# Start pension at age 43?



## Foodie1 (20 Dec 2016)

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.


----------



## Gerry Canning (20 Dec 2016)

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 !


----------



## Conan (20 Dec 2016)

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.


----------



## LS400 (20 Dec 2016)

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.


----------



## Steven Barrett (20 Dec 2016)

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


----------



## Foodie1 (20 Dec 2016)

Thanks to all. So a bit of a divide as to whether we should do it. We also feel the same way.


----------



## Gordon Gekko (20 Dec 2016)

It would be utterly insane to not fund a pension if one can.

There is no divide.


----------



## Gordon Gekko (20 Dec 2016)

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."


----------



## PyritePete (20 Dec 2016)

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


----------



## Sarenco (20 Dec 2016)

Why wouldn't you invest to supplement your retirement income through a tax-advantaged pension vehicle?


----------



## Gordon Gekko (20 Dec 2016)

PyritePete said:


> as per LS400's post, would have needed to pay in a huge amount to have funds at the end.
> 
> I dont know how other posters can say there is no divide



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.


----------



## PyritePete (20 Dec 2016)

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.


----------



## LS400 (20 Dec 2016)

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.


----------



## Sarenco (20 Dec 2016)

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?


----------



## LS400 (20 Dec 2016)

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.


----------



## Sarenco (20 Dec 2016)

LS400 said:


> This is about suggesting a route at this specific point in his life, and starting a pension now is not the way forward.



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.


----------



## moneybox (20 Dec 2016)

Put it  under the matteess, better than the pension fund managers taking their big cut over the next 25 years.


----------



## Gordon Gekko (20 Dec 2016)

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!


----------



## moneybox (20 Dec 2016)

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.


----------



## PyritePete (20 Dec 2016)

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.


----------



## Gordon Gekko (20 Dec 2016)

moneybox said:


> 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.



Plenty I would venture if they are willing to make sacrifices. I deliberately used a modest salary to illustrate the power and tax efficiency of a pension.

And in any event, the counterargument being presented thus far is that 43 is "too late" and that pensions are somehow a grand swindle. Surprise surprise, when those arguments are blown out of the water, others magically appear.


----------



## moneybox (20 Dec 2016)

Gordon Gekko said:


> Plenty I would venture if they are willing to make sacrifices. I deliberately used a modest salary to illustrate the power and tax efficiency of a pension.
> 
> And in any event, the counterargument being presented thus far is that 43 is "too late" and that pensions are somehow a grand swindle. Surprise surprise, when those arguments are blown out of the water, others magically appear.



Can you explain why  60℅ of private sector workers have no pension. If they are only on the marginal rate of tax  it is not worth their while.


----------



## Sarenco (20 Dec 2016)

PyritePete said:


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



Eh, I didn't say that anybody suggested doing nothing.  I simply asked what was your alternative suggestion?

Moneybox has suggested putting it under the mattress in which case it will inevitably lose a considerable amount of purchasing power over the next 22 years.  Can you remember what a pint of milk cost 22 years ago?


----------



## PyritePete (20 Dec 2016)

Make sacrifices ? Isn't that what paying into a pension fund at 43 would be doing ?

Paying into a pension at 43 is madness. No counter-argument needed from someone who already decided not to do this. What did you do regarding your situation, if you dont mind me asking ?

Who mentioned it being a great swindle ? 

If these (counter) arguments are so compelling then why didn't I do it ? Please advise.


----------



## LS400 (20 Dec 2016)

I think Foodi could answer the question about being in a position to contribute so much over such a long period, as this is her question.

But, and as pointed out above, most 43 year olds would not be in that luxurious position, so, well put and detailed as you have it Gordon, this would not be the road for many 43 year olds.


----------



## Sarenco (20 Dec 2016)

moneybox said:


> Can you explain why  60℅ of private sector workers have no pension.



Because they are badly advised?  

Again, what's the alternative?  I assume you weren't serious about the mattress stuffing option.


----------



## moneybox (20 Dec 2016)

...Well they can put it in a savings account and hopefully over time interest rates will rise, at least no one can get their hands on it only the saver.


----------



## PyritePete (20 Dec 2016)

apologies Sarenco, I misinterpreted your post. 

Your other post about being badly advised may hold some water.  

Paying an additional 900 p/m or €10k per year on top of other outgoings at 43 may also explain why 60% of private sector workers dont have a pension.

In my situation, I acknowledged that it "went against the grain" not to start a pension fund at a similar age (give or take) to the OP but I decided it was the best course of action.


----------



## moneybox (20 Dec 2016)

moneybox said:


> ...Well they can put it in a savings account and hopefully over time interest rates will rise, at least no one can get their hands on it only the saver.



Over a million Irish workers earn less than €30,000 a year, how can they afford to pay into a private pension with that sort of money plus pay all the other demands on them like astronomical rents, child care insurances etc etc.


----------



## moneybox (20 Dec 2016)

moneybox said:


> ...Well they can put it in a savings account and hopefully over time interest rates will rise, at least no one can get their hands on it only the saver.



Over a million Irish workers earn less than €30,000 a year, how can they afford to pay into a private pension with that sort of money plus pay all the other demands on them like astronomical rents, child care insurances etc etc.


----------



## Sarenco (20 Dec 2016)

PyritePete said:


> If these (counter) arguments are so compelling then why didn't I do it ?



