Whats your private pension fund worth?

A_Sober_Paddy

Augeo wrote: »

http://www.pensionsauthority.ie/en/LifeCycle/Joining_a_plan/Employers_obligations_to_provide_access/

"make deductions from payroll at the request of employees and remit these to the designated PRSA provider (employers cannot charge for deducting and remitting contributions"

They want to get better, they are obliged to

Well I'd prefer to do it myself, assume I can still avail of the tax relief

ytpe2r5bxkn0c1

A_Sober_Paddy wrote: »

Well I'd prefer to do it myself, assume I can still avail of the tax relief

Only if you are investing directly into a recognised pension fund. You can't just buy stocks, bonds etc. and claim back tax claiming it's a pension investment.

A_Sober_Paddy

Rory Victorious Sandalwood wrote: »

Only if you are investing directly into a recognised pension fund. You can't just buy stocks, bonds etc. and claim back tax claiming it's a pension investment.

Oh I had assumed that

A_Sober_Paddy

A_Sober_Paddy wrote: »

Oh I had assumed that

As above, you'll need a personal pension plan (PPP) or a PRSA.

Very easy to set up, if going PRSA a default investment strategy with <1% management fee and no contribution fee is easily found, Zurich, Davy etc

draiochtanois

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Ciaran_B

I heard an add on the radio last week for a pension product. It said you can get 40% tax relief for every €1 invested. On the add it said you could stick €1000 in a pension fund and get a cheque from the revenue for €400.

Does anyone know what that product was or did anyone hear that add? It was almost certainly on Nova.

Thanks.

draiochtanois

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ytpe2r5bxkn0c1

draiochtanois wrote: »

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A pension fund of €1.5 million at present would yield generally a pension of over 70k, but I doubt the average civil servant has a 70k pension.

draiochtanois

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ytpe2r5bxkn0c1

draiochtanois wrote: »

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I have no idea what you mean by that, but current returns are about 5000 per 100,000 less lump sum.

The figure quoted is if you were buying an instant product in the market place as opposed to building a fund. The article also states that the state contributory old age pension would require 1/2 million to buy in the market place.

The Rape of Lucretia

Rory Victorious Sandalwood wrote: »

A pension fund of €1.5 million at present would yield generally a pension of over 70k, but I doubt the average civil servant has a 70k pension.

You sure about your calculation there ?
I thought, with current yields it was more like €3000 per 100k, so more like a pension of 45k/yr ? Thats with a standard younger spouse and 2% ish per year increase.

(Given that wives work these days though, the old idea of the standard pension annuity allowing for a dependent surviving spouse is become more and more archaic).

ytpe2r5bxkn0c1

The Rape of Lucretia wrote: »

You sure about your calculation there ?
I thought, with current yields it was more like €3000 per 100k, so more like a pension of 45k/yr ? Thats with a standard younger spouse and 2% ish per year increase.

(Given that wives work these days though, the old idea of the standard pension annuity allowing for a dependent surviving spouse is become more and more archaic).

Many giving a yield of 5 per 100 at present and increases of CPI +1% minimum. These would include spousal pension at 50%.

Others may well be 3 per 100 but I'm just judging by those in my circle of friends on private pensions. And even at 3 per hundred 100 the 1.5million quoted would give 45k, when the average civil service pension is only 25k.

BrokenArrows

BrokenArrows wrote: »

........

Whats your pension worth as a % of your annual salary and what age are you?

Just trying to get an idea about how far behind the curve i am.

If upon retirement there's still a state pension roughly equivalent to what it is today you'll need a pension pot of 11 or 12 times your final salary to fund an overall income on retirement of 2/3s final salary.

That's not taking any lump sum, so if you are taking advantage of the tax free lump sum you'll need a pension pot of 13 or 14 times your final salary when the big day comes.

Crude enough and using 4% as an annuity figure, personally the annuity route doesn't appeal, at the moment, that might change as I get to retirement age.

MeatTwoVeg

Rory Victorious Sandalwood wrote:

I have no idea what you mean by that, but current returns are about 5000 per 100,000 less lump sum.

At 60?
You wouldn't get even close to that kind of return.

ytpe2r5bxkn0c1

MeatTwoVeg wrote: »

At 60?
You wouldn't get even close to that kind of return.

At 72 I am.

MeatTwoVeg

Rory Victorious Sandalwood wrote:

At 72 I am.

