# Pensions are a gimmick



## dodo (4 Jan 2008)

Stifster said:


> Go interest only, pay the difference into a pension.



(Moderator note-split from )

 All this talk of paying into a pension sometimes is not as straight forward as it seems, I had  a pension with a big American company ,stated to one of the best around, after 10 goods years of stock markets doing well it was great, but since 9/11 the value has only gone up around 10% or so, I did not add in last 5 years as I left the company but still I thought I would have gained more than 2% a year, I was putting in 7% and employer 8% for 10years,some pension have lost alot of funds in same period aswell
I hear of very few people on the average wage bracket walking away with 100K or more when they retire.
I heard of many people who where told that if they want the  retirement money they where told , that they would now have to put in more money
If between worker and employer say  10% of average wage was put into pension each year, about 3,500 Euro x 40 years 140K, and say inflation was 3 % a year as in alot of the EU, would you get same 140K with inflation for 40 yrs ,I dont think so.
,I think it is a bit of a gimmick,I think op could be right about paying of mortgage even though that was not the question.


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## ClubMan (4 Jan 2008)

*Re: Most Tax efficient renting?*



dodo said:


> I think it is a bit of a gimmick


Dismissing pensions as a gimmick is surely a ridiculously sweeping statement?


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## dodo (4 Jan 2008)

*Re: Most Tax efficient renting?*



ClubMan said:


> Dismissing pensions as a gimmick is surely a ridiculously sweeping statement?


Well you will find out when you retire I guess,but do many average earner's get even 4 times their salary in a lump some when they retire I'm thinking,or even 70% of their current wage on a weekly basic, ask the question to people you know,I did and it does not even come close,it was just a thought,


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## ClubMan (4 Jan 2008)

*Re: Most Tax efficient renting?*

Where are you getting this 4 times salary lump sum figure from? I'm satisfied with how my pension investments are doing to date based on what I've put in and market performance in spite of obvious volatility over the years.


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## Trustmeh (5 Jan 2008)

*Re: Most Tax efficient renting?*

i think the issue with pensions is that no one starts them young enough anymore.  Also the fact that you might start one at a job, then when you leave that job you may have to start a new pension at the next job.  They arent all that flexible.  It would be nice if you start one at say 20 years of age that would stay with you for life (and your employer would contribute to that). But i dont think that will ever happen.


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## dodo (5 Jan 2008)

*Re: Most Tax efficient renting?*



ClubMan said:


> Where are you getting this 4 times salary lump sum figure from? I'm satisfied with how my pension investments are doing to date based on what I've put in and market performance in spite of obvious volatility over the years.


Happy new year clubman,
I was always told through different pension schemes in work ,that one should expect 4 times their salary when they retire at the least,or 70% of their current wage,that is something I was told by irish life many years back and it always stuck in my mind,and I think this does effect your state pension not sure though,
My Dad paid 4% and his employer the same for just over 30years, and he has always been just above the average wage,his policy was with  Irish life for some part then with Canada life,
He got a lump some of 16,000 euro and gets around 800.00 euro a month, does not seem alot to me for someone who has had 8% of his wage going into to a so called good pension, all I say is be weary and your pension might be doing good now but really that means nothing until your cash in when you retire,Can I ask you what % of your current wage would you expect when you retire on a weekly basic, I know In some Countries you automatically get 70% of your wage when you retire after you have paid into your pension during your working life,


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## ClubMan (5 Jan 2008)

*Re: Most Tax efficient renting?*



dodo said:


> Happy new year clubman,
> I was always told through different pension schemes in work ,that one should expect 4 times their salary when they retire at the least,or 70% of their current wage,that is something I was told by irish life many years back and it always stuck in my mind


Never heard such rules of thumb myself. Anyway they are probably not much use - what matters is how much you put in and the performance of the assets/funds in which you invest. There is obviously risk and volatility involved but to dismiss pensions as you seem to be doing is ridiculous.


> and I think this does effect your state pension not sure though


State contributory pensions are subject to _PRSI _contributions only and are not affected by means. Non-contributory pensions are means tested. On the other hand occupational or private pensions are normally paid net of any state pension which you qualify for.