Have you considered the possibility that you don't fully understand how pensions work?



moneybox said:


> ...Well they can put it in a savings account and hopefully over time interest rates will rise, at least no one can get their hands on it only the saver.



They can. 

But they would then have to pay income tax on the savings and then pay DIRT at a larcenous rate on the interest.  Pension contributions are made before deduction of any income tax and any investment income or capital gains can roll-up tax free once inside the pension wrapper.


----------



## PyritePete (20 Dec 2016)

Sarenco said:


> Have you considered the possibility that you don't fully understand how pensions work?
> 
> Now its definitely time for you to read above posts and mine where I have said I got advice from a financial advisor etc so yes I fully  understand how pensions work.


----------



## Steven Barrett (20 Dec 2016)

As long as you have something to provide you with an income in retirement, it doesn't matter what investment you have. Pensions are just the most tax efficient method. Saying 23 years of investment is too short is incorrect though. Would you say the same about buying an investment property, where after paying off all the debt and interest, you probably wouldn't begin to see a return until that length of time. 

People give out about the charges of pensions but charges have never been lower. Gone are the days when a broker got paid 60% of the first year's premium and the management fee was 4.5%! Now you can expect to pay 1% amc. Work out the difference over 23 years. 

People are always giving out about pensions not performing. It's not the pension, that's just an investment vehicle. It's the funds you have invested in and usually the investor moving in and out of funds all the time or leaving the money in cash for a prolonged period. Pick a fund with a decent amount of equity exposure and leave it for 20+ years and you'll do fine. Messing around will only cost you money. 

Steven
www.bluewaterfp.ie


----------



## Sarenco (20 Dec 2016)

@PyritePete

I have read your posts.  Carefully.

You asked why you didn't contribute to a pension and I simply asked whether there was a possibility that you didn't fully understand how pensions worked.  Lots of people don't.

If you did fully understand how pensions worked and there was some other reason why you still decided not to contribute to a pension, could you tell us what it was? I'm not having a go, it's a genuine question.


----------



## Gordon Gekko (20 Dec 2016)

moneybox said:


> ...Well they can put it in a savings account and hopefully over time interest rates will rise, at least no one can get their hands on it only the saver.



Insane advice. Utterly insane. Beyond ridiculous.


----------



## moneybox (20 Dec 2016)

Sarenco said:


> Because they are badly advised?
> 
> Absurd.


----------



## Gordon Gekko (20 Dec 2016)

PyritePete said:


> Paying into a pension at 43 is madness.
> 
> What did you do regarding your situation, if you dont mind me asking?



"Paying into a pension at 43 is madness"

This is one of the most incredible statements I've ever read on AAM. 

To answer your question, when I started working after college, I earned very little whilst training, but my employer would pay 5% of my salary into a pension fund if I matched it with 5%, so I did, even though I was a lower rate taxpayer. It was a no-brainer. The fund has grown at a decent rate and followed me whenever I've moved jobs. Charges have always been minimal. Now I'm in my 30s and I contribute the maximum allowable amount to my pension fund. I will continue to do so, and my employer will continue to juice that up with a meaningful level of contribution on their side. Pension funding is low hanging fruit in terms of building wealth. It really is.


----------



## Gordon Gekko (20 Dec 2016)

And I challenge the argument that a 43 year old on €50,000 a year can't find €5,000 to secure his/her future.

As for why so many people don't fund pensions...the State Pension is probably adequate for a huge amount of people. Retiring on €12,000 a year when you've earned €25,000 a year is arguably no hardship.


----------



## LS400 (20 Dec 2016)

Gordon, 
The point being made, is starting a pension at 43, not, as you are quoting, paying into a pension at 43. 
Completely different scenarios.


----------



## LS400 (20 Dec 2016)

Stephen,

I would much rather invest in a property at that age than start a pension.
There are so many reasons that out weight this.

10 years into the pension, god forbid your circumstances change..your goosed unless you can continue with the same payments and employers contributions.


----------



## Gordon Gekko (20 Dec 2016)

LS400 said:


> Gordon,
> The point being made, is starting a pension at 43, not, as you are quoting, paying into a pension at 43.
> Completely different scenarios.



No it's not. I have always been referring to starting a pension at 43.

Your argument is ludicrous. It's akin to not giving up smoking at 43 because "it's  too late".

22 years of tax-free compounding can do wonderful things.


----------



## odyssey06 (20 Dec 2016)

LS400 said:


> I would much rather invest in a property at that age than start a pension.
> There are so many reasons that out weight this.
> 10 years into the pension, god forbid your circumstances change..your goosed unless you can continue with the same payments and employers contributions.



Doesn't that advice count double re: a property in investment? If your circumstances change how will you afford the repayments?


----------



## Gordon Gekko (20 Dec 2016)

LS400 said:


> Stephen,
> 
> I would much rather invest in a property at that age than start a pension.
> There are so many reasons that out weight this



No there aren't.

Say I'm 43 and a higher rate taxpayer.

I earn €100. I end up with €48. I buy a property for €48. It generates income of €2.40 a year (5%), which nets me €1.15 after tax. Assume I leave the income in a current account paying zero interest and the property appreciates by 5% a year. At 65, it's worth €140 and I pay 33% CGT on my gain. I end up with €135 (€140 plus €25 income less €30 CGT).

