- with the state of the country ATM whats to say that tax relief on pensions where to be abolished......would pensions be such a great idea in your opinion then?

6- you may well say that ATM property is a bad investment.....youd be totally wrong. for a young chap at 25 id rather see him buy a house than waste thousands on a pension

7- the only pension worth buying into would bea state pension through a civil service career

i can go on and on but bottom line is that whatever advice this young man gets is to stay well clear of a pension. at least with a property he can rent it out but with a pension what can he do...PAY INTO IT PERIOD!!!


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## LDFerguson (25 Nov 2010)

marti18 said:


> 1- how can a company like irish life canada life etc predict what your pension maybe in say 2045 when you retire? have they a crystal ball?


 
Not as far as I know. In fact you should never buy any form of investment from a person or company who claims they can predict the future. 



marti18 said:


> 2- tax relief is great but also the cut for the broker is also great as the first year goes to the broker! corect or not?


 
Totally incorrect. No pension product pays the first year's contributions to the broker. If someone tried to sell you a product like that, why on earth would you sign up to it? Commissions must be disclosed at point of sale. 

It's specified by law that the charges on any Standard PRSA from ANY company can be no more than 5% of each contribution and 1% of the fund per year. That must include ALL charges - commissions to brokers or salespeople, fund manager charges, pension company administration and documentation fees - the lot. 



marti18 said:


> 3- when you do achieve the magical day and your pension is ready to collect and is not sufficent enough for your needs you will be accessed if applying for additional help from welfare....so in other words you will miss out on medical card etc etc


 
So are you suggesting that it's a better long-term plan for a 25 year old to have so few assets accumulated at retirement that he can qualify for a medical card and other means-tested State benefits? 



marti18 said:


> 4- as i explained previously in my posts' - yes buying property is far far more superior than buying a pension. at the end of the day the property is worth something to you or your partner dead or alive a pension on the other hand.......hmmmm what % does your partner get when you die.......after busting your backside for years to pay into an unknown investment!!!?


 
If you die before retirement, your estate inherits 100% of your pension fund. If you die after retirement, depending on what sort of pension vehicle you choose, your estate can also inherit 100% of an Approved Retirement Fund. 

I've already explained in my previous post why buying a house is a very poor investment from a tax efficiency perspective compared with a pension.



marti18 said:


> 5- with the state of the country ATM whats to say that tax relief on pensions where to be abolished......would pensions be such a great idea in your opinion then?


 
The four year plan published yesterday did include measures to reduce (not abolish) tax relief over a gradual period on certain types of pension contribution, though not all. However, it's by no means certain that these recommendations will be implemented. The plan itself encourages people with alternative ideas to put them forward for discussion. 

But even if some future Government did decide to abolish tax relief on pension contributions in the future, I would certainly recommend then that clients stop making pension contributions and seek some other form of saving for the future. 

On the house side, if you've bought a house and some future Government decides to introduce some form of penal property taxes, you can't simply stop contributions. You're lumbered with it and will incur substantial legal and estate agency fees if you decide to sell...if you're not in negative equity and can actually sell the thing. 



marti18 said:


> 6- you may well say that ATM property is a bad investment.....youd be totally wrong. for a young chap at 25 id rather see him buy a house than waste thousands on a pension


 
This is your opinion. Can you back this up with any facts? Figures? 



marti18 said:


> 7- the only pension worth buying into would bea state pension through a civil service career


 
Another big sweeping statement. Can you back this one up with any facts? Figures? 



marti18 said:


> i can go on and on but bottom line is that whatever advice this young man gets is to stay well clear of a pension. at least with a property he can rent it out but with a pension what can he do...PAY INTO IT PERIOD!!!


 
I too could go on and on about how wrong that advice would be. Here's just a few random phrases to do with property investment that spring to mind...negative equity, rising interest rates, falling rents, rent not covering mortgage, getting calls at all hours of day and night from tenants, costs of repairs to the property, periods of no rent, keeping records for the taxman, etc. etc.

Despite all the above, I still believe that buying a property as an investment can be a good idea for certain people, if the particulars of the purchase make sense for their situation. Equally, I believe that contributing to a pension is not suitable for everyone. 

But to suggest that contributing to any form of private pension is a bad idea for anyone and that buying a house is automatically better for someone whose circumstances you know nothing about is simply wrong.


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## marti18 (25 Nov 2010)

LDFerguson said:


> Not as far as I know. In fact you should never buy any form of investment from a person or company who claims they can predict the future.
> 
> 
> 
> ...


