Terrible pension rates?

Henry Ford III

Incidentally these are net returns with all costs and charges taken out.

It's equivalent to a rate of return of c. 7.55% p.a. before any tax reliefs are taken into account, and obviously considerably more when they are factored in.

coylemj

Bitcoin wrote: »

Surprised no one is challenging this incredibly disingenuous comparison.
If your money is in a pension, it could be locked away for up to 50 years, often invested in very poor quality and overpriced funds. If you keep your money outside of the system, you can invest it however you like and access it any time and totally sidestep the greedy fee taking pension industry.

And get no tax relief.

And having the ability to 'access it at any time' is most definitely not a benefit because having your pension fund 'locked away' protects it from the most dangerous predator of all - yourself.

Merowig

Bitcoin wrote: »

Surprised no one is challenging this incredibly disingenuous comparison.
If your money is in a pension, it could be locked away for up to 50 years, often invested in very poor quality and overpriced funds. If you keep your money outside of the system, you can invest it however you like and access it any time and totally sidestep the greedy fee taking pension industry.

You can select lower cost pension providers - and you ignore Irelands high capital gains tax for normal investments and the lack of tax relief...

Merowig

Bitcoin wrote: »

Huge, huge assumption that todays conditions will still apply in 30-40 years time.
By the time the pension crisis hits, there is going to be a massive political will to level the playing field between the haves and the have nots. The volume of have nots will be so great that the government will simply have to do something. I suspect what we'll see is some sort of equalisation scheme where the people with big pension pots are forced into contributing to people like me who will have nothing (at least on paper). Also, I think everything under the sun is going to be means tested, pension holders wont get an OAP, free tv licence, allowances, or medical cards.

I hope you do not gamble/hope to live off someone's else pension savings in the future - if so you might become highly disappointed in old age.

Merowig

I just went through the thread in utter disbelief of some the statements here made by some of the posters.

Yes - the pension levy was robbery by the state. Still saving via a pension vehicle was and is the most tax efficient way to accumulate wealth in Ireland for later in life. Others have already provided the mathematical proof as well here.


The discussion reminded me a lot about Aesop's Fable The Ant and the Grasshopper.
The same people who now don't safe via a pension because of "fear" of a new pension levy are very likely the same ones who will later in old age complain how small the government pension is and how difficult it is to make ends meet.
I believe in free will - if people do not want to save privately it will be their own problem - I will only become upset when the begging starts in one form or another.

737max

Merowig wrote: »

I just went through the thread in utter disbelief of some the statements here made by some of the posters.

Yes - the pension levy was robbery by the state. Still saving via a pension vehicle was and is the most tax efficient way to accumulate wealth in Ireland for later in life. Others have already provided the mathematical proof as well here.


The discussion reminded me a lot about Aesop's Fable The Ant and the Grasshopper.
The same people who now don't safe via a pension because of "fear" of a new pension levy are very likely the same ones who will later in old age complain how small the government pension is and how difficult it is to make ends meet.
I believe in free will - if people do not want to save privately it will be their own problem - I will only become upset when the begging starts in one form or another.

You aren't disturbed by how effortless the theft of people's pensions by Noonan was and you don't think it will happen again? If he had been left battered and bruised politically by it then I'd have some confidence in the pension not being stolen.

Merowig

You completely ignore the fact that people who saved via a pension and were impacted by the pension levy ( I was) - are still much better off than people who do not save via a pension.

Also that the government is "raiding" via other means as well (not to speak about inflation)
http://www.boards.ie/vbulletin/showpost.php?p=104620049&postcount=78

Pensions are much better than e.g. savings accounts
http://www.boards.ie/vbulletin/showpost.php?p=104612871&postcount=68

The levy was peanuts in comparison to the advantages
http://www.boards.ie/vbulletin/showpost.php?p=104612871&postcount=68
http://www.boards.ie/vbulletin/showpost.php?p=104575235&postcount=22

737max

You completely ignore that before the crash they only had 30bn of debt and now they have 200bn of debt which will need to be bailed out by hapless victims if things go bad.