Instead, for the same cost (€48) I can divert €80 into a pension fund. The pension fund then buys a much bigger and better property for €80 which generates income of €4 a year (also 5%) on which there is no tax. At 65, the pension fund sells the property which has grown in value at the same 5% rate. There is now a total of €322 in the fund. I get 25% tax free (€81) and then liquidate my ARF (the worst outcome for an ARF) which nets me a further €126.

€207 vs €135

Same rental yields, same cost to me. Pension yields me 53% more.


----------



## LS400 (20 Dec 2016)

Odyssey,
If your circumstances change, the property is still paying for itself, that's the pressure release there.


----------



## LS400 (20 Dec 2016)

Gordon,
You'd good with figures and can manipulate them to suit your argument any way you like.

When I started paying quite a reasonable pensionable amount over the last 20 years, had I put the same into a property in 1996
and had it generated 20 years rent, plus the amount that I have paid in contributions pension wise, I would be in a much better financial position than i am now.

These are hard facts, not some financial list I cobbled together to suit my argument.


----------



## LS400 (20 Dec 2016)

Also, I'm am free to change and adjust to suit my needs over the years to come.

My future is in my hands, and I can control it.


----------



## Fella (20 Dec 2016)

Paying into a pension makes sense if the rules don't change . 
There's going to be a massive shortfall in future years as we age as a nation , I firmly believe the government will raid private pensions like they have already to cover this shortfall so that's my main gripe with paying into a pension . 
If I was on high tax I'd pay some money into a pension but no more than 50% of what I wanted to invest , I'd manage the other 50% myself just in case they government did get stuck in with levies again which imo is more than likely .


----------



## Gordon Gekko (20 Dec 2016)

LS400 said:


> Gordon,
> You'd good with figures and can manipulate them to suit your argument any way you like.
> 
> When I started paying quite a reasonable pensionable amount over the last 20 years, had I put the same into a property in 1996
> ...



You are missing the point.

If a 43 year old makes two investments that cost the same, one via pension and one via personal monies, and they perform the same, the difference is incredibly stark.

€207 vs €135

And that ignores the fact that there's a free employer pension contribution at play!

Neglecting pension funding and investing personal monies as an alternative is bonkers.


----------



## PyritePete (20 Dec 2016)

@Sarenco - I didn't start the pension at that time as I didn't want the equivalent of a 2nd mortgage give or take and decided to pay off the mortgage quicker and then I can plan what to do. For me it was a case of being in control as much as possible. If I did join the pension scheme and then after 25 odd years or so after paying into it, it just didn't make sense to me. I researched it at that time and downloaded info from the Pensions Board website. I was self-employed.

@ Gordon - I should have written started not paying into a pension at 43. And as in any line of work, there are advisers who weren't good at their job, lets leave it like that. When I asked around at that time, would people start a pension at around the OP's age,  9 out of 10 said they wouldn't. And these were people who had started pensions donkeys years before.


----------



## Gordon Gekko (20 Dec 2016)

Fella said:


> Paying into a pension makes sense if the rules don't change .
> There's going to be a massive shortfall in future years as we age as a nation , I firmly believe the government will raid private pensions like they have already to cover this shortfall so that's my main gripe with paying into a pension .
> If I was on high tax I'd pay some money into a pension but no more than 50% of what I wanted to invest , I'd manage the other 50% myself just in case they government did get stuck in with levies again which imo is more than likely .



In the face of the biggest financial crisis the State has ever seen, a 0.75% levy (or thereabouts) was introduced.

So what might or might not happen is hardly a reason to condemn one's self to penury.

And don't forget that public sector pensions and pension funds are linked for the purposes of penalty taxes etc.

A pension of €25k a year will have a capital value of €750k, so anything done to hammer the chap with €750k in his fund will have to be done to the low ranking public servant which will have that lot burning effigies outside Buswells.

My own view is what's more likely is that the State Pension will become means tested or cease to keep pace with inflation, making it all the more important for people to provide for themselves.


----------



## Sarenco (20 Dec 2016)

Fella said:


> Paying into a pension makes sense if the rules don't change .



Pension rules will change in the future.  Of that I have no doubt.

So will the rules on income tax, capital gains tax, PRSI, USC, LPT, DIRT, Exit Tax, stamp duty, etc.  

We have now introduced rent control legislation - who can say for sure that we won't see the reintroduction of exchange controls in our lifetimes?  Or controls on the ownership of precious metals?

Never mind the prospect of the State failing to honour deposit guarantees the next time we have a financial emergency.

Sure, pensions come with political risk but what doesn't?  All investments are subject to political risk.

Again, a pension is just a tax efficient investment vehicle.  That's all.  

There is no particular reason to believe that pension vehicles are exposed to any greater level of political risk than any other type of investment structure.


----------



## Gordon Gekko (20 Dec 2016)

PyritePete said:


> When I asked around at that time, would people start a pension at around the OP's age,  9 out of 10 said they wouldn't. And these were people who had started pensions donkeys years before.



Which is genuinely appalling advice. It's up there with "sure why would you wear a cycling helmet", "you're 43 and you've smoked all your adult life, why stop now", or "why start exercising now, you're 43, it's too late".

And in any event, who in God's name would listen to 9 out of 10 punters who haven't a notion of what they're talking about?

