# Should I start a PRSA??



## kennyb3 (24 Aug 2011)

Im 27 yo, been working in a good job for 7 years and earning 40+k a year now.

Im a little concerned that i havent started a pension yet.

There just always seems to be something else to pay for (saving for a wedding, paying back loans etc)

Im wondering whether pensions are still a preferred option? I know they are tax efficient. Thinking about starting to put €100pm into a prsa.

Im fairly risk adverse, so any advice appreciated.

Also i might be going down the self employed route in 2 years or so time, i assume this will have an impact?


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## SteH (24 Aug 2011)

You could try the Irish Life pension calculator as a good starting point: [broken link removed]


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## thlint (29 Aug 2011)

My advice would be to wait until you are 35 -40 . With inflation any money you put in pension now will be worthless in 30 years time. ( think back to to 1980 when you could buy a house for 12000 - 18000).  You are just been made to feel guilty ignore them (who ever they are) -- if you are going to be self employed you will need every penny you can get and more for the 1st few years.


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## Baracuda (30 Aug 2011)

Disagree with thlint's advice entirely. Starting a pension now at your age makes perfect sense especially given the fact that managed pension funds over the past 40 year period have out performed inflation and every other asset class including property. Using a example of the value of property in 1980 is misleading as managed funds have out performed house prices over the same period. Fact is that all asset classes go up and down in value. The big thing at the moment is gold but this lost 5% there the other day so this even goes up and down in value. I heard an interesting fact on the radio the other day that gold has not kept pace with inflation over the last 25 to 30 years and if it had it would be values at 2500 today instead of c.1900. 

Waiting until you are 35 to 40 is IMO totally wrong advice e.g. you will have to put more money in when you are that age to make up for the lost years that you were not funding your pension, investing is more risky as you are investing for a shorter period of time as well and further to that you may not be able to afford to fund for your pension at this age as you may have a mortgage, kids etc

Also we are facing a very real pension crisis due to an ageing population and now that the government had to use the pension reserve fund to bail out the banks. As a result there is going to be a huge burden on the future taxpayers of the future which the country may not be able to afford so state pension's could be cut in real terms in the future.

My advice is go see a good pension’s advisor (ask a family member or friend who they would recommend) who should be able to advise you on what options are best for you at the moment.


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## aristotle (30 Aug 2011)

thlint said:


> . With inflation any money you put in pension now will be worthless in 30 years time.


 
Do you want to think about that statement again?


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## pconsidine (1 Sep 2011)

I disagree with Barracuda's advice entirely. Going back to 1980 most private pension schemes, even if the contributor has managed to keep up with payments for the entire period - a doubtful proposition for most people in these times of volatile employment, as it has been proved, have, net of the high charges these things attract, hardly outperformed safe cash deposits. Since 1990 the old mantra of "equities always come out ahead" has been proved disasterously wrong, and there is no reason why the old paradigm upon which these things were pushed will ever be re-established. I would advise Kenny to keep his money in his pocket until the pension companies come up with better value products and use his spare cash to develope his career.


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## kennyb3 (1 Sep 2011)

Thanks guys some food for thought.

I suppose you have hot the nail on the head in a sense - put money in pension (which would be equities at my age) - but whats to say its not worth 80% of what i put in today in few years time.

Or do i spend money elsewhere? (on my new business etc) but then how do i go about making up for all the lost years not contributing?


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## Baracuda (1 Sep 2011)

Kenny there is nothing to say at all that the value could be worth a lot less than the 80% in a few years as you said! In fact this will happen many times for the first 10 to 15 years of the pension! What you need to remember is that you are not cashing in the pension in a few years time, you wont be cashing it in for about 41 years! As for your second question only you can answer that one.

pconsidine. Yes the charges were high on some contracts all right but these usually had high bonus rates providing premiums were maintained. The ones that had low charges were better value if you had to stop payments. But you need to consider that PRSA's have low charges and you are not comparing like with like in your argument. Also can you back up your arguement that pensions funds have "hardly outperformed safe cash deposits" through a real life example or through a link? If you were to pick a period over the last 10 years though I would certainly agree with you! 

A good advisor would have made sure that your overall pension would have been well diversified and would have lifestyling etc built in. He/she would have also moved you out of a high chargeing pension into a low charge pension as well. So perhaps it's the quality of the advise that you receive over the life of the contract rather than the charges that dictates the final value of your pension fund.


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