> My Dad paid 4% and his employer the same for just over 30years, and he has always been just above the average wage,his policy was with  Irish life for some part then with Canada life,
> He got a lump some of 16,000 euro and gets around 800.00 euro a month, does not seem alot to me for someone who has had 8% of his wage going into to a so called good pension


8% is not an awful lot to be putting away though. And you cannot extrapolate from a single example such as this to the general case as there are so many factors that could have affected the ultimate payout.


> all I say is be weary and your pension might be doing good now but really that means nothing until your cash in when you retire,Can I ask you what % of your current wage would you expect when you retire on a weekly basic


No idea. Haven't assessed this. I just maximise my pension contributions to my age related tax relief limit because I can afford to for the past years and invest in relatively high risk/reward funds because I still have a good while to go. I do put a bit more thought than that into it but I not an awful lot!


> I know In some Countries you automatically get 70% of your wage when you retire after you have paid into your pension during your working life,


What countries? And what pension funds? State or occupational/private? Defined benefit (largely a dying breed) or defined contribution?


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## dodo (5 Jan 2008)

*Re: Most Tax efficient renting?*



> What countries? And what pension funds? State or occupational/private? Defined benefit (largely a dying breed) or defined contribution?



Finland is a Country who I am quite familar with , and that seems to be the case there 70% no matter what your job, My inlaws both retired one was school teacher and other was in private sector, both now get 70% of the wage they once where on before retirement. I think private pension is not really a big thing there as the state pension is done this way. Also if one was to find themselves in an old folks home regardless of what your pension net is automatically 80% is taking from your pension to pay for your care the other 20% is for your personell use.this 80% would include all earnings profit after tax paid, ie if you had your house rented out the net income would also have to be deducted 80% to pay for your care. So you could have one person with pension of 1000K a month in same Old folks home as someone with pension of 5000K a month.Pension's are also taxed if it is over a certain amount.
I also think that 8% into a pension would not be to far of the average in Ireland, As I said before I did for over 10Years put in 7% and my employer 8%, 15% of total earnings, and earning good salary. But looking at the stats through the years it is no where near where I was told it would be. 
 I think I should have a choice to where I want my employer to put his contribution, ie if I wanted it  to go into a high yield savings account along with my contributions which could not be touched until retirement, maybe their is such a thing ?
I  calculated 5k at 3% over 30yr using compound interest = 12,136 Euro, taking 5K  between combined contributions , so adding a minimum of 5K a year after that for each year and growing with wage increase and inflation, I dont know how to calculate in full but seems a good yield come retirement,  I know taxes are an issue but I think the 3% sample is on the low side.  Any idea how much this would amount to in 30years,


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## ClubMan (5 Jan 2008)

*Re: Most Tax efficient renting?*



dodo said:


> Finland is a Country who I am quite familar with , and that seems to be the case there 70% no matter what your job


Seems to be or is? And what rates of tax and social insurance apply there?


> I also think that 8% into a pension would not be to far of the average in Ireland


On what basis do you think this?


> I think I should have a choice to where I want my employer to put his contribution, ie if I wanted it  to go into a high yield savings account along with my contributions which could not be touched until retirement, maybe their is such a thing ?


Many occupational funds offer a range of funds investing in a range of assets. Many offer bond/cash funds but these are arguably not a good idea other than for those nearing retirement.


> I  calculated 5k at 3% over 30yr using compound interest = 12,136 Euro, taking 5K  between combined contributions , so adding a minimum of 5K a year after that for each year and growing with wage increase and inflation, I dont know how to calculate in full but seems a good yield come retirement,  I know taxes are an issue but I think the 3% sample is on the low side.  Any idea how much this would amount to in 30years,


You have totally ignored inflation. 3% gross or net could well be a zero or negative real return when you take it into account.


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## MMilken (6 Jan 2008)

Seems like a flawed argument, the argument from the OP seems to be:

State pensions are high in Finland
=> pension schemes in Ireland are a gimmick.

This takes no account of the fact that marginal tax rates may be higher, with a higher level of State Pension Contribution automatically deducted than in Ireland and also no ceiling on the level of salary on which the pension contribution is deducted.

This is no camparison to the State Pension system that applies in Ireland.

The OP seems to be comparing the Finnish State Pension System to Private Pensions in Ireland, a completely meaningless comparison.