At 60, with 100k you'd get about 2.2k annuity.
Your original calc. is way off and the post you corrected is actually right.

The money the average private sector worker needs to contribute to get the equivalent returns that public sector workers currently enjoy are staggering.
It suits the PS unions to confuse this issue as if it was understood by the broader public, there would be outrage at their current pay demands.

ytpe2r5bxkn0c1

MeatTwoVeg wrote: »

At 60, with 100k you'd get about 2.2k annuity.
Your original calc. is way off and the post you corrected is actually right.

The money the average private sector worker needs to contribute to get the equivalent returns that public sector workers currently enjoy are staggering.
It suits the PS unions to confuse this issue as if it was understood by the broader public, there would be outrage at their current pay demands.

You obviously have an issue with Public Service pay and conditions which goes beyond this thread's topic of what our pension pots are worth. Personally, I don't have any strong views one way or the other on public service employees and I was not one myself. Though I believe they do mostly contribute towards their pensions.

You can rubbish my calculations as much as you like but I know what is actually being returned. I am receiving the return. There is no hypothetical or presumed scenario involved. If you have been building a pension fund that results in an annuity of as little as 2.2% then you have made a very poor investment. 4% is easily achievable and higher with a bit of effort.

MeatTwoVeg

Rory Victorious Sandalwood wrote:

You can rubbish my calculations as much as you like but I know what is actually being returned. I am receiving the return. There is no hypothetical or presumed scenario involved. If you have been building a pension fund that results in an annuity of as little as 2.2% then you have made a very poor investment. 4% is easily achievable and higher with a bit of effort.

What return you are getting in entirely irrelevant to the discussion.
I'll spell it out for you one more time.

You said that an annuity of 5k per 100k is possible for someone retiring at 60.

It's not.
It's not even close.
You will get less than half of that.
You're incorrect.

endacl

MeatTwoVeg wrote: »

The money the average private sector worker needs to contribute to get the equivalent returns that public sector workers currently enjoy are staggering.

It sure is. Thanks, taxpayers! I'll be out at 60 by the very latest, on defined benefits.

MeatTwoVeg

endacl wrote:

It sure is. Thanks, taxpayers! I'll be out at 60 by the very latest, on defined benefits.

It's tomorrow's taxpayer's that will be paying, not today's.
I wouldn't be so confident that they'll be willing to do so given the demographic shift that is likely.
It will be very easy for future Govts to introduce levies and taxes on pensions in the future to claw back outlaw.

People on public service pensions today are most at risk, at least private sector pensions are based on a fund.

You're essentially hoping that future generations will be willing to stump up the taxes to fund your retirement.

I wouldn't be so confident of that.

endacl

MeatTwoVeg wrote: »

It's tomorrow's taxpayer's that will be paying, not today's.
I wouldn't be so confident that they'll be willing to do so given the demographic shift that is likely.
It will be very easy for future Govts to introduce levies and taxes on pensions in the future to claw back outlaw.

People on public service pensions today are most at risk, at least private sector pensions are based on a fund.

You're essentially hoping that future generations will be willing to stump up the taxes to fund your retirement.

I wouldn't be so confident of that.

Ah, it'll be grand once Ireland's politicians continue to be drawn from the pool of 'teachers with notions'...

The Rape of Lucretia

The Rape of Lucretia wrote: »

You sure about your calculation there ?
I thought, with current yields it was more like €3000 per 100k, so more like a pension of 45k/yr ? Thats with a standard younger spouse and 2% ish per year increase.

(Given that wives work these days though, the old idea of the standard pension annuity allowing for a dependent surviving spouse is become more and more archaic).

Well you don't have to purchase an annuity I suppose

Veloce150

MeatTwoVeg wrote:

The money the average private sector worker needs to contribute to get the equivalent returns that public sector workers currently enjoy are staggering.

The Irish Times quoted very high-end cases. The average is much, much lower.

The figures were released by the Department of Public Expenditure in a reply to a parliamentary question from Sinn Féin TD Pearse Doherty.

The department says the average pension last year was €24,400.

Seems like the average Civil Service pension is about the same as the (Married) Social Welfare Pension? Then, some of the Social Welfare Pensioners would have private pensions as well whereas any Civil Servant recruited before 1995 is not entitled to the Social Welfare Pension and only has the CS pension which is 1/2 of final salary.

This suggests that the average Civil Service Pensioner survives on less than many in the private sector.

