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Easy guide to Pensions

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  • 15-01-2009 7:40pm
    #1
    slick31
    Registered Users Posts: 46 ✭


    :confused:Hey,
    I thinking of pulling out of my pension shceme because....
    I've been in a pension scheme with my job for the last 5 years. I put in 10% of my salary my employer contributes 7.5%. I have to say I don't understand pensions at all. Am I throwing my money away investing it in a pension? When I signed up for the pension I thought I would get back what I put in. Can I lose money with this pension? Could I end up with virtually nothing? Could the broker be on a beach somewhere sipping pina colada's!:rolleyes:
    Is there a very simplified version of understanding pensions?
    Can I (or anyone else) get out of this pension? And get my money back??? I've been told that you can freeze a pension but you can't close it down? No one I've spoken to seems to be able to give any definite answers. Is a pension fund just a pyramid scheme?
    I would be really grateful if anyone could explain pension funds (without contradictions) in simple terms.
    Cheers,
    Slick:eek:


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    #2
    broker2008
    Registered Users Posts: 750 ✭✭✭broker2008


    Have a look here: http://tinyurl.com/8c9kcb at the Pensions Board Website.

    Pensions are long term. Don't mind the value that they are now. You are buying units very cheap at the momnet and when they go up you will see the value. Value irrelevant until the day you go to retire. The fact that your employer pays 7.5% - it is like free money. Keep it going and forget about it. You can't get your money back but you can make it "paid up" ie freeze payments but I wouldn't recommend it. Stop looking at the value or it will upset you too much.


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    #3
    broker2008
    Registered Users Posts: 750 ✭✭✭broker2008


    Explain pensions in simple terms.

    Imagine a poker pot in a game of cards: you put some money into the pot, your employer puts money into the pot and then the tax man gives you back a reward for putting money into the pot - in the way of tax relief. The money in the pot is used to buy shares, property even cash whatever you decide. for every hand of poker. If the shares make money, there will be more money in the pot - you won the hand. If the shares have gone down in price, you lost the game of poker until the next game - next day.

    The aim of the game is that when you reach pension age is that there are lots of poker chips to cash in. You use this money to either keep playing cards, you can keep a 1/4 of the pot without getting taxed or use the money to take a guaranteed income for the rest of your life - called a pension.


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