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## GeneralZod (6 Jan 2008)

Since 2000 I've had €88k in contributions (employee + employer) into my DC pension. The value of the fund in September was €110k.  I'd have got better performance if it was invested in savings accounts. Pension provider is Canada Life.


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## ClubMan (6 Jan 2008)

But if you were saving in a deposit account then surely you would have only been able to save about half of the €88K since you presumably received c. 41% or 42% tax and 6% _PRSI_/health contribution relief on your contributions which you would not have received on deposit savings? And you would not have received the employer contribution. 

Note that €110K from €88K over 7 years is c. 3.24% net which would equate to a gross deposit interest rate of c. 4.05%. Are you sure that you would have consistently received that or better over the same period on deposit? I was just shredding some old statements and the _NR/Anglo _rates on offer over some of that period (the best on offer at the time) were c. 3.5% if I recall correctly.

Also - what charges apply to your _CL _scheme? These could be a significant drag on performance and not an attribute of pensions in general whatever about specific offerings.


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## CCOVICH (6 Jan 2008)

GeneralZod said:


> Since 2000 I've had €88k in contributions (employee + employer) into my DC pension. The value of the fund in September was €110k.  I'd have got better performance if it was invested in savings accounts. Pension provider is Canada Life.




What was the fund value in, say, March of 2007?


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## CCOVICH (6 Jan 2008)

MMilken said:


> Seems like a flawed argument, the argument from the OP seems to be:
> 
> State pensions are high in Finland
> => pension schemes in Ireland are a gimmick.
> ...



Exactly-_who_ funds 70% pensions in Finland?


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## GeneralZod (6 Jan 2008)

The tax relief is the saving grace.

I don't know what the charges are but they certainly aren't the best available if I was able to shop around. I should contact the trustees to request they get better value. 

Here's a breakdown of the contributions and fund value.


Date-----------Contributions-----Fund Value
March 2001    7k                     6k
March 2002    16k                   16k
March 2003    28k                   22k
March 2004    39k                   40k
Sept   2004    45k                   48k
March 2005    50k                   54k
March 2006    62k                   80k
Sept   2006    67k                   86k
March 2007    78k                   102k
Sept   2007    88k                   111k


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## Daddy (7 Jan 2008)

Expect another poor year in investment returns General Zod.

Agree the tax relief is the saving grace.

I'm with Canada Life/Setanta - returns very poor over last 5 years.

The original projections on taking out the pension showed projections based on 8% p.a.

Projections in the last few years have now changed to 6% p.a.

I've achieved about 2% over last 5 years.


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## ClubMan (7 Jan 2008)

Daddy said:


> The original projections on taking out the pension showed projections based on 8% p.a.
> 
> Projections in the last few years have now changed to 6% p.a.


Those projections are meaningless in terms of what might actually happen. They are just done so that you can get projections using the same figures from a number of providers and based on those compare the net effect of charges on performance.


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## MMilken (7 Jan 2008)

The Financial Regulator adjusted the max projection rate that may be used by regulated firms from 8% to 6% in about 2003, that is why it changed.


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## GeneralZod (7 Jan 2008)

Clubman, you mentioned you're happy enough with the performance you've got over the years. What sort of return have you got and who's the provider if I may be so impertinent to ask?


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## ClubMan (7 Jan 2008)

I don't have the figures handy. I have three pensions at the moment:
_Hibernian _personal pension plan - single contribution a few years ago plus the recent transfer of my _Equitable Life WP/UL _pension fund late 2007. Performance on the _EL _fund overall was a disaster for obvious reasons - just about breakeven in nominal terms since late 90s/early 2000s.
_Irish Life _buy-out bond into which I transferred previous occupational scheme funds (from three previous employments consecutively and transferred each time I moved)
_Eagle Star PRSA _which I have been contributing to for a few years now and which my current employer facilitates contributions to and matches 6%.
I have a good deal on charges on all three which minimises any drag on performance.


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## CCOVICH (7 Jan 2008)

GeneralZod-would you know what kind of asset allocation your _CL_ plan has/has had?


