Why are people obsessed with getting a pension

Varta

Robert_Beach wrote: »

There should be no private health insurance or private pensions. We can (and should) combine our national interests to ensure the State provides both of these, and does so in a manner which is ethically consistent with the health and future of the nation in mind.

There is nothing wrong with private healthcare and private pensions per se. The issue is that they are supported with state aid. It is a glaring injustice that takes money from the less well off and gives it to the better off. By all means have a private pension or private healthcare, but pay for it yourself.

GreeBo

Varta wrote: »

It is a glaring injustice that takes money from the less well off and gives it to the better off. By all means have a private pension or private healthcare, but pay for it yourself.

Hang on, so you want me to stop getting tax relief on my pension as it's taking money away from the people who aren't doing anything about their future themselves?

You do know that my private pension is designed to grow in value and that I'm taxed on that value as if it was income.
Net result being that I'm paying more in tax then I would be without a pension?
If no one had a private pension and instead relied on the state... How do you think that would work out?

Very worst case scenario, I'm borrowing from the state in the form of tax relief on my pension and then paying back in more than I otherwise would be... The state makes money from my private pension compared to me not having one.

Varta

GreeBo wrote: »

Hang on, so you want me to stop getting tax relief on my pension as it's taking money away from the people who aren't doing anything about their future themselves?

You do know that my private pension is designed to grow in value and that I'm taxed on that value as if it was income.
Net result being that I'm paying more in tax then I would be without a pension?
If no one had a private pension and instead relied on the state... How do you think that would work out?

Very worst case scenario, I'm borrowing from the state in the form of tax relief on my pension and then paying back in more than I otherwise would be... The state makes money from my private pension compared to me not having one.

None of that is true.
Hang on, so you want me to stop getting tax relief on my pension as it's taking money away from the people who CAn't doing anything about their future themselves? See the difference?

You do know that my private pension is designed to grow in value and that I'm taxed on that value as if it was income.
Net result being that I'm paying more in tax then I would be without a pension?
Then how come you and others on this thread claim that pensions are tax efficient and that you save way more tax going in than you have to pay withdrawing?

Very worst case scenario, I'm borrowing from the state in the form of tax relief on my pension and then paying back in more than I otherwise would be... The state makes money from my private pension compared to me not having one. See above.

GreeBo

Varta wrote: »

Then how come you and others on this thread claim that pensions are tax efficient and that you save way more tax going in than you have to pay withdrawing?

Both can be true.
Think of it as the state investing in my private pension.
I get the benefit of their investment but they also get the benefit of me paying tax (albeit at a lower rate) on a much larger sum of money for a much longer period.

Lets say Im earning 100k a year.
The state can either take 50% of it until I retire and then basically get diddly squat (and also pay my state pension, health, etc, etc)
OR
You can allow me to take a controlled amount of my gross pay tax free and invest it in my pension.
You still get 50% of whats left every month until I retire
You now also get the benefit of tax from whatever of my pension I draw down until I die.

The pot of money is much larger in the second scenario, hence why I have a private pension, but also the tax I am paying amounts to more than the state would get otherwise.

Its basically deferred but they get more out of it.
Long term it works out better for everyone as the fund value grows (its an investment afterall) and so I benefit from having an effective salary after I retire and the state benefits from taxing me on that salary, long after I retire.


Serious question:
Why do you think the state gives tax relief on pension contributions if the above isn't true?
(Please, PLEASE dont reply with some nonsense about fat-cat bankers and unethical bogeymen lining their own pockets and stealing from the poor)

S.M.B.

Varta wrote: »

I think you are being very naive. The tax relief on private health care and private pensions was introduced as a result of lobbying by private healthcare and pension providers. The reason being that without tax relief their products would be unaffordable to most people. In the case of pensions, the products would also be so unattractive as to make them almost redundant.

As for relieving the burden on the HSE: (a) If the tax forgone were spent on the HSE it could provide a better service to more people, and (b) Private healthcare regularly dumps its more difficult cases onto the HSE.

If I'm being naive (which I may be) I could say you are being overly cynical.

Maybe like a lot of things the reality lies somewhere between the two perspectives.