MeatTwoVeg wrote:

People on public service pensions today are most at risk, at least private sector pensions are based on a fund.

The private pesnion funds have their profits levied by the state and suffer from high management fees and are based on dodgy investments......good luck with that,.

MeatTwoVeg

Veloce150 wrote:

This suggests that the average Civil Service Pensioner survives on less than many in the private sector.

Veloce150 wrote:

The private pesnion funds have their profits levied by the state and suffer from high management fees and are based on dodgy investments......good luck with that,.

You seem to be arguing with yourself there Bud.

Veloce150

Veloce150 wrote: »

....................
The private pesnion funds have their profits levied by the state and suffer from high management fees and are based on dodgy investments......good luck with that,.

Not in all cases.

Under 1% management fees with no contrib charges is easily found.

Are IShares, Vanguard ETFs etc dodgy investments?

draiochtanois

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mahoganygas

draiochtanois wrote:

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Agreed, counterparty risk is an issue with ETFs. But if an investor wants to buy the market and sit on it for 30 years, then an ETF is a cheap way of doing that. Assuming they are passive investors and are willing to hold their nerve during a downturn.

draiochtanois

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mahoganygas

draiochtanois wrote:

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You'd have to wonder how Berkshire Hathaway will perform when Buffet eventually steps down (or drops dead!).

draiochtanois wrote:

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You're not alone in this opinion. But personally I feel that this fear is overly exaggerated by some commentators.

Leveraged ETFs are akin to mortgage bonds, IMO many ETFs are conceptually sound. The likes of Vanguard for example (most are physical I believe)

Deise Vu

Its not entirely on point but, seeing as it has been discussed, here is a Central Bank report on Annuities from January of this year:

https://www.centralbank.ie/press-area/press-releases/Pages/Pensionsalesinspectionrevealssignificantvariationsinannuityrates.aspx

Typically Central Bank it is a hard read (deliberately so I reckon) but the jist of it is that the best annuity a healthy male age 66 with no spousal portion and no guarantees (ie die tomorrow and the Annuity provider keeps everything) is a shade over 4.5%. That is for a 'Level Term' pension which means you are getting €4.5K for every €100K invested for the rest of your life with no increase whatsoever.

Compare that with TK Whittaker, mentioned earlier, who would have finished his PS career on a salary probably around IR£25K+ (About €32K) who is now "earning" in the region of €100K as a retired Secretary General / CB Governor. I think the great man himself would admit expecting future generation to pay pensions of this nature is the very definition of a Ponzi scheme.

And we all know what happens to those eventually.

In my case I have a pension fund of around 4 times salary with 11 years to go. Not nearly enough but the best I can do. I also have some personal savings and am depending on some inheritances / The Lotto to get by. I also carry a newspaper article in my wallet about a perfectly legitimate financial transaction which was carried out by an ex politician's wife about two years ago. I tell people the article is going to be the fuse on my first Molotov Cocktail when the Teachers who run the country come for my pension in order to fund theirs.

Most people think I'm joking. I'm not.

mahoganygas

Deise Vu wrote:

Most people think I'm joking. I'm not.

I'll bite.

So who is she? And what did she do?
And why is it in your wallet?

Deise Vu

Deise Vu wrote: »

...........

In my case I have a pension fund of around 4 times salary with 11 years to go. Not nearly enough but the best I can do...........

If you get 7/8% growth annually and max fund it from now to retirement you shouldn't do too badly.

Especially if you don't plan on going the annuity risk upon retirement.

draiochtanois

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bappelbe

draiochtanois wrote: »

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Could you explain what you mean by counterparty risk with the ETFs?
is it that they actually are not holding the shares that they claim?

Deise Vu

mahoganygas wrote: »

I'll bite.

So who is she? And what did she do?
And why is it in your wallet?

Its in my wallet because the Molotovs will have to be made in a hurry . There won't be any long public discussion before the legislation for obvious reasons.(It is a Sunday Times business section article - credit to Brian Carey)

First I have to reiterate that what happened is perfectly legitimate, which is what I find so objectionable about it.

The local authorities of Ireland have their own insurance scheme for when people trip over slightly uneven pavements called IPB Insurances. This scheme was administered by a Dublin Broker called Brennan Insurances who were paid €35M in the 3 years to 2010 administer the scheme. In 2012 IPB bought Brennan Insurances for €25M.

