# What to do for pension



## snowflake (9 Oct 2008)

Age: 39
Spouse’s/Partner's age: 40
Annual gross income from employment or profession: 35k
Annual gross income of spouse: 37k plus bonus depending on sales
Type of employment: both self-employed 
In general are you spending more than you earn or are you saving? Saving
Rough estimate of value of home 550k
Amount outstanding on your mortgage: 120k
What interest rate are you paying? 5.7% EBS tracker
Other borrowings – none
Do you pay off your full credit card balance each month? yes
Savings and investments: none
Do you have a pension scheme? no
Do you own any investment or other property? no
Ages of children: none
Life insurance: no
*What specific question do you have or what issues are of concern to you?
*In this uncertain time, how do we save for a pension? Have been bitterly disappointed with money put into pension worth less than we put in. Property not a good bet at the moment, but would still consider property, as we are looking at long term 20 years to retirement. I know there is tax advantages to pensions, but I really have a problem paying into one that is loosing money.


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## ClubMan (9 Oct 2008)

snowflake said:


> Do you have a pension scheme? no
> 
> ...
> 
> Have been bitterly disappointed with money put into pension worth less than we put in. Property not a good bet at the moment, but would still consider property, as we are looking at long term 20 years to retirement. I know there is tax advantages to pensions, but I really have a problem paying into one that is loosing money.


How have you been losing money (on paper) if you don't have any pension in the first place? Remember that a pension is a long terms investment, has significant tax benefits and (depending on what you invest in) will experience fluctuations/volatility in value even though the long term trend should be upwards. If you are nervous about this volatility then you can always choose a lower risk fund etc.


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## PaddyW (9 Oct 2008)

Perhaps OP has stopped paying into pension fund?


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## snowflake (9 Oct 2008)

yes, pension was paid up when I moved from employed to self-employed. Are pensions still a good way of saving for retirement? After all the 100's of thousands wiped off people's pension funds lately?


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## ClubMan (9 Oct 2008)

snowflake said:


> yes, pension was paid up when I moved from employed to self-employed.


Your first post is misleading so.


> Are pensions still a good way of saving for retirement?


Of course. Tax benefits are significant and if you are concerned about volatility of certain (e.g. mainly or solely equity based) funds then there are others which are less risky to choose from. 


> After all the 100's of thousands wiped off people's pension funds lately?


On paper?


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## snowflake (9 Oct 2008)

sorry for the confusion, my pension was only for a few years and therefore I really don't count it as a pension to retire on and I can't pay into it anymore, so that's why I answered no to a pension.


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## Mr DT (9 Oct 2008)

You need to ask yourself a few questions.....like what age would you like to retire, what kind of income you believe you would need to survive, your attitude to risk etc etc.

Tax beneifits are massive and as its a long term investment things will come back in the markets. A balanced portfolio of cash, bonds, equity, property etc is ideal. 

A least you are doing something about it now which is great. I would seek professional advice to be honest but be prepared that you have left it late to save for retirement, at your age you might need to be putting substantial money away each money. Obviously this will depend on the questions you need to ask yourself.


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## infinity (9 Oct 2008)

ClubMan said:


> .
> On paper?


 
what about people retiring now or in the next few years ?


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## Askar (10 Oct 2008)

While the tax benefits might be good assuming you are taxed at the higher rate, the Irish fund managers are much too expensive imo, especially considering how poorly they have historically managed money (per rubicon figures) compared to basic indices and inflation. Over the relevant period that 1/5% fee can amount to an enormous chunk of any potential return (assuming that manager can even manage a positive return). In fact, I would bet that few people with pensions have any idea what their total expense ratio is and how their fund performs relative to other funds. 

I remember one brochure for an AVC which gave the exact same description for its low and medium risk funds. While it used words like GARP and value investing it had almost the worst track record of practically all Irish funds - which is saying a lot.

Interesting that no US fund manager took up Buffetts original bet that 10 of the fund managers funds would not beat S&P 500 tracker at an expense ratio of 0.15%.


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## LDFerguson (10 Oct 2008)

infinity said:


> what about people retiring now or in the next few years ?


 
Such people should have switched out equity or other potentially volatile asset classes some years ago.  This is standard practice for any lifestyle pension fund or default investment strategy on PRSAs.  

If people are re-investing their pension fund in Approved Retirement Funds they simply roll over into a similar fund without capitalising any paper loss.  

If there are people who don't fall into the above two categories, they have not received good advice and have my sympathy.


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## infinity (11 Oct 2008)

LDFerguson said:


> Such people should have switched out equity or other potentially volatile asset classes some years ago.



that still doesn't answer my original point. what about people who are at that stage _now_ - i.e. their pension fund manager wants to switch out of equities this week - not a few years ago. what happens to people retiring in 2 or 3 years time ?? 

not being pedantic - but lots of people mention "paper losses" when pension funds are being discussed at the moment - but surely _somebody _is losing out at the moment or coming years ?


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## LDFerguson (11 Oct 2008)

If someone is in an equity-based pension fund now and wants to retire they have two choices - take the hit now and retire or defer retirement.  

This is the very reason why everyone should review their pension fund at a minimum of five years prior to their planned retirement, if they're not planning to invest in an ARF.


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