S.M.B.

Varta, I do think the optics of the pension tax relief are not great at the moment, which is why I don't think they'll continue to exist in their current form, here in the UK and in Ireland.

I do think it's one of those rare tax breaks that does favour someone in my position, currently a higher rate tax payer but likely to be a lower rate tax payer in retirement, a position that often gets pretty badly stung when it comes to policy. I wouldn't be surprised if the incentive moves from a postponement of income tax to a flat 30% top up for all. I also wouldn't be adverse to such a move but am going to continue to take advantage of how things operate right now.

tax relief on pension contributions is taxation policy as a modifier towards socially desirable behaviour

prsi is taxation to fund social transfers/transactions

theres a different case for each

each is a valid function of government

the idea that anyone can call any of it misappropriation or behave as if it's not some of the most basic policy and governance available to a government is embarrassing

embarrassing.

happy to live on the state pensions alone? sound. you're informed and responsible.

happy to contribute to a private pension pot, knowing the risks and the returns profile? fine, you're informed and responsible.

the idea that there's something unethical about either is, as kippy says, laughable. ethics, if it means anything at all, is a discussion space relevant to the intersection of two sets only- that which is legal and that which is personal.

anyone talking about the behaviour of another party which is legal but unethical is a child and safely ignored.

and to continuously drag a debate as workaday cut-and-dried as saving towards retirement into /ethics/ is both embarrassing *and* childish

to then throw into the (invalid, remember) ethical discussion the opinion that contributing to a private pension pot whilst taking advantage of tax breaks to do so is unethical, but relying on the state to provide support to you in your later years as a preferential default is ethical- that's clearly utter rubbish

earning low wages is not an ethical position. earning high wages is not an ethical position.


but if they were, and the argument is centred of the ethics of the individual contributions or otherwise to the governing pot, one is clearly superior to the other and a given society not only can, but in fact should reward and encourage the behaviours that maximise the impetus for those able to maximise their own earnings and contributions (and thereby minimise their own draw on state resources) to do so.

governance isnt theory, all the people people want all the stuff, idle demand is not real demand and if you think you deserve what the other fella has, that's nice. go get it.

Varta

GreeBo wrote: »

Both can be true.
Think of it as the state investing in my private pension.
I get the benefit of their investment but they also get the benefit of me paying tax (albeit at a lower rate) on a much larger sum of money for a much longer period.

Lets say Im earning 100k a year.
The state can either take 50% of it until I retire and then basically get diddly squat (and also pay my state pension, health, etc, etc)
OR
You can allow me to take a controlled amount of my gross pay tax free and invest it in my pension.
You still get 50% of whats left every month until I retire
You now also get the benefit of tax from whatever of my pension I draw down until I die.

The pot of money is much larger in the second scenario, hence why I have a private pension, but also the tax I am paying amounts to more than the state would get otherwise.

Its basically deferred but they get more out of it.
Long term it works out better for everyone as the fund value grows (its an investment afterall) and so I benefit from having an effective salary after I retire and the state benefits from taxing me on that salary, long after I retire.


Serious question:
Why do you think the state gives tax relief on pension contributions if the above isn't true?
(Please, PLEASE dont reply with some nonsense about fat-cat bankers and unethical bogeymen lining their own pockets and stealing from the poor)

You will pay less tax than you save, you even get a tax-free lump sum. It's the main reason pensions are attractive.

Nice attempt to shut down an argument with the bit in bold. The fact is pension tax relief was introduced at the behest of the pensions industry. Without it they would lose the bulk of their business.

As I said, I have no issue with private pensions... as long as you pay for it yourself after you have paid your taxes.

Varta

S.M.B. wrote: »

Varta, I do think the optics of the pension tax relief are not great at the moment, which is why I don't think they'll continue to exist in their current form, here in the UK and in Ireland.

I do think it's one of those rare tax breaks that does favour someone in my position, currently a higher rate tax payer but likely to be a lower rate tax payer in retirement, a position that often gets pretty badly stung when it comes to policy. I wouldn't be surprised if the incentive moves from a postponement of income tax to a flat 30% top up for all. I also wouldn't be adverse to such a move but am going to continue to take advantage of how things operate right now.