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## putsch (7 Jan 2008)

I agree with the title. Private pensions as currently set up are a very lucrative gimmick for the pension providers - fees are paid regardless of performance and the tax relief (paid for effectively by all the joe soaps many of whom are pensionless) masks very poor performances - many not giving a return in excess of off the street interest rates. 

As people have found alternatives to the traditional pension providers those companies have gone ballistic at the idea that the golden goose might be threatened. They have created an artifical head of steam about the % of people without pensions (what they mean is without pensions invested with them). And it looks as if the politicians will respond - talks about compusory pensions are ridiculous. Let the companies come up with risk sharing schemes i.e. their fees are dependant on performance - then we'll see the manager work for their money.


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## GeneralZod (7 Jan 2008)

CCOVICH said:


> GeneralZod-would you know what kind of asset allocation your _CL_ plan has/has had?



The allocation from the start has been 25% of premiums into each of:

CL/BIAM Pension Managed
CL/Setanta Pension Equity Fund
CL/Setanta Group Pension Managed I
CL/KBC Pension Managed

I believe the names/managers of these funds have changed since the start. I started making 10% AVCs in 2006.

I also have a personal pension plan from Standard Life set-up in 1998 and I stopped making payments into it in 2000. The asset allocation into that  is 10% Irish equity and 90% international equity. Total premiums were €17k and value of fund in April 2007 was €20k. Clearly €17k in 2000 money is worth a lot more than €20k in 2007 money.



putsch said:


> They have created an artifical head of steam about the % of people without pensions (what they mean is without pensions invested with them).
> 
> And it looks as if the politicians will respond - talks about compusory pensions are ridiculous. Let the companies come up with risk sharing schemes i.e. their fees are dependant on performance - then we'll see the manager work for their money.



Putsch, based on my experience over the last 10 years I strongly agree with you, in particular about how the pension industry is manipulating the agenda, they're riding on the discussion from the UK where the demographics are significantly different. After 10 years of a mostly booming Irish and World economy my returns have been appalling. I've little faith that by the time I retire my funds will be worth much more than the sum of the contributions. After inflation they might well be less than what was put in. The annuity rules will prevent me from accessing most of what little there is. It really is little wonder people look for other ways of funding their retirement such as property, present property price correction included. That said I don't like property because I wouldn't want the hassles but might eventually be reluctantly driven into it. I dearly hope to be proven wrong. For these reasons I'm attempting to invest separately from my pension. At least I'll only have myself to blame for the mistakes I'll make.


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## CCOVICH (7 Jan 2008)

The returns from Quinn Life for the  and  Freeway funds over the past 10 or so years were in excess of 11% p.a. (and that is to 30/11/2007 apparently), which appears to be quite a bit better than what GeneralZod is getting from CL.  Of course past performance is generally meaningless, but it is a useful benchmark in this context, as Quinn also offer these funds as pension products.  

But we are not necessarily comparing 'like with like' as I see that the word 'managed' appears in 3 out of the 4 funds owned by GeneralZod, whereas the Quinn funds are merely index trackers...

There are more than likely other (managed?) funds out there that will have done better (and worse), but I am familiar with Quinn down to having a little money in there myself, but if there are other examples out there, it would be useful to see them.

Of course a more balanced portfolio may include US, Asian and emerging markets, fixed income and cash, the returns on which could very well have dragged down overall portfolio performance over the same period.

It's not surprising that the pensions industry would scaremonger over pension coverage, they have a vested interest to do so.

So, what are the alternatives?  Do it yourself, i.e. you pick the assets/funds in which your pension contributions are invested?  Defined benefit for all?  Property (on its own)? Cash/fixed income?

Leaving aside pension fund performance for a minute, surely the tax relief on contributions is a good thing?


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## MMilken (7 Jan 2008)

This thread is in danger of turning into a nonsense with people who little or nothing about what they are talking about spewing out paragraphs about "poor joe public".

Tax relief is available to everyone on pensions.

PRSAs are also available to all - no annuity rules with these.

Pensions can also invest in property.

Property over the last two years in Ireland has truly proven to be an appalling investment so I think people need to get their head out of the sand and realise that they need to educate themselves about pensions and investments OR get an educated advisor.

Either way, spouting out nonsense on a forum is not going to help the situation.


