Pension - Is it worth it or not?

[jjm]

I am not sure about the new single scheme (post 2012 entrants). For Class A public servants prior to that date the maximum final pension (full service) equates to 50% of pensionable salary (usually average of final 3 years). This is inclusive of State Pension. So for a person entitled to full pension his/her final pension would consist of :Occupational Pension + State Pension = 50%. Therefore, the occupational pension component varies in relation to the State Pension level (if state pension is lower the Occ. Pension should be higher).

it already is in place when Joan Burton done away with the transitional pension for people who had to retire at 65 in 2013 the the private sector worker was down 42 euro until the were 66 the public sector worker would have the 42 euro per week added out of general taxation, There are lots of other examples but there is no point in muddying the water

 

[jjm]

it already is in place when Joan Burton done away with the transitional pension for people who had to retire at 65 in 2013 the the private sector worker was down 42 euro until the were 66 the public sector worker would have the 42 euro per week added out of general taxation, There are lots of other examples but there is no point in muddying the water

they only way of explaining it is
tom the private sector worker has a total pension of 460 made up of 230 prsi pension and 230 from a pension he paid into he is mean tested and the prsi pension is cut to 30 euro so he now has a pension of 230 private and 30 prsi total 260

Tom the public servant worker has a total pension of 460 made up of 230 prsi pension and 230 from a pension he paid into he is mean tested on the prsi pension and it is cut to 30 euro he now has a pension of 30 euro prsi pension his other pension is increased by 200 euro to make up for the means test cut in his prsi pension so he still has 460 of a pension,


tom the private sector worker is delighted because he knows most of the 1.4 million pensioners are made up of private sector workers and the dice will swing back to being fair to both people who paid the same amount of PRSI,the only way around it would be to slowly lower the prsi pension over many years but you have 1.4 million pensioners to pull the wool over there eyes without any of them spotting what is going on

 

[Early Riser]

There are lots of other examples but there is no point in muddying the water

jjm, I haven't been following this discussion so I am obviously lacking enough context to grasp the point you are making. And I am not sure if you are accusing me of muddying the waters, but I was simply replying to a question by cremeegg. I have no beef in this discussion one way or the other.

Just to clarify one thing though. The example I gave relates only to a Public Sector worker at State Pension age. Retiring at 65 (or younger) the situation is a bit more complicated (too much more complicated to derail this thread for). However, the principle still applies. Whatever the total pension amount due, the lower the prevailing state pension rate, the higher the occupational pension element will be to make up the total .

 

[jjm]

jjm, I haven't been following this discussion so I am obviously lacking enough context to grasp the point you are making. And I am not sure if you are accusing me of muddying the waters, but I was simply replying to a question by cremeegg. I have no beef in this discussion one way or the other.

Just to clarify one thing though. The example I gave relates only to a Public Sector worker at State Pension age. Retiring at 65 (or younger) the situation is a bit more complicated (too much more complicated to derail this thread for). However, the principle still applies. Whatever the total pension amount due, the lower the prevailing state pension rate, the higher the occupational pension element will be to make up the total .

Earley Riser sorry you never entered my head too much more complicated is the word i should have used( I did not want to be muddying the water referring to myself .Glad you picked me up on it other wise I would not have noticed you may have taken offence

,the only beef I have in this is money collected from both public and private sector in prsi some needs to be ring fenced for there pension now, all public servants pension contributions need to be ring fenced also,I know that would not be enough to meet there pension when the retire there employer the taxpayer will still need to fund it at that time seeing they are not contribution now,Where I work we still have a Defined benefit and the employer pays two thirds and employee pays one third it is well managed and funded and I will be retiring next year I would like to thing that people in important positions in government stopped kicking the can down the road when they know it may not affect them and don't care about there fellow workers retireing in years to come,

 

[Early Riser]

Glad you picked me up on it other wise I would not have noticed you may have taken offence

No offence taken at all,jjm. I was only clarifying.

 

[Gordon Gekko]

This country is in huge danger of lurching way too far to the left.