You are absolutely right to take advantage of it. I wouldn't expect you are any other citizen to bring about change, I expect that from the government. The change will come. This new pension for all business is just a foot in the door. Soon everyone will be included, whether or not you have a private pension. Then they will eliminate the tax relief on private pensions and they can counter any arguments by saying that they are still allowing you to put money into a pension pre-tax.

Jim2007

Robert_Beach wrote: »

There should be no private health insurance or private pensions. We can (and should) combine our national interests to ensure the State provides both of these, and does so in a manner which is ethically consistent with the health and future of the nation in mind.

I could argue that there should be no state pension or health service on the basis that it would be a far better service to the public if both were run privately.

Here in Switzerland we have no public health service, everyone is required to have private health insurance. And as a result, hospital waiting lists and people on trollies are unknown concepts. In fact they are closing hospitals at the moment due to over capacity... I've been to the A&E four times and in all cases I was with the doctor within 20 minutes of going there, in fact on one occasion I was not finished filling out the registration form when I was called into see the doctor!

The Swiss health insurance rules are:
- Everyone must have health insurance and if you can't afford it the state pays your premiums.
- Everyone must be accepted for what we call basic insurance, which more or less covers everything but a private room in a hospital.
- The state sets the standards for treatment, care and drugs etc that must be covered under the basic health insurance
- The state conducts audits of hospitals, doctors, insurance companies etc... to ensure compliance and a complaints system for any citizen that feels standards where not met in their case.

The federal department of health employs less that 500 people and none of the hundred or so insurance companies have every gone burst because they have to take on all comers.

It will be a very long day before the Irish or UK public health service come even close to the level of care I have at the moment.

A private pension fund (called the 2nd pillar) is mandatory in Switzerland, you start paying 7% for age 25 and it rises to 14% by the time you reach 55. It is at least matched by your employer, but in most cases they pay a few percent higher as a perk of the job. All through the height of the last recession my fund was returning between 4.77% and 6.1% and at worst all pension funds were returning the minimum state required rate of 3% at the time.

The rules for the private pension funds are very strict:
- The state provides a list of investment instruments (stocks, bonds etc...) that the funds may hold
- The state sets the asset allocation ratios that the fund must meet based on the demographics of the fund members: so younger funds would be higher on equities and older ones on bonds and so on
- Funds must meet a state set minimum return each year, failure to do so means that the fund manager must pay the shortfall into the fund.
- Fund managers cannot charge entry/exit fees
- Funds managers cannot charge transaction or holding fees
- Funds managers cannot benefit from retro or trade routing fees.

Now in the 30 years or so that I have been working in the area not one of the 94 funds managers in the industry have gone bust or left the market despite the restrictions.

You don't have to run everything to provide a good service, you just have to regulate it properly.

Varta

Deleted User wrote: »

tax relief on pension contributions is taxation policy as a modifier towards socially desirable behaviour

prsi is taxation to fund social transfers/transactions

theres a different case for each

each is a valid function of government

the idea that anyone can call any of it misappropriation or behave as if it's not some of the most basic policy and governance available to a government is embarrassing

embarrassing.

happy to live on the state pensions alone? sound. you're informed and responsible.

happy to contribute to a private pension pot, knowing the risks and the returns profile? fine, you're informed and responsible.

the idea that there's something unethical about either is, as kippy says, laughable. ethics, if it means anything at all, is a discussion space relevant to the intersection of two sets only- that which is legal and that which is personal.

anyone talking about the behaviour of another party which is legal but unethical is a child and safely ignored.

and to continuously drag a debate as workaday cut-and-dried as saving towards retirement into /ethics/ is both embarrassing *and* childish

to then throw into the (invalid, remember) ethical discussion the opinion that contributing to a private pension pot whilst taking advantage of tax breaks to do so is unethical, but relying on the state to provide support to you in your later years as a preferential default is ethical- that's clearly utter rubbish

earning low wages is not an ethical position. earning high wages is not an ethical position.


but if they were, and the argument is centred of the ethics of the individual contributions or otherwise to the governing pot, one is clearly superior to the other and a given society not only can, but in fact should reward and encourage the behaviours that maximise the impetus for those able to maximise their own earnings and contributions (and thereby minimise their own draw on state resources) to do so.

governance isnt theory, all the people people want all the stuff, idle demand is not real demand and if you think you deserve what the other fella has, that's nice. go get it.