 

1- his circumstances must be good if hes thinking about investing ina pension till his retirement age which canbe from 55-65.

2- for a broker, what are the advantages to selling pensions, your telling me theres zero commission!?

3- irish life do predict/forecast what your pension maybe valued at when you reach X age while paying X amount....THIS IS FACT!! 

4- depending on what pension you have your state will inherit it....as you said depends on what pension! honestly i never heard of them paying 100% 

5-yes i would state that investing in property at this young mans age seriously outweights a performance of a pension

6- rent and so on can be a pain but its money assisting your investment every single month- someone else is paying your investment whereas a pension you pay out of your pocket every single month till its up

7- if this chap does buy a house we can all clearly see that ireland is nearly rock bottom- taxes will increase but ATM prices are great value for a FTB

i can argue all day regarding this matter as its a great discussion but honestly if this was your son would you sell him a pension which he must pay full to get full benefits or advise him on bricks and mortar which has many more benefits


***** what happens when this chap later in life wants to buy a house,  maybe hell have to freeze pension leading to decrease in pension at retirement age or decrease payments period leading to same!


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## Marietta (25 Nov 2010)

I am aware of numerous people who are very unhappy with their pensions, some have been wiped out completely then again they invested in bank shares...


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## marti18 (25 Nov 2010)

Marietta said:


> I am aware of numerous people who are very unhappy with their pensions, some have been wiped out completely then again they invested in bank shares...


 

Marietta,

            youve only tipped the iceberg......the institutions and brokers try to keep this quiet but us real people are the people who get F'ed while they get comissions as this is fact no matter wat people think


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## LDFerguson (25 Nov 2010)

Of course there's commission for a broker for arranging a pension.  As I said, the charges I quote above include commission and charges.  Even after commission and charges to the pension company, the customer still gets 95% of each and every contribution invested, subject then only to a 1% annual fund management charge.  This is the charge for any Standard PRSA from any company.  Some online brokers arrange PRSAs with even lower charges than this.  Google PRSA and see.

I think you're mistaking a written illustration with a forecast.  Any written ilustration anyone receives from any pension company clearly states that it is NOT a forecast/prediction nor intended as such.  It's merely an illustration of what your fund could be worth IF certain assumptions made are met.  

Google "Approved Retirement Fund Death" and you'll see that an Approved Retirement Fund can be inherited 100%.

As regards my own family, over the years I've arranged both pensions and finance for house purchases for family members.  I'll certainly be encouraging my own kids to start making pension contributions from an early age.   



> 5-yes i would state that investing in property at this young mans age seriously outweights a performance of a pension


 


> 7- if this chap does buy a house we can all clearly see that ireland is nearly rock bottom


 
You'd need a crystal ball to predict either of those!


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## marti18 (25 Nov 2010)

LDFerguson said:


> Of course there's commission for a broker for arranging a pension. As I said, the charges I quote above include commission and charges. Even after commission and charges to the pension company, the customer still gets 95% of each and every contribution invested, subject then only to a 1% annual fund management charge. This is the charge for any Standard PRSA from any company. Some online brokers arrange PRSAs with even lower charges than this. Google PRSA and see.
> 
> I think you're mistaking a written illustration with a forecast. Any written ilustration anyone receives from any pension company clearly states that it is NOT a forecast/prediction nor intended as such. It's merely an illustration of what your fund could be worth IF certain assumptions made are met.
> 
> ...


 

LD great discussion but i know i can cross examine and deflect your posts' regarding pensions. there are for and againsts' but im totally against so for this matter im not going to bore other posters with this topic but thanks again for the discussion!


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## LDFerguson (29 Nov 2010)

Fair enough.  I know I could answer and disprove each and every criticism you put forward, but I guess we'd better agree to disagree before we send others to sleep.  Cheers.


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## MrEBear (29 Nov 2010)

Hi everyone, thanks for all the replies. I've read all the posts up to date and marti not to say you are 100% correct but you do make a good point, a house may actually be a better investment than a pension, but tbh I had thought it may be a bit early to consider buying as I'm not sure where I'll be in the next ten or twenty years. I'm in a fairly secure job but there's not advancement opportunities where I am and would hate for location to be a deciding issue if I wanted to change jobs, but you have deffinately given me something to think about. 

Thanks for all the replies everybody and I'll let you all know what I decide to do. Bear


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