As in many other countries, Globalisation has meant that the incomes of those who are either too lazy or too stupid to adapt have not kept pace with general growth, and never will. The taximan who once earned €80k a year and chose his hours has been displaced by the economic migrant who will work for anything.

It's inevitable that the constituency in question will gather behind Sinn Fein/PBP/etc. And the next step? A land grab against those who were neither lazy nor stupid. Watch the anti-private pension/anti-PPR relief/anti-inheritance narrative gather momentum. Populism ahoy...

 

[cremeegg]

money collected from both public and private sector in prsi some needs to be ring fenced for there pension now, .....I know that would not be enough to meet there pension

What you say is correct but you are missing the bigger point.

If the PRSI contributions of todays workers were set aside to pay their pensions when they retire, how would the pensions of those who are already retired be paid.

 

[jjm]

What you say is correct but you are missing the bigger point.

If the PRSI contributions of workers were set aside to pay their pensions when they retire, how would the pensions of those who are already retired be paid.

No i am not missing the bigger point
I am well aware that 70% of what is taken in PRSI is spent on pensions

I am also well aware that a large % of the people claiming from the fund have paid in very little in prsi some only had to pay a yearly amount of around 200 Euro to get there pension for 10 years others as you know well only pay a total of 4% of payroll,While Private and public sector workers there is 14.5% of payroll stopped and put into the prsi fund ,I hope you don't mind it drives some posters mad but up until the usc came in it was higher it was 18.5% of payroll was stopped in2013 before that average was around 16.5% going back years I came across a payroll wage slip for 1986 or 1987 and 15% of payroll was stopped in that year,

The PAYE worker paying PRSI CLASS A1 including public service since 1995 and private sector workers since around 1970 have payed in enough to be entitle to a full pension ,

The government parachuted a lot of people who paid very little in to the prsi fund so there needs to be money transferred from general taxation to cover them ,
People who have paid very little in should start paying a benefit in kind tax that will be ring fenced for the next generations pensions

You can now get a record of every single weeks prsi contributions, I phoned Donegal office for my own records and had a full record going back over 40 Years within 2 days it was spot on it shows what type of prsi
and covered every week,
When we are talking about fiscal space and how much is available to spend first in the queue should be a requirement to replace prsi squandered in the past,

There should be no rainy day fund it should be put into the ring fenced PRSI Fund .

In fact if the last rainy day fund was in a prsi fund we could not be forced to waste it on bailing out the banks,

word needs to be got out there that the public are expecting if the government meets a problem with unfunded pensions people who paid full PRSI A1 for 40 year are first in the queue we need to start a debate not about the 300bn in unfunded pensions but how much the PRSIA1 part is and address it,

 

[Dan Murray]

Globalisation has meant that the incomes of those who are either too lazy or too stupid to adapt have not kept pace with general growth, and never will.

Gordon,

I find this sentence very crude.

 

[Gordon Gekko]

Gordon,

I find this sentence very crude.

You are entitled to your view; I find the sense of entitlement amongst that cohort abhorrent.

 

[Sarenco]

That's fair enough Gordon but in my experience an unmerited sense of entitlement is not confined to any particular cohort. People often underestimate the role of luck in life.

 

[Gordon Gekko]

That's fair enough Gordon but in my experience an unmerited sense of entitlement is not confined to any particular cohort. People often underestimate the role of luck in life.

They do to be fair, but in my experience, the begrudgers' plight tends to be self-inflicted.

 

[Early Riser]

As in many other countries, Globalisation has meant that the incomes of those who are either too lazy or too stupid to adapt have not kept pace with general growth, and never will. The taximan who once earned €80k a year and chose his hours has been displaced by the economic migrant who will work for anything.

Gordon -Check out attribution theory - part of the human condition.

Simplistically :

When something "bad" happens to,or is manifest by others - we tend to attribute it to internal factors ,eg, laziness, poor judgement, lack of foresight, stupidity, bad personality,etc.

When something bad happens to ourselves (or one of "ours") - we tend to attribute it to external factors, eg, bad luck, chance, provoked, bad decisions of others, "the company",etc.