Why not consult with a few independent experts on a flat fee basis?

The punter in the street hasn't a clue about this sort of stuff.


----------



## PyritePete (20 Dec 2016)

@ Gordon - if I understand it correctly, you are now saying that a pension of €25 k per year...2k a month into a pension ??


----------



## PyritePete (20 Dec 2016)

@ Gordon - no it is not appalling advice. these 9 out of 10 people are family & friends who started a pension and upon reflection said they wouldn't do it again.  In one of my previous posts I said i consulted a financial advisor without success.

You must be the punter in the street


----------



## PyritePete (20 Dec 2016)

anyway to the OP, I hope you can see that all that glitters is not gold. Good luck with your decision.


----------



## Sarenco (20 Dec 2016)

PyritePete said:


> @Sarenco - I didn't start the pension at that time as I didn't want the equivalent of a 2nd mortgage give or take and decided to pay off the mortgage quicker and then I can plan what to do. For me it was a case of being in control as much as possible.



Fair enough.  That's a legitimate financial approach.  I personally don't think it's the optimal approach but that's a different argument.

However, it's a big jump from there to say that it's madness for a 43 year-old to start contributing to a pension.  For all we know the OP may not even have a mortgage.


----------



## Fella (20 Dec 2016)

Sarenco said:


> Pension rules will change in the future.  Of that I have no doubt.
> 
> So will the rules on income tax, capital gains tax, PRSI, USC, LPT, DIRT, Exit Tax, stamp duty, etc.
> 
> ...



I do understand that Sarenco and it's a valid point , but if I own a property and have rented it out and rules change I can decide to sell up and not bother with that investment property anymore. I feel very much locked in with a pension you can't access your money. 
If I have my money invested myself there is a huge advantage that I can access it and manage it and if needs be move it either out of the country - to another bank - to another currency etc etc . 
If the government decide to put a 1% levy on my private pension tomorrow there is nothing I can do. 

Like everything in life we don't know what will happen down the line, for me I'd rather sacrifice some tax relief and have access and control of at least part of my investments. If I was on the high tax ( which I'm not ) I would put some money in but I certainly woudnt have all my eggs in one basket , we are a small country and things can change quickly so like that i like quick access.


----------



## PyritePete (20 Dec 2016)

We can look at it from different angles and I can also say that for me to join a pension at 43 wouldn't be optimal. Different strokes for different folks and all that. 

Maybe LS400 put it better than me and it doesn't stack up.


----------



## LS400 (20 Dec 2016)

Sarenco,
I have pension, and I wouldn't discourage anyone at the right age starting one. 
This is not about the risks involved in your return, as I am aware every investment carries risks.

But I'm 100% against starting one this late in your working life. 

Certain things Gordon, are too late to start, there's no getting away from reality. I'm not talking health wise, Im talking financial wise. 

Since the op can't turn the clock back, its far better to take a different route to achieve a realistic goal, and starting a pension now is absolutely the wrong path with the choices available.


----------



## Sarenco (20 Dec 2016)

Well, lots of folks discovered in the very recent past that they couldn't actually exit their BTL investments when things went south.

There is nothing to stop the Government applying a levy on brokerage accounts held by Irish tax payers and preventing them from moving money overseas.  Don't fool yourself into thinking otherwise.


----------



## Sarenco (21 Dec 2016)

LS400 said:


> Since the op can't turn the clock back, its far better to take a different route to achieve a realistic goal, and starting a pension now is absolutely the wrong path with the choices available.



I've got that but since you won't tell us about this "alternative route" this is starting to get very repetitive. 

Again, what's your alternative approach for supplementing your retirement income?


----------



## LS400 (21 Dec 2016)

Blimey, do you want me to name the property and location,, I've been banging on about that route all evening.


----------



## LS400 (21 Dec 2016)

Yes, property eventually went south, but if we were to adopt that attitude with the pension crisis of late, you would run a mile from any pension guru who came within touching distance of you.

On the balance of probabilities, I have full confidence, my route would see a better return.


----------



## Sarenco (21 Dec 2016)

LS400 said:


> Blimey, do you want me to name the property and location,, I've been banging on about that route all evening.



So your "alternative route" is to simply to invest in property?  You can invest in property through a pension vehicle and Gordon has already shown you in some detail why that works out to be a better approach.

I strongly suspected that you didn't really understand how pensions worked. Now I know you don't.


----------



## Gordon Gekko (21 Dec 2016)

PyritePete said:


> @ Gordon - if I understand it correctly, you are now saying that a pension of €25 k per year...2k a month into a pension ??



Sorry, I don't understand your post.


----------



## Gordon Gekko (21 Dec 2016)

LS400 said:


> Yes, property eventually went south, but if we were to adopt that attitude with the pension crisis of late, you would run a mile from any pension guru who came within touching distance of you.
> 
> On the balance of probabilities, I have full confidence, my route would see a better return.



I have shown you why your "route" is demonstrably inferior. For a 43 year old, the same property investment with the same performance does 53% better in a pension vehicle. And that ignores the bonus of employer pension contributions.

I agree with Sarenco, you just don't understand pensions, which is a shame because your own wealth will suffer as a result. However, what we're trying to avoid is other poor souls (such as the OP) listening to your wild advice.