737max

past performance is not indicative of future returns.

Merowig

737max wrote: »

You completely ignore that before the crash they only had 30bn of debt and now they have 200bn of debt which will need to be bailed out by hapless victims if things go bad.

Germanys GDP Debt Ratio is 68.3%
Italy 132.6%
China 46.2%
Irelands ratio is 75.4%

Ireland is much closer to Germany than to Italy...

If everything goes sour then taxes go up again - dirt will increase, capital gains tax will increase, inflation, property tax and vat will increase, etc.
You speculate on a future which is unlikely. And even if a pension levy is again reintroduced people with a private pension will very likely be much better off than people without one.

Merowig

737max wrote: »

past performance is not indicative of future returns.

Neither are past taxes and levies!

Tigerandahalf

Can I ask is someone with a private pension still entitled to the full state pension once they have made the necessary contributions?

737max

what is so dramatically difference between now and then. People who don't have defined contribution pensions then decided to steal money from defined contribution pensions to plug a hole. What has changed?

737max

Tigerandahalf wrote: »

Can I ask is someone with a private pension still entitled to the full state pension once they have made the necessary contributions?

Don't expect it to be worth index linked the 238 or 248 euro which it is at the moment.

Merowig

Tigerandahalf wrote: »

Can I ask is someone with a private pension still entitled to the full state pension once they have made the necessary contributions?

Yes they are entitled to the full state pension (if they have made the necessary contributions)

Tigerandahalf

Merowig wrote: »

Yes they are entitled to the full state pension (if they have made the necessary contributions)

Does that state pension then eat into your tax free allowance on pension earnings?

Merowig

http://www.citizensinformation.ie/en/money_and_tax/personal_finance/pensions/taxation_of_pensions.html

professore

The focus is always on the tax relief you get now. No one talks about how your pension could well be taxed to the hilt when you draw it down 30 years from now.

The average person in Ireland with 2 kids and a big mortgage really doesn't have the disposable income to save for a pension at anything like the rate necessary.

coylemj

Tigerandahalf wrote: »

Does that state pension then eat into your tax free allowance on pension earnings?

The state pension is taxable, unless your total income is below the exemption threshold, link below.

http://www.revenue.ie/en/personal-tax-credits-reliefs-and-exemptions/marital-and-civil-status/exemption-and-marginal-relief/exemption-limits.aspx

There is no USC payable on the state pension and everyone over 66 is exempt from PRSI.

Merowig

professore - do you have a glass ball and do you know the tax rate in the future?
It is not only the tax relief but also the tax-free growth in the pension vehicle.

I could also speculate that the government is taking away your home or the property tax won't be affordable any longer or or or..

Personally, it is unlikely that I will retire in Ireland so I do not care too much how much the pension will be taxed in the future in Ireland.


Do you have any source for your claim that the average couple in Ireland with 2 kids and a mortgage do not have the income to save for a pension?
Perhaps not everyone took a property/mortgage which is for them unaffordable?

Squatter

Merowig wrote: »

Do you have any source for your claim that the average couple in Ireland with 2 kids and a mortgage do not have the income to save for a pension?

But that's not what he wrote!

You omitted the word "big" in front of "mortgage" - and it's a little word with big significance!

Tigerandahalf

Merowig wrote: »

http://www.citizensinformation.ie/en/money_and_tax/personal_finance/pensions/taxation_of_pensions.html

In order to tax your social welfare pension your annual tax credits are reduced by the tax liability on your social welfare pension. For higher incomes, the standard rate cut off point will also be reduced. You then effectively pay tax on both the pensions, but it is collected from the occupational pension

Geuze

Tigerandahalf wrote: »

Does that state pension then eat into your tax free allowance on pension earnings?

Yes, the CSP is taxable, like all other income.

There is no such thing as tax-free allowances, they were abolished maybe 15 years ago.

Merowig

You can when/ before you retire become a tax resident of Portugal and pension income is then tax free for the first 10 years.
Cyprus is charging 5% tax on pensions.