The millionaire next door drives a 4 year old car , lives a frugal lifestyle and doesn't take on consumer debt or show their wealth..

Sarenco said:
Define "wealth"? Define "financial asset"?

A 55 year-old Garda, with 30-year's service, will have accrued a State-guaranteed, inflation-proof, pension entitlement that would cost well in excess of €1m to buy in the open market. Is that a "financial asset"? Probably not. But it's certainly an incredibly valuable entitlement.

I don't mean to pick on the Gardai. Take pretty much any public servant and figure out how much it would cost to buy their accrued pension entitlement in the open market. Those entilements have a value that I would suggest is simply ignored in these "surveys".
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While a public servant pension is very valuable, it can't be counted as a financial asset when assessing someone's wealth. They can never cash it in or access the value of it. Beyond the spouse's pension, there is no value to be inherited. The same would apply for someone who purchased an annuity with €1m.

I don't think it is too difficult to assess whether someone is a millionaire or not; their net worth outside the family home but before taxes.


Steven
www.bluewaterfp.ie
 
Even the "humble" state pension would cost a quarter of a million to buy, most people receiving it today would never have contributed enough in prsi or taxation to have funded it. Who is funding this deficit now?, it's the guys investing in negative yielding bonds, they are actually funding a lot of this.
 
Are Gardai not subject to the rules of the new single pension scheme. Will this not reduce the value of their pensions in future.
 
SPC100 said:
"When looking at the distribution of wealth by income group, the top 20% of income earners have 39% of net wealth, while those in the bottom 20% have 11% share of net wealth."
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For all the bleating we hear of income & wealth inequality, I thought the the top 20% of income earners would own a lot more than 39% of net wealth. I wonder how this stacks up internationally. A socialist republic??
 
If I die tomorrow, my wife will be a millionaire but don't tell her that.....
 
Sarenco said:
Define "wealth"? Define "financial asset"?

A 55 year-old Garda, with 30-year's service, will have accrued a State-guaranteed, inflation-proof, pension entitlement that would cost well in excess of €1m to buy in the open market. Is that a "financial asset"? Probably not. But it's certainly an incredibly valuable entitlement.

I don't mean to pick on the Gardai. Take pretty much any public servant and figure out how much it would cost to buy their accrued pension entitlement in the open market. Those entilements have a value that I would suggest is simply ignored in these "surveys".
Click to expand...

I think the Garda is always chosen as the example as they have a fast accrual pension. 30 years service is all that is required. Most other public servants have to pay 40 years of contributions.
 
Sarenco said:
Define "wealth"? Define "financial asset"?
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SPC100 said:
The Median net wealth of irish households is 102,600, mean is 218,700. (definition is all assets - all liabilities)
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I'd have to reread the article to confirm definitions....

I doubt they are using a npv of defined benefit pension or state pension for that matter.

So arguably that would increase the wealth of many household.
 
Sarenco said:
Exactly.

So a retiree with €1m in an ARF is a millionaire, whereas a retiree that bought an annuity with their €1m pension pot is not. Sorry but I don't see the logic.
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If you purchase an annuity, you are in effect getting a fixed salary. You not longer have a €1m asset, you have a salary. If you have an ARF, you have the full use of that €1m at any time (subject to taxation)
 
Firefly said:
For all the bleating we hear of income & wealth inequality, I thought the the top 20% of income earners would own a lot more than 39% of net wealth. I wonder how this stacks up internationally. A socialist republic??
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I was very surprised by this too. I wondered why it might be so.

Some of high wealth must be inherited. And there is no guarantee later generations will have high income.

They say one generation to make it, one to something(manage?) it and one to lose it.

Maybe like millionaire next door there are lots of middle income folks who have high wealth through frugality.

Maybe folks with high income obtain a lot of assets quickly and then spend more time at lower income.

Maybe retirees with large pots but low income too feature here.
 
Sarenco said:
A 55 year-old Garda, with 30-year's service, will have accrued a State-guaranteed, inflation-proof, pension entitlement that would cost well in excess of €1m to buy in the open market. Is that a "financial asset"? Probably not. But it's certainly an incredibly valuable entitlement. I don't mean to pick on the Gardai. Take pretty much any public servant and figure out how much it would cost to buy their accrued pension entitlement in the open market. Those entilements have a value that I would suggest is simply ignored in these "surveys".
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We've had this before. A public service pension is not equivalent to an annuity. The cost to the State is the retiree's lump sum plus the value of the pension payments, i.e. it's its capital sum. https://askaboutmoney.com/threads/t...of-state-pensions.200678/page-13#post-1489835.