----------



## cremeegg (21 Dec 2016)

LS400 said:


> Gordon,
> You'd good with figures and can manipulate them to suit your argument any way you like.
> 
> When I started paying quite a reasonable pensionable amount over the last 20 years, had I put the same into a property in 1996
> ...



You might get a higher return on a property investment, than you would get on the typical equity/bond mix that pensions are generally invested in, or you might not. From 1996 property did well, from 2006 property did badly.

Whichever asset you choose to invest in, you will get tax advantages if you make the investment through a pension.

To reflect on your own experience, the reason you got a poor return was because your investments did badly. You would have gotten a better return if your investments did better. Either way you paid less tax because it was within a pension.


----------



## LS400 (21 Dec 2016)

Gordon,
Did you actually look at what you wrote,
Your talking about a chap who is 43 and starting to take out a pension, how in the name of god, can he build up enough in his pension to fund a property vehicle on which to satisfy an income within 22 years, bearing in mind, the last few years of his investment will go into a very low risk fund, which probably realistically gives the investment growth 15 years.
Your talking about a self administered pension, you need to have built up a sizable pot to do this. 

Your figures have been massaged completely, and totally biased with tunnell vision, towards taking out this pension, 

I dont profess to be an expert in this field,  I pay someone for advice, this same pension, agent, also has diverted into property as he admits a lot of people will be sorely disappointed on the maturity of their pension, unless they have the ability to pay substantial funds into it.  

So, I understand enough, to advise a 43 year old to give it a wide berth.


----------



## cremeegg (21 Dec 2016)

LS400 said:


> So, I understand enough, to advise a 43 year old to give it a wide berth.



Hi LS400,

Having read through this thread, I took what I thought was the strongest post against the OP taking out a pension. That is your post 45. I responded to it in detail. I thought that was a respectful way to address a poster with whom I disagreed.

Let me now try a different and perhaps more honest response. 

LS400, you don't know what you are talking about, and you are giving out dangerous advice.


----------



## PGF2016 (21 Dec 2016)

LS400 said:


> Gordon,
> Did you actually look at what you wrote,
> Your talking about a chap who is 43 and starting to take out a pension, how in the name of god, can he build up enough in his pension to fund a property vehicle on which to satisfy an income within 22 years, bearing in mind, the last few years of his investment will go into a very low risk fund, which probably realistically gives the investment growth 15 years.
> Your talking about a self administered pension, you need to have built up a sizable pot to do this.
> ...



Is the crux of your argument that buying a property allows you to leverage someone else's money (the renter) to build up a pension pot? The alternative is funding it through your own money. In this case you've two sources of income working versus one.


----------



## ixus (21 Dec 2016)

I see these discussion on here regularly and very rarely see any mention of how governments have recently raided pensions. Take Poland for example:

https://www.bloomberg.com/news/arti...ents-in-need-raid-private-retirement-accounts

It is a real risk. However,  Auto-enrollment is inevitable when you look at the state of pensions here and the lobbying of vested interests.

To the OP, what is your husbands employment position/earning bracket? Employee, self-employed, Director? High,medium,low earner? 

If say, he was a Director or high earner, he could avail of an executive Pension and plough a lot of earnings in tax efficiently. Potentially retire at 50/55 by winding up company.


----------



## Dan Murray (21 Dec 2016)

LS400 said:


> I also believe there should have been a penalty point type system put in place to tackle bad LLs, reach a certain point, and you are precluded form being such. This should entail, condition of property, attitude of LL, refunds of deposit etc.
> 
> This point systems should also be....



I've made the occasional provocative posts myself in the past - but LS400 seems to have the ability to troll at a far superior level. Many recent posts seem to be taking the sugar and salt rich confection for which Jacobs is renowned.


----------



## cremeegg (21 Dec 2016)

ixus said:


> I see these discussion on here regularly and very rarely see any mention of how governments have recently raided pensions. Take Poland for example:
> 
> https://www.bloomberg.com/news/arti...ents-in-need-raid-private-retirement-accounts



That is shocking


----------



## PyritePete (21 Dec 2016)

Gordon Gekko said:


> Sorry, I don't understand your post.



i didnot understand yours in the first place


----------



## Foodie1 (21 Dec 2016)

I am reading all these replies with great interest and some confusion. My husband is on 80k, PAYE earner.


----------



## Gordon Gekko (21 Dec 2016)

PyritePete said:


> i didnot understand yours in the first place



I'll take a leap here and try and answer a question which you haven't made clear.

- I modelled a scenario where a 43 year old on €50k could start a pension and end up with total pension income of €25k (i.e. State plus private) and €100k in the bank.

- Separately, you or someone else asked what I do. I contribute €23k a year on a personal basis which is the maximum and isn't shy of €2k a month. That costs me €1,200 a month after tax but I view it as vital and worthwhile expenditure. I'd prefer to have the €1,200 in my back pocket, but such is life.


----------



## PyritePete (21 Dec 2016)

Gordon Gekko said:


> I'll take a leap here and try and answer a question which you haven't made clear.
> 
> No, that was you. Leap away...
> 
> ...



Happy for you and I hope it works out. As I said earlier, I chose differently and I am comfortable with my decision. 