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## ClubMan (7 Jan 2008)

MMilken said:


> This thread is in danger of turning into a nonsense with people who little or nothing about what they are talking about spewing out paragraphs about "poor joe public".


I agree - it's all a bit pointless. Blanket condemnations of pensions as a gimmick or some sort of plot by the financial industry against unsuspecting punters and pliable Governments are as facile as comparing what one person *thinks might *be the story with _Finnish _state pensions with _Irish _private pensions...


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## GeneralZod (8 Jan 2008)

CCOVICH said:


> But we are not necessarily comparing 'like with like' as I see that the word 'managed' appears in 3 out of the 4 funds owned by GeneralZod, whereas the Quinn funds are merely index trackers...
> 
> Of course a more balanced portfolio may include US, Asian and emerging markets, fixed income and cash, the returns on which could very well have dragged down overall portfolio performance over the same period.



Within the constraints of the funds that i can select within my occupational DC scheme I've stayed away from cash funds because I'm well away from retirement. The descriptions for the other funds say they're invested in a broad mix of Irish and International equities,   property bonds and cash. 



MMilken said:


> This thread is in danger of turning into a nonsense with people who little or nothing about what they are talking about spewing out paragraphs about "poor joe public".


I'm hoping for some constructive analysis of the information I've provided instead of dismissive replies. I believe the title of this thread is overly simplistic but there's something to it. For example the out performance of index tracker funds mentioned by CCOVICH aren't available to me through my occupational scheme. Traditional advice says equity investments won't necessarily make a return in the short term. Seven years is the figure I've seen to on average to hope for a decent return. After 10 years of investment in funds whose stated objective is to deliver long term growth the facts of the funds performance speak loudly.



MMilken said:


> Tax relief is available to everyone on pensions.


Several people have already acknowledged this as one of and possibly the main attraction of pension funds.



MMilken said:


> PRSAs are also available to all - no annuity rules with these.


Yes. I wouldn't have started making AVCs unless otherwise.



MMilken said:


> Pensions can also invest in property.


That is an asset class that my managed funds are invested in.

I'm hoping this thread can continue in a constructive manner.


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## MMilken (8 Jan 2008)

GeneralZod said:


> I'm hoping for some constructive analysis of the information I've provided instead of dismissive replies. I believe the title of this thread is overly simplistic but there's something to it. For example the out performance of index tracker funds mentioned by CCOVICH aren't available to me through my occupational scheme. Traditional advice says equity investments won't necessarily make a return in the short term. Seven years is the figure I've seen to on average to hope for a decent return. After 10 years of investment in funds whose stated objective is to deliver long term growth the facts of the funds performance speak loudly.
> 
> 
> Several people have already acknowledged this as one of and possibly the main attraction of pension funds.
> ...


Most company pension schemes allow access to passive (index tracking funds) - if not, then a person can ask the Trustees to make such a fund vailable...this is easily done, or opt out of their company's arrangement and set-up an index-tracking PRSA.

A Managed Fund would only have about 5% to 10% property, so the exposure would be low.

The average performance over the last three years is about 10% annual, the average over the last ten years is about 7% annual...the facts speak loudly...you are in a crap scheme or are picking bad funds.


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## z109 (8 Jan 2008)

MMilken said:


> The average performance over the last three years is about 10% annual, the average over the last ten years is about 7% annual...the facts speak loudly...you are in a crap scheme or are picking bad funds.


And the performance for the years before that? I seem to recall 2000/2001/2002 (down 10-20%), the late nineties (Asian currency crisis), the early nineties (UK property crash, Japan deflation) being appalling years. A few years of losses makes a huge dent in a pension fund that takes a long time to recover. In theory these funds should be invested 'safely' as they are a long-term investment, but it seems that they are stuffed into whatever the flavour of the month is:
- Japanese bubble
- Tech bubble
- Property bubble
- next? gold bubble? commodity bubble? BRIC bubble? Pick your poison, your mid-twenties pension manager who's never seen a bubble burst will stuff your money into it.

Try moving your funds from a non-performing fund to a better one? Prepare for opaque charges, long delays, arguments from the pension staff ("you're locking in the losses, why don't you speak to one of our investment managers").