A very long-winded way of defending a hand out from the state. And people in receipt of the state pension are not living of fthe state, they paid for that pension through their tax and prsi. By having a private pension you are improving your own financial position, not lessening the burden on the state. Why should the state give you money to improve your own financial position?

GreeBo

Varta wrote: »

You will pay less tax than you save, you even get a tax-free lump sum. It's the main reason pensions are attractive.

Nice attempt to shut down an argument with the bit in bold. The fact is pension tax relief was introduced at the behest of the pensions industry. Without it they would lose the bulk of their business.

As I said, I have no issue with private pensions... as long as you pay for it yourself after you have paid your taxes.

I'll pay more tax but have more money, win-win.
Do you really think the state offers tax relief just because of the pensions industry? You dont think its because the government *wants* people to have a private pensions as it actually saves the government money?

Its not shutting down an argument, its trying to prevent childish nonsense from taking over an adult thread. There is no big bad bogeyman out to get people, people need to grow a pair and plan for their future themselves rather than bitch and moan at those who do, whilst also having their hand out to get a chunk of the tax those same people pay.

I am paying for my private pension and I do pay my tax. The very reason I am able to get tax relief on up to 25% of my pension contributions is *because* I am paying 52% on the rest of it.
I'm pretty sure I am putting in far more than I will ever take out.

GreeBo

Varta wrote: »

A very long-winded way of defending a hand out from the state. And people in receipt of the state pension are not living of fthe state, they paid for that pension through their tax and prsi. By having a private pension you are improving your own financial position, not lessening the burden on the state. Why should the state give you money to improve your own financial position?

a hand out from the state?
Sure thats exactly what you are looking for!!

Even people with private pensions have been paying tax and prsi throughout their working life yunno, usually at the higher rate.

Improving your financial position lessens the burden on the state, I'm not going looking for a medical card if I have a €3M pension for example.

martingriff

Varta wrote: »

I think you are being very naive. The tax relief on private health care and private pensions was introduced as a result of lobbying by private healthcare and pension providers. The reason being that without tax relief their products would be unaffordable to most people. In the case of pensions, the products would also be so unattractive as to make them almost redundant.

As for relieving the burden on the HSE: (a) If the tax forgone were spent on the HSE it could provide a better service to more people, and (b) Private healthcare regularly dumps its more difficult cases onto the HSE.

1 of the main problems in the HSE is not money related it is structure related

The J Stands for Jay

Varta wrote: »

they are still allowing you to put money into a pension pre-tax.

That's what tax relief is..

The J Stands for Jay

Varta wrote: »

, they paid for that pension through their tax and prsi. ]

No they didn't, they paid for the social welfare paid out when they paid their taxes.

Squozen

bfa1509 wrote: »

This thread has me baffled! I completely agree with the OP. I am in my 20s and I simply cannot understand why it it makes sense to pay into a pension at my age. I can understand if you are in your 50s or 40s or at a stretch late 30s but 20s! I can't understand it.

Please read about how compound interest works. This attitude is why Australia has a compulsory personal pension.

Squozen

Varta wrote: »

A very long-winded way of defending a hand out from the state. And people in receipt of the state pension are not living of fthe state, they paid for that pension through their tax and prsi.

No. They paid OTHER people's pensions through their tax and PRSI. That's the problem. Down the line there won't be enough workers to pay your pension, so you're right up it. Hence (if you can), get a personal pension and guarantee you are unaffected. And the earlier you start the easier that is for you.