We have no idea how profitable this was for Brennan Insurances because, despite having this lucrative state contract it didn't have to disclose figures as it is owned by two Isle of Man registered companies.

We do know, however, that one of the Directors of Brennan Insurances was Professor Niamh Brennan. She has had a glittering career as an accountant and, lately, as a Professor at UCD where among her many achievements she established the "UCD Centre For Corporate Governance".

http://www.ucd.ie/research/people/business/professorniamhbrennan/

Maybe I am just a begrudger but it struck me as particularly galling that someone who is on the PS Salary and pension gravy train, with a particular interest in Corporate Governance should be a Director of a business that received €60M of state funds over a few years and the transaction can be hidden in Isle of Man accounts. My justification for my begrudgery is that it just sticks in my throat that my paltry pension fund will almost certainly be seized in order to pay her pension. Plus the pension of her husband, former attorney General, Michael McDowell.

And to repeat, it is all perfectly above board and legitimate, anyone of us could have done the same yadda yadda yadda.

Deise Vu

Augeo wrote: »

If you get 7/8% growth annually and max fund it from now to retirement you shouldn't do too badly.

Especially if you don't plan on going the annuity risk upon retirement.

I wish I could predict the future but with earnings multiples where they are, Brexit, Putin, Trump, Deutsche Bank, the World awash with debt, etc etc etc I am not taking any risks whatsoever with my fund.

I will be avoiding annuities like the plague though. That's a given.

mahoganygas

I fail to see why this would irk you?

1. IPB is not a state company. It's a private company which underwrites large projects including state investments such as hospitals and local authority liability insurance. Just like the painting and decorating company which is refurbishing the Oireachtas. They are providing a service. Nothing else.

2. Brennan did not receive a state contract. It's a private business which provided service to IPB. Why would they open their books simply because they are a client of a company which is a client of the state?

3. IPB's new administrator after 2012 is a publicly traded company, which does publish results. Does that give you some reassurance?

I'm baffled what this has to do with public sector pensions, Michael McDowell or corporate governance.

MeatTwoVeg

Deise Vu wrote:

My justification for my begrudgery is that it just sticks in my throat that my paltry pension fund will almost certainly be seized in order to pay her pension. Plus the pension of her husband, former attorney General, Michael McDowell.

The precedent certainty already exists.
I mean they've already taken about 2.5 billion from private workers funds to, in part, fund public pensions.

My only hope lies in the numbers, there are more of us.

and we have Molotov cocktails to hand.

deathtocaptcha

Pensions are by in large a scam. If you're under 40, you've got 30 years of work ahead of you minimum.

The retirement age will keep increasing due to the fact we've got an aging population that (a) reduces workforce (b) means cost of looking after that aging population increases. Keeping people working longer saves the taxpayer money.

By the time you're 70, you should be debt free and have considerable savings. That combined with state pension should be more than enough to live on as you'd have no rent / mortgage, medical card, travel card, various allowances for heat, phone etc...

A pension would be nice but I'd view it as an investment that could go badly wrong and one that you've no control over. Not a guaranteed jackpot at the end of your working life which is what most people see it as.

If you put the same amount of cash in to a high interest savings account (highest available each year) as you do a pension, you'd have instant access to it and full control over it throughout your life. And you wouldn't be that worse off at the end of it all...

FTA69

I have a final salary pension in work. Can someone explain what the benefits or drawbacks of that are? I haven't a clue about these things

MeatTwoVeg

deathtocaptcha wrote:

By the time you're 70, you should be debt free and have considerable savings. That combined with state pension should be more than enough to live on as you'd have no rent / mortgage, medical card, travel card, various allowances for heat, phone etc...

What State pension?

The one we have now?

I'd agree with a lot of what you've written, but it's highly unlikely the State pension will be as generous in 30years time and there's no way I'd be planning on being dependent on it.

deathtocaptcha wrote:

If you put the same amount of cash in to a high interest savings account (highest available each year) as you do a pension, you'd have instant access to it and full control over it throughout your life. And you wouldn't be that worse off at the end of it all...

Well you're missing out on the tax savings as well as employer contributions, if available to you.
I'm not convinced the benefits of having access to your savings outweigh that.

Deise Vu

mahoganygas wrote: »

I fail to see why this would irk you?

1. IPB is not a state company. It's a private company which underwrites large projects including state investments such as hospitals and local authority liability insurance. Just like the painting and decorating company which is refurbishing the Oireachtas. They are providing a service. Nothing else.