Also public service pensions just don't fall from the sky – (a) you have to have the smarts to pass the entrance exam; and then (b) work for up to 40 years to get the pension. The pension you get is based on how your career progressed, not on investment returns. It's not an entitlement; you've got to work for it.
 
PMU said:
Also public service pensions just don't fall from the sky – (a) you have to have the smarts to pass the entrance exam; and then (b) work for up to 40 years to get the pension. The pension you get is based on how your career progressed, not on investment returns. It's not an entitlement; you've got to work for it.
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Want to tell the majority of private sector employees that the reason they don't have a pension is that they didn't have the smarts to pass and entrance exam and that the work they do for 40 years doesn't count...…...

Still think it is not an entitlement?
 
PMU said:
Also public service pensions just don't fall from the sky
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Did anybody suggest otherwise?

I was simply making the point that a very significant number of public servants will retire with accrued pension entitlements that would cost well in excess of €1m to buy in the open market.

Those pension entitlements are extremely valuable but for some reason they seem to get ignored whenever there's a discussion about wealth.
 
SBarrett said:
While a public servant pension is very valuable, it can't be counted as a financial asset when assessing someone's wealth.
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Of course it can! A 50-year old Garda retiree on his €40k pension can convert his income into wealth by buying assets with it. He could even contribute to a PRSA for a few years and claim tax relief on it!


SPC100 said:
I did a quick google, and then quick scan of https://www.tasc.ie/assets/files/pdf/the_distribution_of_wealth_in_ireland_final.pdf
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The TASC survey is based on a CSO survey based in 2013 which did not measure pension wealth, either in PRSAs, ARFs, DB schemes, public sector occupationals, contributory state pensions, nothing. Any conclusions based on this will be seriously flawed as there is no measure of pension wealth.

Much of the measured wealth by the CSO was in land (which is easy to count and value). On average you need to have about 110 acres to have €1m worth of farmland in Ireland. By that measure there are over ten thousand millionaire farmers in Ireland. Most of them would vigorously deny that they are millionaires of course, as their land is not something they ever intend to sell!

What I am getting at is that wealth is very hard to a) define; and b) measure.

At my age most of my wealth is my skills which should see me earn above-average wages for another few decades. How would you put a monetary figure on that?
 
A public sector pension is not wealth, it is an entitlement, crucially it still depends on the state's ability to pay it when you retire. Remember when the eastern block crumbled in 1989, all those workers had rock solid pensions, indeed that was one of the few advantages of communism. The polish government still paid out the nominal value all those pensions but with seriously devalued polish zlottys. Yes this is an extreme example but it shows the difference between a state entitlement and hard wealth.
 
I have cash on deposit in my local bank. But that doesn't form part of my wealth. It is simply an entitlement to call on the bank to pay me the cash and crucially it depends on the bank's ability to meet its obligations to me. Remember when all those banks started going bust in 2009?

No, my only real wealth is all buried in a biscuit tin in my back garden.

;)
 
Sarenco said:
I have cash on deposit in my local bank. But that doesn't form part of my wealth. It is simply an entitlement to call on the bank to pay me the cash and crucially it depends on the bank's ability to meet its obligations to me. Remember when all those banks started going bust in 2009?
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A bank deposit as you well know is completely different to a pension entitlement, it is a highly liquid form of wealth. In your false analogy with 2009 you could have taken your bank deposit out of the bank and bought other assets, currencies etc as many people did then, you could not do that with your pension entitlement. If you remember one of the key reasons for imf bailout in 2010, was to allow the government to keep borrowing to pay those very pensions, it is not rock solid, yes the state would go to great lengths to avoid cutting these as was proven.
Also is not the old age pension an entitlement? but increasingly it is becoming obvious that the state may not pay everybody this entitlement in years to come. Therefore you could never assume this as a form of wealth even though it would cost at least a quarter of a million to buy in the market.
 
joe sod said:
A bank deposit as you well know is completely different to a pension entitlement, it is a highly liquid form of wealth. In your false analogy with 2009 you could have taken your bank deposit out of the bank and bought other assets, currencies etc as many people did then, you could not do that with your pension entitlement.
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Can you not also buy other assets with your pension payouts?

A rental property is also an illiquid asset, does that mean it doesn't count in calculating wealth?

How about Government bonds? Do you exclude these on the basis of a possible default?

Frankly, your arguments that an accrued public sector pension entitlements does not count as "wealth" make no sense to me.
 
Pat is 70, has a sole income of a SPC, has no assets but has a life interest in a house. He doesn't own it but can live in it rent free until death.

Michael lives next door and is also 70, gets the SPC and an annuity of €500 pcm. He has no other assets and pays €1000 a month in rent.

Who is wealthier?
 
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