Varta

Varta wrote: »

A very long-winded way of defending a hand out from the state. And people in receipt of the state pension are not living of fthe state, they paid for that pension through their tax and prsi. By having a private pension you are improving your own financial position, not lessening the burden on the state. Why should the state give you money to improve your own financial position?

privately funded personal pension- a handout

non contributory state pension- hard earned


riiiiiiiiiiiiiiiiiiiiiiggggghhhhhhtttttttt

Robert_Beach

Private pension tax breaks are there for the rich and powerful to squirrel money away tax free. They also enrich the financial snakes who run the pension companies.

Now they want ordinary people to hand over hard earned money to these guys, to urinate up against a wall and your ordinary worker will be lucky to see a fraction of it back in 40 years. If at all. Of course that's after it fund climate change, war and all the other horribleness.

I gaurauntee in 40 years, after the money is all gone ("opps, sorry the market crashed! Again..."), the poor people of Ireland will be told that they "should have invested better" and that there's no state pension for them. Disgusting.

KyussB

Jim2007 wrote: »

I could argue that there should be no state pension or health service on the basis that it would be a far better service to the public if both were run privately.

Here in Switzerland we have no public health service, everyone is required to have private health insurance. And as a result, hospital waiting lists and people on trollies are unknown concepts. In fact they are closing hospitals at the moment due to over capacity... I've been to the A&E four times and in all cases I was with the doctor within 20 minutes of going there, in fact on one occasion I was not finished filling out the registration form when I was called into see the doctor!

The Swiss health insurance rules are:
- Everyone must have health insurance and if you can't afford it the state pays your premiums.
- Everyone must be accepted for what we call basic insurance, which more or less covers everything but a private room in a hospital.
- The state sets the standards for treatment, care and drugs etc that must be covered under the basic health insurance
- The state conducts audits of hospitals, doctors, insurance companies etc... to ensure compliance and a complaints system for any citizen that feels standards where not met in their case.

The federal department of health employs less that 500 people and none of the hundred or so insurance companies have every gone burst because they have to take on all comers.

It will be a very long day before the Irish or UK public health service come even close to the level of care I have at the moment.

A private pension fund (called the 2nd pillar) is mandatory in Switzerland, you start paying 7% for age 25 and it rises to 14% by the time you reach 55. It is at least matched by your employer, but in most cases they pay a few percent higher as a perk of the job. All through the height of the last recession my fund was returning between 4.77% and 6.1% and at worst all pension funds were returning the minimum state required rate of 3% at the time.

The rules for the private pension funds are very strict:
- The state provides a list of investment instruments (stocks, bonds etc...) that the funds may hold
- The state sets the asset allocation ratios that the fund must meet based on the demographics of the fund members: so younger funds would be higher on equities and older ones on bonds and so on
- Funds must meet a state set minimum return each year, failure to do so means that the fund manager must pay the shortfall into the fund.
- Fund managers cannot charge entry/exit fees
- Funds managers cannot charge transaction or holding fees
- Funds managers cannot benefit from retro or trade routing fees.

Now in the 30 years or so that I have been working in the area not one of the 94 funds managers in the industry have gone bust or left the market despite the restrictions.

You don't have to run everything to provide a good service, you just have to regulate it properly.

Oh look, you couldn't help replying in reference to my posts again, as predicted...

Someone investing money in e.g. an arms dealer or a bomb manufacturer, who e.g. sells weapons/bombs to the Israeli's, to drop on civilians - is supporting an unethical business. Someone investing money in fossil fuel companies that are known for engaging in propaganda/denialism regarding climate change, and which engages in widespread environmental destruction, is supporting an unethical business.

Only finance shills and sociopaths think ethics don't matter. Of coure they fucking matter. Ethics goes way beyond what is and isn't illegal - and many of the companies invested in, will be engaging-in/supporting practices in the third world, that are illegal here - and often illegal there as well...

Even by that standard, you'd still be investing in unethical companies.

Ethics, is first and foremost the no.1 issue. Money/Profits, is at the bottom of a long list of ethical and regulatory and legal concerns, that come far above it.

You'd be hard pressed to find a major pension fund out there, which doesn't have easily identifiable unethical companies in its investments.


What the public should take from this thread, is that just about every single finance industry professional in this thread, either completely dismisses or outright ignores ethical concerns - and that's the kind of person you'll be trusting with your money. I wouldn't trust a person who disregards ethics, with anythhing - that's about the most untrustworthy trait that you'll find in a person.