There's more than 1 way to skin a cat


----------



## Gordon Gekko (21 Dec 2016)

PyritePete said:


> Happy for you and I hope it works out. As I said earlier, I chose differently and I am comfortable with my decision.
> 
> There's more than 1 way to skin a cat



Yes, but some ways are better than others. This "I'll invest myself because pensions don't make sense" stuff is dangerous nonsense. My worry is that someone will listen to it. The pensions crisis is bad enough without utter tripe like this being disseminated.


----------



## ixus (21 Dec 2016)

80k per annum
Employer 3% = 2.4k

Age range:

40-49  Tax Relief 25%
50-54 30%
55-59 35%
60+ 40%

80k @25% = 20k.
less 2.4k (employer)
17.6K @40% relief = a cost of 7.04K to husband for 20K into pension. 

Start next year at 44 = 6 years of 20K @ cost of 7.04k = 120K pension @ 43.2k cost. (assuming no up or downside to investment or wages)

50-54 @ 30%= cost of 8.64k per annum with 24k contributed = 120k @ 43.2k cost

At 55, pension could be 240k from monthly contributions of 580 and 720 approx. Add another 128k from 55-59.

(someone will correct me if calculations are incorrect)


----------



## PyritePete (21 Dec 2016)

Yes some ways are better than others, mine ! And again, no its not nonsense. Its a matter of deciding what was/is best for people in their own situations. 

Why is the pension crisis bad enough ? 

Did you find out who said it being a great swindle ?


----------



## PyritePete (21 Dec 2016)

Foodie1 said:


> I am reading all these replies with great interest and some confusion. My husband is on 80k, PAYE earner.



Hi Foodie1,

as I mentioned earlier good luck with your decision. What I have posted is exactly my own experiences and why I didn't start a pension in my early to mid-forties. When I said i acknowledged it "going against the grain" I mean that I may be one of few that has chosen this path. Another poster (#67) has said that the investments performed poorly and my family & friends told me the same. Maybe they were poorly advised. 

At that time, I was told that by not starting a pension at around 43 (especially with a new job in your circumstances) that it was a gamble. I didn't see it that way at the time and I still dont. I'll be mortgage free sooner and then I can decide what to do. 

Please do research it thoroughly and maybe you can let us know what decision you arrived at.

Cheers,
Pete


----------



## PGF2016 (21 Dec 2016)

PyritePete said:


> Why is the pension crisis bad enough ?



Most people aren't preparing for their retirement and there will (soon) come a point when government can't afford to pay a decent pension (when the numbers in employment aren't large enough to support the growing numbers of retirees).


----------



## Gerry Canning (21 Dec 2016)

Foodie .
Hes on k80 .
1. Pension Tax relief = 40% = a huge plus.
2. Compnay are giving him 3% per annum = a huge plus.
3. @ 43 with 25 years contributions he protects your futures.
4. If you can pay mortgage off quicker , that is an ok option , provided you then have the discipline to then really increase pension contributions.
To me its a no brainer , ie go for it.NOW !


----------



## moneybox (21 Dec 2016)

PGF2016 said:


> Most people aren't preparing for their retirement and there will (soon) come a point when government can't afford to pay a decent pension (when the numbers in employment aren't large enough to support the growing numbers of retirees).



That argument has been doing the rounds for years, true, elderly population set to double or triple in next twenty years but sure they are thousands of young foreign workers coming to work and pay their taxes here who will no doubt multiply in numbers in years to come. 

Fact of the matter is over half of private sector workers in this country have no pension provision made because their can't afford it due to earning salary of €30,000 or less. It's not because they are badly advised.


----------



## trasneoir (21 Dec 2016)

LS400 said:


> Also, I'm am free to change and adjust to suit my needs over the years to come.


From this and a few other comments, I don't think you realise that contributions to PRSAs can be increased, reduced, or suspended indefinitely without penalty.



Fella said:


> if I own a property and have rented it out and rules change I can decide to sell up.


And hope the buyer/market hasn't taken the new rules into account when valuing your property?

I take your point that (taxed) equity in private property easier to cash out than equity in a pension scheme, but I don't think it's follows that it's less vulnerable to political whim. Beating up landlords is one of our oldest national sports - if the state ever gives up on it, I think the GAA will have to start a league.


----------



## Merowig (21 Dec 2016)

moneybox said:


> That argument has been doing the rounds for years, true, elderly population set to double or triple in next twenty years but sure they are thousands of young foreign workers coming to work and pay their taxes here who will no doubt multiply in numbers in years to come.


If the EU forces that Ireland changes its way how multinationals are taxed I doubt that that many working immigrants will continue to come here...



> Fact of the matter is over half of private sector workers in this country have no pension provision made because their can't afford it due to earning salary of €30,000 or less. It's not because they are badly advised.


My wife earns less than 30k - but has now started after my insistence as well a private pension. She makes only very small contributions - but it is better than nothing. Many people in Ireland have no "financial education". Or prefer to spend now more instead of saving for the future as Pension age lies far into the future and they don't see the importance of saving.


