Ask any public/civil service employees. Literally it was robbery.
Given Noonan's raid on pension funds, can the government be trusted?
- Thread starter Bronte
- Start date
- Status
Steven Barrett
Registered User
- Messages
- 5,331
I wrote an article a couple of weeks ago on leaving your pension funding too late. If you want to fund a €40,000 income and start funding 40 years out, it will cost you €357 a month. That is a total of €171,360. If you start 10 years from retirement, it will cost you €3,575 a month. That is a total of €429,000.
Pensions are expensive - don't leave it too late - Bluewater Financial Planning
Everyone knows that the earlier you start your pension, the better off you will be in the end. Afterall, some of your money will be invested for 40 years. I have come across a number of cases recently where people are nearing retirement and are drastically trying to play catch up. These are...
Now, if we have the scenario where these person doesn't save at all over the decades that they are working and enjoys living on what they earn, it is highly unlikely that they will suddenly start saving €3,575 a month from age 55.
Steven
http://www.bluewaterfp.ie (www.bluewaterfp.ie)
Yes, there was one levy, charged at three different rates over a period of years. There were never two levies as was claimed as far I know.
Gordon Gekko
Registered User
- Messages
- 7,846
It wouldn’t be outlandish for €10,000 put into a pension at age 25 to be worth €160,000 at age 65.
Whereas it wouldn’t be outlandish for €10,000 put into a pension at age 55 to be worth €20,000 at age 65.
That’s pensions.
“Are you not entertained?!”
Whereas it wouldn’t be outlandish for €10,000 put into a pension at age 55 to be worth €20,000 at age 65.
That’s pensions.
“Are you not entertained?!”
So you think that people should start their pensions late but then they're screwed if they do?
Or you could buy a property that will give you 40K. And you keep your capital.I wrote an article a couple of weeks ago on leaving your pension funding too late. If you want to fund a €40,000 income and start funding 40 years out, it will cost you €357 a month. That is a total of €171,360. If you start 10 years from retirement, it will cost you €3,575 a month. That is a total of €429,000.
Pensions are expensive - don't leave it too late - Bluewater Financial Planning
Everyone knows that the earlier you start your pension, the better off you will be in the end. Afterall, some of your money will be invested for 40 years. I have come across a number of cases recently where people are nearing retirement and are drastically trying to play catch up. These are...www.bluewaterfp.ie
Now, if we have the scenario where these person doesn't save at all over the decades that they are working and enjoys living on what they earn, it is highly unlikely that they will suddenly start saving €3,575 a month from age 55.
Steven
http://www.bluewaterfp.ie (www.bluewaterfp.ie)
To compare like with like here that would mean buying a €172K property yielding €40k p.a. in rent (a 23% yield)!
(In fact maybe more like a €100K property if you factor in the tax relief involved in the pension contributions).
And your property would still be only worth €172K (or less) while @Steven Barrett's is worth €429K.
Last edited:
I'm constantly amazed on here that differing views are so easily dismissed. Especially the pension v property bias.
T McGibney
Registered User
- Messages
- 6,957
I was staggered by your claim that a person should wait until they're 55 before investing in a pension. I actually thought it the worst suggestion I ever saw on AAM.
There was a time when there was no PRSI over the age of I think 25. After a certain level of income. My husband hit that ceiling when we moved abroad and the experts in his top company HR department and the top experts they hired in to help with the cost of living difference both missed that.
About 2 decades ago the same company brought in top pension experts to 'hard sell' defined contribution to get everyone out of defined benefit. He went to the meeting (spouses obviously not invited) and came back with acres of documentation on how wonderful it was all going to be.
Thankfully he declined that wonderful offer on my advice. I'm not against pensions, not at all. I'm merely pointing out a slightly off view of them.
I like the Austrian model that everybody puts into a pot (compulsory). As long as it's invested wisely, has sate guarantees, is not used for a substitute for state pension, is not used for a tax raid and you don't get screwed when you finally get it.
I wouldn't trust an Irish government though. Not after what Noonen did, not after bank bailouts, not after temporary USC, after the Quinn levy, which was on the back of the AIB levy So many I forget some of them. That is where my stance comes from.
What if the person instead invested the money in a business? Or invested it in property? My husband 'invested' in an Irish Life pension at some stage, as far as I could figure out it was all about commission and lost value from the get go until he got his money out. His company pension on the other hand was defined contribution and run well, so that seemed a sensible thing, plus it was compulsory. In addition the employer was paying into it so it was a no brainer.
T McGibney
Registered User
- Messages
- 6,957
Most businesses fail within a few years of startup.
How feasible is it to invest in property over a period of 20-25 years in the same way as people invest in pensions, by committing variable sums periodically whenever they can afford it and holding back whenever they can't?
Did he do his homework before investing with Irish Life? I set up my pension with one of the most prominent pension advisors on AAM and my experience has been the precise opposite to his.
Where did I ever say that. And I'm well aware of taxes on rental income.
Most successful business people put everything into it and only get to pensions later.
There was no AAM back in the past. There was and remain plenty of slick sales men. You took good advice, using a good advisor on here which is an excellent thing to do. Because you also have some financial knowledge. But this doesn't apply to everybody. I think it's fair to say that the posters on here are well paid and know how to get good advice and how to invest wisely. That creates a bias in thinking.
It's easy, for example, to say, everybody was stupid to get endowment mortgages. But I don't recall the experts at the time warning how bad they were.
T McGibney
Registered User
- Messages
- 6,957
Not really. Any business person who puts all their eggs into a single basket is foolish.
AAM has been here since around the turn of the millennium. If your doubts about pensions are based on experiences in the 1990s, maybe you should say that.
If you've access to a reliable advisor and basic street smarts, you'll do fine with pensions even without specialist knowledge. It's not as difficult for example as buying a house to live in.
Me, I didn't need an expert to tell me that endowment mortgages didn't add up.
Did you account for the pension levy in that calculation, the only way to account for it accurately is to deduct it based on the fall in pension funds in the years in question 2011 to 2015. Therefore you would need to calculate year on year based on the actual average pension value in that year. The pension levy was deducted off an already depressed pension fund value ,therefore its effect was greater than in a normal year.
Maybe someone in the pensions industry has done the calculation the true effect of the pension levy in reducing pension values a decade out and 2 decades out etc
To get back on topic. Can an Irish government be trusted regarding unfair taxation of workers investments. Definitely not when the government consists of FG and Labour. It was this combination which raided workers pensions. They also abolished top slicing for redundancy lump sums. They started the taxation of job loss compensation as if it was a windfall profit.
Sounds to me like they were both defined contribution.
Nothing preceding your post was off topic in my opinion.
- Status