The only thing that makes it worth doing is the tax relief. The pension companies know this and don't give a monkeys as long as they get their management fees.


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## boaber (8 Jan 2008)

yoganmahew said:


> And the performance for the years before that? I seem to recall 2000/2001/2002 (down 10-20%), the late nineties (Asian currency crisis), the early nineties (UK property crash, Japan deflation) being appalling years. A few years of losses makes a huge dent in a pension fund that takes a long time to recover. In theory these funds should be invested 'safely' as they are a long-term investment, but it seems that they are stuffed into whatever the flavour of the month is:
> - Japanese bubble
> - Tech bubble
> - Property bubble
> - next? gold bubble? commodity bubble? BRIC bubble? Pick your poison, your mid-twenties pension manager who's never seen a bubble burst will stuff your money into it.



This is a very sweeping statement and you seem to be picking out very specialised funds, rather than, say, a managed fund, which not only invests in different assets (e.g. Ireland, N. America, Europe, Property, Cash, Fixed Interest) but also invests in different sectors (e.g. Healthcare, Financials, Energy, Telecoms etc).

I'm no expert, but there's a lot more to fund management that just stuffing your money in a bubble.  Plus the people who make the final decisions are not the mid-twenty pension manager.




yoganmahew said:


> The only thing that makes it worth doing is the tax relief. The pension companies know this and don't give a monkeys as long as they get their management fees.



But the fund management fee is usually a % of the value of the assest, so if the value falls, the amount received by the fund manager falls


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## z109 (8 Jan 2008)

boaber said:


> This is a very sweeping statement and you seem to be picking out very specialised funds, rather than, say, a managed fund, which not only invests in different assets (e.g. Ireland, N. America, Europe, Property, Cash, Fixed Interest) but also invests in different sectors (e.g. Healthcare, Financials, Energy, Telecoms etc).
> 
> I'm no expert, but there's a lot more to fund management that just stuffing your money in a bubble.  Plus the people who make the final decisions are not the mid-twenty pension manager.
> 
> But the fund management fee is usually a % of the value of the assest, so if the value falls, the amount received by the fund manager falls


No, the funds I am referring to are BIAM or Natwest or the company pension fund that I was invested in. They were/are all general managed funds. Medium risk, as befits my age. On default investment strategy (i.e. every other sap is likely to have had the same losses).

I agree that there should be more to fund management than following the herd. I just don't see any evidence of it. The evidence that I do see (that trackers outperform managed funds) shows that they follow the herd up and down and hope to look good on a long-term average.

The management fee is the most outrageous part of the whole setup. Why should they get a fee if the fund goes down? Why should they get a % of the total asset and not a cut of the profits/share of the losses?


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## Sunny (8 Jan 2008)

boaber said:


> I'm no expert, but there's a lot more to fund management that just stuffing your money in a bubble. Plus the people who make the final decisions are not the mid-twenty pension manager.


 
There should be but have a look at most Irish Asset Managers allocation and see how many have gone very overweight the ISEQ in so called diversified global or European funds because it was easy money for a couple of years and they didn't have to do any work. 

I don't agree with the title of the thread but I would have some sympathy for the people who complain about the quality of asset managers and level of fees and charges involved in pensions for very little service and performance.


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## LDFerguson (8 Jan 2008)

I agree with MMilken's posts.  

The title of this thread is a wild over-generalisation.  There are undoubtedly reasons why certain individuals can be disappointed with their own pension arrangements, including, but not exclusively: - 


The performance of their chosen fund was poor.  Make sure always to check this over a meaningful time period, not just a short three or five year period.
The charges on their scheme were excessive.  It's undeniable that greedy elements in the pension industry, in both the sales and product provision ends, have produced some appaling contracts over the years.
They didn't understand that your retirement may last from 20 - 30 years and putting away a small amount of money for 10 years pre-retirement isn't going to fund an amazing lifestyle for 25 years afterwards.
But to jump from having a complaint about your own pension arrangement to branding the whole pensions industry a gimmick is throwing a whole family of babies out with the bathwater.  

If you're a 41% taxpayer, you can get up to 47% relief on your contributions.  Your chosen funds grow free of capital gains tax or tax on rents/dividends.  When you retire a sizaable portion of your fund (typically 25%; perhaps more in certain circumstances) will be tax free.  The balance will be taxed at less than the high-rate tax for all but the largest pensions.  