----------



## Gervan (21 Dec 2016)

I started paying into a pension scheme (private, wasn't allowed into the company scheme) in my mid-40s_,_ with an annual income of just over €20,000, not understanding that the money would probably never be mine. 
Having reached the age at which I could have drawn down the pension, I discussed my options with the bank representative, who advised the best thing I could do with this sum of about €25,000, was nothing. Just leave it. If I reach 75 it will be mine. Meanwhile the bank takes annual management fees, the pension levy helped itself to some more...
I don't think pension contributions on a small income, when there is no income tax advantage, are a good idea. I disagree that "small contributions are better than nothing". If I had put the money into something like a Regular Saver instead, I would now have access to it.
€12,000 a year seems like a very generous income, from where I am standing.
_



Gordon Gekko said:



			As for why so many people don't fund pensions...the State Pension is probably adequate for a huge amount of people. Retiring on €12,000 a year when you've earned €25,000 a year is arguably no hardship.
		
Click to expand...


_


----------



## LS400 (21 Dec 2016)

Well this has been a bit of a marathon,

Creamegg, I never said my pension performed poorly, Im quite lucky I started a long time ago, and yes you are correct about the tax incentive and employer contributions as with the amount I have being plowing into for years, has enabled me to now, do a self administered Pension and buy a reasonable sized property from which I will hopefully take advantage of in the near future.

You and Gordon are also correct that Im not an expert in this field, maybe you feel  posters should declare their suitability in certain topics before answering a post. I have contributed to many posts and given my opinion, this is my opinion so have the decency to respect it.

I have also ran this along side a property I bought 20 years ago, I dont want to sound smug, and dont consider this a boast, but these have performed fantastically, so it suited my needs.

There was luck involved, had I bought within the last 10 years, I would be singing a different tune. But here and now, at this present moment, it is what I am recommending. I would not and am not afraid to look at options outside a regular pension.

Dan, What can I say. Your contribution to this tread has been, well, rather lacking, if thats the best you can do. But on that note, and to reply,  I firmly believe bad LL will be held accountable in some form their actions in one way or another, I just hope your not too smug to acknowledge it when it does.

Foodie, thats a great Salary and puts him in a good position to contribute heavily to achieve his goal in 22 years.
But, and as this is a public forum, its not just about this 43 year olds on a top salary.

This is also about the average 43 year old here, being in a position to rely on an income aged 65, and, its out of the reach for many.


----------



## LS400 (21 Dec 2016)

Merowig, I think its great she has looked into doing something for retirement, this resonates with what my wife is doing and has been doing for quite a while, but on looking at maturity, we will be lucky to get two week in the canaries a year out of it.

So with pensions, you either have to pay handsomely into it, or dont be too disappointed at the end game.


----------



## Merowig (21 Dec 2016)

I see it as a start. No one expects a huge pension when only a small amount is payed in. Though if you have later 100 Euro more per month it already can be a help.

We also don't plan to retire here in Ireland. So purchasing power will be higher most likely where we will retire.


----------



## Foodie1 (21 Dec 2016)

We may be able to stretch to 400pm but its a big commitment for sure! Did not forsee such a heated debate on this subject but really appreciate all your comments.


----------



## LS400 (21 Dec 2016)

Foodie,
Appreciate you coming back with above post, that reinforces what I have been saying, at €400/ month, although I don't have the college degrees that other posters have here, I really really implore you go seek alternative investments other-than to rely on a pension based on that premium.

It's not there, and won't be there in 22 years.


----------



## Sarenco (21 Dec 2016)

LS400 said:


> It's not there, and won't be there in 22 years.



What does that mean?  What won't be where in 22 years?

I really don't want to be rude but, frankly, your posts are becoming increasingly nonsensical.


----------



## Merowig (21 Dec 2016)

Capital Gains tax is extremely high in Ireland in comparison to other countries, Interest rates are low and DIRT eats away on the little interest one receives. Property has the chance to bubble again and it seems Ireland gets rent controls.
Only a pension wrapper protects one from being taxed to death in Ireland.
Trying to maximise pension contributions is something everyone should do before investing in other fields.

The reason pension look unattractive is because the annuity rates are very unattractive. But people forget they cna shop around - and even transfer the pension pot to a pension vehicle outside of Ireland.
And then you have as well ARFs/AMRFs.


----------



## LS400 (21 Dec 2016)

Look at it this way, 
I have been putting away €600/month, for close to the 20 year mark into this pension, granted its probably been a net cost of 400 to me, I am now looking at a pot now of €280k if I should now cash in and purchase a property from the fund.
This is my intention for the next number of years, as with the tax free rent, I expect it to grow considerably. 
Not bad and I'm not complaining, but it wasn't easy with young kids and the many challenges financially in that time, I'm glad I didn't cash it in. 

This is the other side,
20 years ago with a small deposit I purchased a house, all went well, and in a short time purchase another and so on.

The rent paid the mortgage on all properties.
I'm a blue collar worker, and drive a 13 year old car and I can say I have sacrificed to take this road.

I ask you now and Gordon, who I said was good with figures. Based on what I have now..
3 in Ireland and 2 in the Uk,
Mortgage in total of €230k still to pay.
Conservative value of properties €1.1m

What would this have taken in pension funding to achieve, bearing in mind, they are running st approx the same time frame.

 I'm not posting these figures, and never have bragged in anyway shape or form to glote over anyone, and big myself up, but rightly or wrongly, I'm happy with the road I took.

If I have missed something here, and would have been better off going your route, I will be the first to hold my hands up and eat humble pie.

Yes it has been a risk, and as i said, had I got cought, I would be singing a different tune. But i didn't, and have know problems in promoting my journey. 