Robert_Beach

Robert_Beach wrote: »

Private pension tax breaks are there for the rich and powerful to squirrel money away tax free. They also enrich the financial snakes who run the pension companies.

Now they want ordinary people to hand over hard earned money to these guys, to urinate up against a wall and your ordinary worker will be lucky to see a fraction of it back in 40 years. If at all. Of course that's after it fund climate change, war and all the other horribleness.

I gaurauntee in 40 years, after the money is all gone ("opps, sorry the market crashed! Again..."), the poor people of Ireland will be told that they "should have invested better" and that there's no state pension for them. Disgusting.

wheres yr figures of ROI of pension investment over the last say forty years?

any decent figures at all to back that repetitive nonsense up?

one-off specific funds like say waterford crystal imploded with disastrous results such as you describe for their workers, but set against the number of well performing funds the instance of such is miniscule

kyuss, you havent a bulls notion what the people in this thread work as and you are absolutely out of control in your monomaniacal rantings as usual

KyussB

There's a whle bunch of them dismissing ethics, who've either directly or indirectly said they work in the industry, in the thread.

Varta

GreeBo wrote: »

I'll pay more tax but have more money, win-win.
Do you really think the state offers tax relief just because of the pensions industry? You dont think its because the government *wants* people to have a private pensions as it actually saves the government money?

Its not shutting down an argument, its trying to prevent childish nonsense from taking over an adult thread. There is no big bad bogeyman out to get people, people need to grow a pair and plan for their future themselves rather than bitch and moan at those who do, whilst also having their hand out to get a chunk of the tax those same people pay.

I am paying for my private pension and I do pay my tax. The very reason I am able to get tax relief on up to 25% of my pension contributions is *because* I am paying 52% on the rest of it.
I'm pretty sure I am putting in far more than I will ever take out.

But you don't. You only pay part of it, the rest you are allowed to put into a private pension. And tell me how people having private pensions saves the government money. BTW I'm fairly certain that I put more in than I got out, but that's the way a functioning society works, some pay more and some pay less. Otherwise it's just dog-eat-dog.

Robert_Beach

Deleted User wrote: »

wheres yr figures of ROI of pension investment over the last say forty years?

Oh what's the saying, "Past performance does not indicate future returns"

any decent figures at all to back that repetitive nonsense up?

This is quite clearly a way for the government to offload state provided pensions entirely. In a few years, old people will be left to starve because "sorry you shouldn't have invested in that index, it lost it's arse" and the State will shrug its shoulders. It's going to a be a complete dog eat dog society, and I want no part of it.

It'll be a nice juicy number though, whichever companies they pick to implement this cash grab from workers. I'm sure it's entirely transparent as to which companies and funds get picked. 100% sure.

Robert_Beach

Robert_Beach wrote: »

Oh what's the saying, "Past performance does not indicate future returns"



This is quite clearly a way for the government to offload state provided pensions entirely. In a few years, old people will be left to starve because "sorry you shouldn't have invested in that index, it lost it's arse" and the State will shrug its shoulders. It's going to a be a complete dog eat dog society, and I want no part of it.

It'll be a nice juicy number though, whichever companies they pick to implement this cash grab from workers. I'm sure it's entirely transparent as to which companies and funds get picked. 100% sure.

in other words- "no"

Varta

Deleted User wrote: »

privately funded personal pension- a handout

non contributory state pension- hard earned


riiiiiiiiiiiiiiiiiiiiiiggggghhhhhhtttttttt

A very selective response. You know very well I was referring to the government hand out that contributes to your private pension. What you euphemistically refer to as tax relief.

Robert_Beach

It's a disgrace that workers subsidize this "relief" for the high earners in this country. It's the first thing I'd do away with were I in power.

KyussB

KyussB wrote: »

There's a whle bunch of them dismissing ethics, who've either directly or indirectly said they work in the industry, in the thread.

given what you can spin out of actual direct information, im afraid one does not put a single iota of faith in what you are satisfied to declare based on your own inferences from indirect observation.