When something "good" happens we others we tend to attribute it to external factors,"right place at right time", got lucky, always going to do well with his background, etc.

When something good befalls us - we tend to attribute it to internal factors, "worked hard for it", intelligence, made clever choices, good personality traits.

 

[jjm]

"Sarenco, post: 1526336, member: 87373"]This topic has already been discussed at some length:-
https://www.askaboutmoney.com/threads/should-i-just-save-money-or-contribute-to-a-pension.170752/

FWIW, I don't think there is any real likelihood that the contributory State pension will be abolished entirely (leaving only the means-tested State pension). Today's civil servants and TDs will qualify for the contributory State pension and turkeys are not inclined to vote for Christmas!

Remember that post-tax savings can also get clobbered by the government of the day. For example, DIRT was increased to 41% in the wake of the financial crisis regardless of a depositor's income level.Sarenco, post: 1526567, member: 87373"]That's fair enough Gordon but in my experience an unmerited sense of entitlement is not confined to any particular cohort. People often underestimate the role of luck in life.



Well you can see the turkeys from post 158 built a parachute to avoid Christmas .You have too ask the question why did they bother changing the D stamp as all seeing the PRSI class A 1 got a pay rise of 5% to make up for the fact that the employee paid around 2% for a D stamp PRSI class A1 employees paid around 7% both finished up getting the same pension,
Someone starting on the 4 of April paid around 2% prsi class D
Someone starting on the 7 of April paid around 7% prsi class A1 they 7 of April Employee Got 5% more than the person doing the same job so both would have the same pay would get the same pension when
the retire,
Just for the record public sector workers on a D stamp can work in retirement before the age of 65 and it will not affect there pension, PRSI A1 get the same pension but if the work after retired before reaching 65 it affects them,


The government sold it as bringing public service workers into line with the private sector ,What i am saying We need to hold them to there word any paye worker who had around 17% of there payroll sent to the prsi fund PRSI since 1995 need to be getting a treated the same ,This has nothing to do with public service workers it is all about private sector workers holding the government at account ,My suggeston is prsi Class A1 pension should be linked to a % of a public servants grade 3 pay,

We can already see from no 1 post that this needs to be done because it is affecting how private sector workers are planning/not planning for there future so this need to be addressed ,

I am all for people paying into a private pension along with there state pension ,I will be retiring next year in fact I planned to retire at 60 but still work and it is a lovely position to be in knowing for the past number of years that i don't need to work if i don't want to, Ireland has a very good system tax wise for both public and private sector workers to plan for there retirement and anything stopping people from doing so must be removed,[/QUOTE]

 

[world201812]

OP here, thank you for all your input on the pensions thing. First chance I’ve had to respond.

Sarenco

Noted about the state contributory unlikely to be abolished. Point taken re the savings, and DIRT rate, but savings as in the moment sitting in for example a current account are not impacted, so there is always the option to stick cash under the mattress.

Steven

Thanks for echoing Sarenco’s point on it re turkeys and xmas and unlikely to veto it.

Cremeegg

I didn’t realise a DC can’t go bust, but I always thought DC schemes were worth little compared to DB, and if DC returns are not certain, the cash under the mattress option sounds appealing. Certainly, putting in more than the minimum is questionable. Interesting to see the Means Test isn’t an impossibility.

Hopefully, in general, the political fury of the grey brigade would keep the governments paws off the state pension.

One thing I completely didn’t realise was you pay tax and the other levies on pensions, as a public servant relation pointed out. My naivety!!!

Jjm

As a 30 something your line of Ireland ‘and has a very good system tax wise for both public and private sector workers to plan for there retirement’ is encouraging but in general…

A private sector worker who wants to have some sort of decent pension upon retirement/not at the whim of the markets needs to get herself or himself into a public sector job? Or is that overly simplistic?

 

[Gordon Gekko]

Overly simplistic.

Someone in their 30s should embrace market collapses and volatility. The stuff about funds not delivering etc is all rubbish. Make sure you're not being charged too much, make sure you're taking on enough investment risk and embrace volatility.

The additional return you'll generate is compensation for the fund going up and down in value.