2. Brennan did not receive a state contract. It's a private business which provided service to IPB. Why would they open their books simply because they are a client of a company which is a client of the state?

3. IPB's new administrator after 2012 is a publicly traded company, which does publish results. Does that give you some reassurance?

I'm baffled what this has to do with public sector pensions, Michael McDowell or corporate governance.

1. IPB is owned by the Local Authorities ie answerable to your local councillors. On what planet would that be considered a private company?

2. Because incorporating something in the Isle of Man is a tactic to hide figures from the general public. What had they got to hide?

3. How does what has happened since have any bearing on what happened previously? The fact that Brennan Insurances received approximately €12M per annum for three years and was then bought for €25M suggests it was a very lucrative business indeed. How are the new crowd doing?

I have already explained my views on the sustainability of Public Pensions. As regards Corporate Governance, I would have thought transparency when dealing with Public money would be more appropriate than secrecy. Especially when such eminent Public Servants are directly involved. No?

Deise Vu

FTA69 wrote: »

I have a final salary pension in work. Can someone explain what the benefits or drawbacks of that are? I haven't a clue about these things

The benefit is that you (in theory) know what pension you will be getting at retirement eg 1/80th of final salary for every year worked up to 40 years would have been a typical Defined Benefit (DB) pension.

The downside is, as explained in previous posts, DB schemes are completely unsustainable. If you are in a public sector scheme, the Government is conning you into thinking future generations will continue to pay your pension out of current tax revenue. If it is a private sector scheme the problem is more immediate. They are almost all under water and when they go bust, thanks to Government inaction and incompetence over the years in failing to legislate, existing pensioners get first call on the pension funds and people not yet retired get whats left, if anything.

If your company and the pension fund go bust together, in theory, you are not too bad as the Govt have to pick up the tab á la Waterford Crystal (as if they could). If your company just winds up the pension in order to survive, then it is a problem between the workers and the company. You will be faced with a choice of accepting a much lower pension or bankrupting your company and losing your job. Nice choice that.

draiochtanois

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deathtocaptcha

deathtocaptcha wrote: »

................

A pension would be nice but I'd view it as an investment that could go badly wrong and one that you've no control over. Not a guaranteed jackpot at the end of your working life which is what most people see it as.

If you put the same amount of cash in to a high interest savings account (highest available each year)...................

In that spirit I'd advise an element of diversification, save some, pension some, invest some, use some to pay off mortgage early.

No point not having a pension for fear it'll be taken off you or eroded by levies.

faceman

deathtocaptcha wrote: »

Pensions are by in large a scam. If you're under 40, you've got 30 years of work ahead of you minimum.

The retirement age will keep increasing due to the fact we've got an aging population that (a) reduces workforce (b) means cost of looking after that aging population increases. Keeping people working longer saves the taxpayer money.

By the time you're 70, you should be debt free and have considerable savings. That combined with state pension should be more than enough to live on as you'd have no rent / mortgage, medical card, travel card, various allowances for heat, phone etc...

A pension would be nice but I'd view it as an investment that could go badly wrong and one that you've no control over. Not a guaranteed jackpot at the end of your working life which is what most people see it as.

If you put the same amount of cash in to a high interest savings account (highest available each year) as you do a pension, you'd have instant access to it and full control over it throughout your life. And you wouldn't be that worse off at the end of it all...

I strongly disagree, with certain caveats.

Pensions are tax effiencient for a start. To really benefit you should start as young as possible. That way over the long term you're pension trend is "up and to the right".

The challenge with pensions though is when it's managed by fund managers. Ask yourself, do you want someone who takes the bus to work to be managing your investment?

The world of finance should be thought is schools. I reckon if people were more finance savvy, more people could read, understand and question their annual pension statement. That would force fund managers to up their game.

Friends in the US have a 401k which is the US equivalent of a pension. Individuals have a financial adviser and are made aware, and in some cases, provide more input on investment decisions. It's super tax efficient.

In Ireland though, while it is tax efficient, there are sneaky pension levies applied by both fund managers and the government. And no one questions it.

draiochtanois

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BrokenArrows

This thread is going on way longer than i thought it would.

I wonder how many people have started sorting out their pension based on this thread?

Deise Vu

BrokenArrows wrote: »

This thread is going on way longer than i thought it would.

I wonder how many people have started sorting out their pension based on this thread?

I think we can safely rule out draoichtanois for a start.