That's why pensions are not a gimmick.


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## boaber (8 Jan 2008)

yoganmahew said:


> I agree that there should be more to fund management than following the herd. I just don't see any evidence of it. The evidence that I do see (that trackers outperform managed funds) shows that they follow the herd up and down and hope to look good on a long-term average.



According to a press statement by _Mercer_ yesterday 





> 2007 also saw a significant divergence in the performance of Irish Managed Funds with a swing of 9.5% between the top and bottom performers. Over the 12 months, the top performing managed funds were AIBIM (1.3%) and Eagle Star (0.6%) while the bottom two were New Ireland (-8.2%) and BIAM (-7.6%).  Over 3 years Eagle Star and AIBIM take top position with a return of 12.3% p.a. each while BIAM and New Ireland were bottom at 6.4%. Over 5 years, Eagle Star remains at the top returning 12.1% p.a. with AIBIM a close second at 11.8%.


 Hardly evidence that all investment managers are following the herd.



Sunny said:


> There should be but have a look at most Irish Asset Managers allocation and see how many have gone very overweight the ISEQ in so called diversified global or European funds because it was easy money for a couple of years and they didn't have to do any work.


I agree a lot of "Managed" Funds were/are hevily weighted in Irish Equities.  Indeed some investment managers were stating this when their managed funds did not perform as well as others during times of growth.  They claim to be somewhat justified in their approach as their managed funds have not fallen as sharpely as others invested heavily in Irish Equities.


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## ClubMan (8 Jan 2008)

For people who baulk at paying intermediaries unless the investments are gaining in value would self directed/self administered schemes be an alternative option - i.e. do you pay lower or no charges on these compared to more common unit linked funds with a specific annual management fee charged on the gross fund value?

For the record I also believe that it's silly to expect the fund managers not to be paid simply because the fund does not grow over a specific period. There are few if any markets/assets which will not exhibit some (sometimes significant) volatility over time so this goes with the territory. In any case if a fund value remains static but all similar funds/assets/markets nosedive then surely the fund manager deserves to be paid because they have done *relatively *well?


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## LDFerguson (8 Jan 2008)

MMilken said:


> Because they are doing their job - if you did not earn money for your company in a given day do you think you should not be paid?


 


yoganmahew said:


> Yes.


 
Yoganmahew - your ideas are unworkable in the extreme.  Do you accept that (a) a fundamental feature of any investment above the level of deposit accounts is that investments will fall as well as rise in value and (b) it is impossible to predict which fund managers will outperform each other into the future?

If so, you are suggesting that all fund managers should take on a job in the knowledge that they will not be paid from time to time due to circumstances outside of their control.


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## Betsy Og (17 Jan 2008)

....errr, getting back to pensions

I point I want to bring up is the notion of "phased fund switching" which basically means that as you approach retirement more and more of your fund goes into deposits, government gilts, bonds etc. (i.e. very secure assets that are unlikely to fluctuate much).

This means that you shouldnt be totally screwed if you happen to retire during a bad year in the markets. I know its a basic statement but I think people may have this fear.

Diversification is key to avoiding big losses - dont put all your eggs in one basket (more basic commonsense). In my own case I've a AVC PRSA scheme with Eagle Star (together with a recent employer scheme) and so far I've diversified goodo into high risk stuff around the globe, its doing ok so far and maybe it'll tank some year or other but its got 20 years before I even start thinking about retirement. So on average across a wide portfolio I should be ok.

Also, when markets are down you buy in cheap - now you might also be "catching a falling knife", but with 20 years to play with then, on average, history would show that you should make returns above deposits/more secure investment.

With the tax relief involved I think its undeniable that pensions should form part of someones financial picture, notwithstanding the misgivings people have about various aspects of the industry (& I'm not in the industry myself).


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## dodo (17 Jan 2008)

*Re: Most Tax efficient renting?*



ClubMan said:


> Seems to be or is? And what rates of tax and social insurance apply there?
> 
> On what basis do you think this?
> 
> ...