 

[jjm]

OP here, thank you for all your input on the pensions thing. First chance I’ve had to respond.

Sarenco

Noted about the state contributory unlikely to be abolished. Point taken re the savings, and DIRT rate, but savings as in the moment sitting in for example a current account are not impacted, so there is always the option to stick cash under the mattress.

Steven

Thanks for echoing Sarenco’s point on it re turkeys and xmas and unlikely to veto it.

Cremeegg

I didn’t realise a DC can’t go bust, but I always thought DC schemes were worth little compared to DB, and if DC returns are not certain, the cash under the mattress option sounds appealing. Certainly, putting in more than the minimum is questionable. Interesting to see the Means Test isn’t an impossibility.

Hopefully, in general, the political fury of the grey brigade would keep the governments paws off the state pension.

One thing I completely didn’t realise was you pay tax and the other levies on pensions, as a public servant relation pointed out. My naivety!!!

Jjm

As a 30 something your line of Ireland ‘and has a very good system tax wise for both public and private sector workers to plan for there retirement’ is encouraging but in general…

A private sector worker who wants to have some sort of decent pension upon retirement/not at the whim of the markets needs to get herself or himself into a public sector job? Or is that overly simplistic?

The public service has the biggest unfunded defined benefit scheme in the world for it size and to make things more complicated the money the pay into it is given back to them in wages pushing up there cost along with everyone else ,It was fine when the government could borrow and they were not asked what they are going to spend it on, If you want to get an idea what Ireland will be like in 25 years time for public servants
take a look as Greece at present many like yourself think that because there contract of employment says and the law of the land back them up at present because the money is there to pay them all is fine,

Do you expect a 75 year old in the private sector to go out to work every day and be taxed to the hilt so you in the public service can retire on the terms which the country can no longer afford ,
Do you really think people are going to take getting up early in the morning and going to work and see there pensions cut because the money is needed to pay higher pensions to a select group,

What I expect will happen is the people who get up early in the morning along with lower paid public servants the type who now vote for FG and FF and would not vote for a left wing party if there life depended on it will become the new left and they will not be led by what goes for left wing well to do parties in Ireland at present , In fact they will be out to clip there wings ,

 

[jjm]

Overly simplistic.

Someone in their 30s should embrace market collapses and volatility. The stuff about funds not delivering etc is all rubbish. Make sure you're not being charged too much, make sure you're taking on enough investment risk and embrace volatility.

The additional return you'll generate is compensation for the fund going up and down in value.

I agree 100% so the sooner you start the better,back in 1982 that was how is was explained to me the also Quoted the whole of the USA depends on the markets for there pension you are in good company,
you said you were 30 something I don,t know when you plan to retire to get full benefit of the tax free lump sum you may have to be over 20 years in a pension scheme for some reason this is not pointed out on askaboutmoney often enough,

 

[world201812]

Fascinating stuff folks.

I should as you suggest start ASAP so and max it out to 20% if affordable so. What is being charged too much, I know on PRSA’s I have/looked at (I know these are different to DC pensions) the rates range from 0.4% to 1.0%. What is a fair charge?

I like the fact that with the limited PRSA’s I have I can log in online and see them. Not the mounds of paper that I saw in the post less than 10 years ago with DB pension!

Interesting Jjm on the public service DB scheme. I don’t know, of all the people I know who are retired it’s the state workers who have the best quality of life. I have a relation in his early 70’s still working, he was self-employed but business went bust, so that is happening now, so to a certain extent people are already ‘taking it’, in terms of private sector/self employed pension terms and conditions which aren’t great. I do wonder are we overstating the power of the angry private sector worker thing, the reality is state workers can shut the country down and who could blame them if the government threaten their pensions. Most workers would do so if they had the clout.

20 years service. That is a good point, I need to check out about the 20 years service thing. If people jump jobs every 3-5 years how complicated will it be for them when they hit retirement in terms of figuring out what they have pension wise.

I will read that other thread as was linked in one of the first responses. Certainly, food for thought all of this. I do wonder how the government expect people to take up pension enrolement when there are so few protections out there for people.