It's not for everyone, but it's me, not some government department controlling my future at the stroke of a pen.


----------



## odyssey06 (21 Dec 2016)

A small deposit got you property #1? And a little time later you were able to purchase another? Was it on a 100% mortgage or where did your second deposit come from?

Please give us the name of the bank in 2016 Ireland that will allow anyone to repeat that strategy given deposit rules and stress tests.
Remember one govt dept put those rules in place and now another has capped rent increases. 

A lot of people tried to execute your strategy but got caught up in the crash... maybe u had a bit more luck or skill or timed things better... but they ended up bust. It may have worked 15 years ago... or maybe not for some. I dont see it working today.

How many years would it take to save deposit?
When will the mortgage be paid off and the property start to return a positive yield? Before or after retirement age.?


----------



## Sarenco (21 Dec 2016)

So, the equivalent of €400 per month after tax over 20 years resulting in a pension pot of ~€280k, after all investment costs.  Are they the correct numbers?

That gives you an annual return just shy of 9.5%.

Do you really think you achieved that kind of annual return on your high-risk, leveraged property portfolio?

After all costs and taxes?

Not a snowball's chance in hell.


----------



## LS400 (22 Dec 2016)

Apologies, that should have been €180k, (Was a long day) enough for a 2 bed North Dublin. which i expect to let at approx €1000 going straight to the pension fund.
No, Odyssey, absolutely no to the 100% mortgage, I have worked bloody hard, and not afraid to get up on  Saturday and some times Sunday too.

I did say I sacrificed a lot, and some of that was family life, 

I also said I was lucky in this field, I have heard the horror stories, and have family who got cought. In 2011, i took risks, there were no guarantees, it could all go wrong for me tomorrow,  Maybe it wouldn't work to my extent today, but being very aware of the past in this field,  I have no fear in purchasing another now. 

I hope I have given people out there another option to consider and to look close at what the realistic gain will be, remember, I was never anti Pension, I just know now that what I thought was a good premium to be paying hasn't quite performed as I was led to believe, and the crux of the thread started by Foodie was the 43 year old, not the taking out of a pension.
This has been dragged in to a Private / Public sector    

So, I have to put on my blue collar and go fund my wonderful pension, so its over and out on this topic for me, 

I will have to check other threads over the next week or so and contribute my perils of wisdom.  Normally the mods would have chastised me by now due to my relentless 
defense. Another thing I proud of, no sin bin  

You can breath easier guys.

Its been nice swimming with the sharks. 

Merry Christmas to all

LS


----------



## Gordon Gekko (22 Dec 2016)

"perils of wisdom"

Is that a Freudian slip?


----------



## Gerry Canning (22 Dec 2016)

Back to the original post.

I am pleased for those who managed to make gains on property plays , and as they said that ain,t for everyone, and is risky.

I have no doubt = start that new pension now ..


----------



## PyritePete (22 Dec 2016)

Gordon Gekko said:


> "perils of wisdom"
> 
> Is that a Freudian slip?



I have read your posts...great swindle indeed


----------



## Sarenco (22 Dec 2016)

LS400 said:


> Apologies, that should have been €180k



Ok but that still equates to an annual return of nearly 6% on your money.  After all investment costs and taxes.

It is highly unlikely that your 2-bed rental will achieve anything like that kind of return.  You really need to properly account for costs and taxes if you want to make an apples-to-apples comparison.


----------



## PyritePete (22 Dec 2016)

LS400 said:


> Apologies, that should have been €180k, (Was a long day) enough for a 2 bed North Dublin. which i expect to let at approx €1000 going straight to the pension fund.
> No, Odyssey, absolutely no to the 100% mortgage, I have worked bloody hard, and not afraid to get up on  Saturday and some times Sunday too.
> 
> I did say I sacrificed a lot, and some of that was family life,
> ...


 LS400, I applaud your relentless defense. And a merry Christmas to you too.


----------



## Bronte (24 Dec 2016)

Sarenco said:


> Well, lots of folks discovered in the very recent past that they couldn't actually exit their BTL investments when things went south.
> 
> .



I'm taking issue with this. You are referring to reluctant landlords who bought high, intending to flip, and the investment never made sense from the get go.

If the rent doesn't mostly cover the mortgage and you don't stress test you are correct.

Also those still in NE ( I am on one ) it doesn't matter, not if the rents are basically covering everything. But the government has really made it difficult in the last few years.

You should think long term and not put yourself in a forced sale at the wrong time position.

As regards the OP. Unlike the 57 year old thread, I'd be for a pension. I don't think 43 is too old. But I'd want a worked example of the figures before I'd make a decision. And other investments, such as property, are not for  everybody.

My own experience is my OH. But he has a defined benefit pension that was based on employer contributions mostly, on a high salary,  and was about 20 years of contributions and will give him a decent pension at 65. He also has a small pension of 30k that will pay out 3k at 65 from Ireland, from before we left. The 30k is if we cashed it in.

Two cases scare me though. In relation to pension funds. Enron and the Waterford workers. And that reminds me. The lovely Green on his mega Yacht and the BHS workers left with little.


----------



## Sarenco (24 Dec 2016)

No, I wasn't referring to reluctant landlords particularly.

I was referring to the many thousands of people that bought BTLs prior to the crash and couldn't exit the market when rents plummeted because they found themselves in NE.


----------