EG of  Finnish Pension ,FIL get gross 3,400 euros  a month of this he gets 2,350,MIL gets  gross 2,400 a month of this she gets 1,900.euros, 
If the Irish markets where down 24% in  2007 as stated on the news this morning ,how does this effect Irish pension's in general ,I know pensions also invested abroad.  It is a bit like 4 guys play poker all night together and when you ask them all how did it go they all say they are up or broke even on the night.I have seen to many people burned when they go to collect their big promised pension only to be told that due to markets been down and things like 9/11 we cant give you what we promised. Ask around and see for yourself. How many times have people been told to add to their pension or face a bleek retirement,and still 20 yrs or more to go.


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## ClubMan (17 Jan 2008)

As already mentioned your comparison of the _Finnish _state pension system with occupational/private pensions in Ireland is meaningless.


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## dodo (18 Jan 2008)

ClubMan said:


> As already mentioned your comparison of the _Finnish _state pension system with occupational/private pensions in Ireland is meaningless.


Just remember if it sounds to good to be true you know the rest,


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## ClubMan (18 Jan 2008)

dodo said:


> Just remember if it sounds to good to be true you know the rest,


What is that supposed to mean? Nobody has said that pensions are, of necessity, a sure thing. There are many variables - how much and how consistently over time you contribute, what you invest in, what charges apply, when you want to retire, how much you want to retire on, what the tax regime may be over the pension investment and retirement terms, etc. etc. - about which informed and judicious decisions need to be made in accordance with then circumstances and needs of the individual. However, all things being equal, investing in a diversified range of assets over the long term is arguably the best way to cater for retirement cash lump sum and income needs. Other than implying that we should all maybe move to _Finland _due to the state pension Nirvana that you seem to think that pertains there what considered and pragmatic arguments and suggestions have you got to make on the issue?


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## Stagsy (20 Jan 2008)

Betsy Og said:


> ....errr, getting back to pensions
> 
> I point I want to bring up is the notion of "phased fund switching" which basically means that as you approach retirement more and more of your fund goes into deposits, government gilts, bonds etc. (i.e. very secure assets that are unlikely to fluctuate much).
> 
> ...


 
I have heard that Hibernian are offering a suite of pension funds that follow this route, something like 8 or 9 funds in the suite, with consecutively lower risk. The amount of time you have left to retirement determines which fund your contributions are in at any time.

This seems fairly prudent given this year's drop in equities. I wouldn't like to have been retiring this December if all my pension was in shares (not affiliated with Hibernian by the way). The funds are called Focus Managed I think.


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## ClubMan (20 Jan 2008)

Most if not all pension providers offer a range of funds varying by risk/reward profile etc. allowing people to choose those that best match their specific needs and also allowing those nearing retirement to gradually shift from higher to lower risk/reward investments to guard against volatility hitting them as they near retirement. (Those rolling some or all of their pension funds into further investments such as _A[M]RFs _may not want to do this). And the default investment strategy for _PRSAs _take this sort of approach too.


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## Betsy Og (8 Feb 2008)

ClubMan said:


> (Those rolling some or all of their pension funds into further investments such as _A[M]RFs _may not want to do this).


 
Thats a good point, if you're going to ARF your fund, and presuming you replicate the investment strategy you previously had, then even if its a terrible year your fund is down but the investments are cheap to buy back into so you havent crystallised/locked in losses. 

Presuming that at some point you'll actually need the money to fund your lifestyle in retirement then your "phased fund switching" idea will come into play as you approach that drawdown date.

Just to mention I gather there are also "Lifestyle" funds where you buy in and the fund itself edged more into cash as you approach retirement, so theres no need to switch funds as such, the fund morphs into what you need it to be. Obviously the provider needs to group people with the same time horizon to pension together as 1 fund couldnt satisfy diverse needs.


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## alan.caulwel (1 May 2008)

canada life have a new fund available OPPENHIME FUND check it out excellent track record. over last 15 yrs has aggregated approx 14% compound out performing average fund manager by 4-5%. has only become available recently


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## ClubMan (1 May 2008)

alan.caulwel said:


> canada life have a new fund available OPPENHIME FUND check it out excellent track record. over last 15 yrs has aggregated approx 14% compound out performing average fund manager by 4-5%. has only become available recently


Past performance is no guide to future returns.


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