What is a reasonable pension pot?

AndrewJRenko

AndrewJRenko wrote: »

Amazing idea. Can't quite see it taking off here.

Does this happen anywhere else in the world, I wonder?

Its a pretty crazy idea which would force most people into the rental market except the very rich. I bet Mr Somerville author of the paper is fairly well housed himself.


The first page is way out of date of course.

http://www.tara.tcd.ie/bitstream/han...pdf?sequence=1


Ireland has long experienced a remarkably high level of owner occupation of residential property, both absolutely and relative to neighbouring countries. According to the first census after the second world war, 52.7 per cent of private dwellings were owner occupied in 1946.1 That approximates to the current rates of owner occupation in Denmark, France, Netherlands and Austria, which were in the range 53 per cent to 58 per cent in 2001-2003, and comfortably exceeds the current rate for Germany, which was 45 per cent in 2002 excluding the former DD.

Even then that was clearly selective since he mentioned only 5 countries.

Anyway those states are way out of date. We may have had 79.2% ownership in 1991, but its about 65% and falling now.

Heres a sample of some European countries.

https://www.statista.com/statistics/246355/home-ownership-rate-in-europe/

Ireland is 9th lowest and falling.

Henry Ford III

Please don't use bold letters/font.

Jim2007

fvp4 wrote: »

Its a pretty crazy idea which would force most people into the rental market except the very rich. I bet Mr Somerville author of the paper is fairly well housed himself.

Do you think a housing policy based on people taking on a huge amount of debt or relying on the state to put a roof over their head is a smart idea???

When you buy a house you break all the tenants of investing: you invest in a high risk asset class with a low rate of return, you borrow to do so, you fail to diversify among asset classes and within the asset class itself. Generally speaking apart from the period while raising your family, you will have an over capacity in housing. How is that a wise investment???

Within the Anglo Sphere, for want of a better term, there is a high emotional value attached to property ownership which is not there in other countries. The consensus in Switzerland, is that you should not spend more that 20% of your net monthly income on housing. Here people tend to change apartments two or three times in their lives: an initial small apartment on leaving the nest, a large apartment when raising a family and a smaller place when the nest is empty. Some move to the countryside in early retirement and to a town or city later when health declines and they need easier access to healthcare etc.

For a Swiss, financial independence means a solid pension fund, a well diversified investment portfolio and zero debt. About all zero debt. In the last recession when as Swiss employee lost their job, their biggest financial comment was probably a few months rent to cover the notice period. That made them very mobile in the work force and of course equity portfolios recovered long before negative equity disappeared.

It is just a very different philosophy, most people seem to live comfortably enough in both countries.

Raoul Duke III

Jim2007 wrote: »

Do you think a housing policy based on people taking on a huge amount of debt or relying on the state to put a roof over their head is a smart idea???

When you buy a house you break all the tenants of investing: you invest in a high risk asset class with a low rate of return, you borrow to do so, you fail to diversify among asset classes and within the asset class itself. Generally speaking apart from the period while raising your family, you will have an over capacity in housing. How is that a wise investment???

Within the Anglo Sphere, for want of a better term, there is a high emotional value attached to property ownership which is not there in other countries. The consensus in Switzerland, is that you should not spend more that 20% of your net monthly income on housing. Here people tend to change apartments two or three times in their lives: an initial small apartment on leaving the nest, a large apartment when raising a family and a smaller place when the nest is empty. Some move to the countryside in early retirement and to a town or city later when health declines and they need easier access to healthcare etc.

For a Swiss, financial independence means a solid pension fund, a well diversified investment portfolio and zero debt. About all zero debt. In the last recession when as Swiss employee lost their job, their biggest financial comment was probably a few months rent to cover the notice period. That made them very mobile in the work force and of course equity portfolios recovered long before negative equity disappeared.

It is just a very different philosophy, most people seem to live comfortably enough in both countries.

Speaking of philosophical differences (and maybe we should open up a separate thread), one factor at play in Switzerland, and indeed much of contintental Europe is inter-generational wealth transfers.

Simply put; we were a poor country until very recently. Switzerland has been a rich country for a long time. This results in very different phases of wealth formation and attitudes towards investment. The Swiss can see the value in long-term investment, they actively plan with those horizons in mind. The Irish are much more short-term focussed.
I would argue that wealth and the security it brings allows you the luxury of long-term planning. Which then brings its own rewards.

Jim2007

Raoul Duke III wrote: »

Speaking of philosophical differences (and maybe we should open up a separate thread), one factor at play in Switzerland, and indeed much of contintental Europe is inter-generational wealth transfers.

Simply put; we were a poor country until very recently. Switzerland has been a rich country for a long time. This results in very different phases of wealth formation and attitudes towards investment. The Swiss can see the value in long-term investment, they actively plan with those horizons in mind. The Irish are much more short-term focussed.
I would argue that wealth and the security it brings allows you the luxury of long-term planning. Which then brings its own rewards.

I could not agree because I know plenty of poor Swiss people. Yes, there are some very wealthy people in Switzerland, Ireland and else where. Most Swiss kids won’t inherit a house and in most cases the parents will have spent most of their savings in retirement so their won’t be much of an inheritance to look forward to.

One thing you have not got yet in Ireland is pensioners who can’t afford to live in the country full time. If you got to Spain, Portugal or the South of Italy in the winter, you’ll find a lot of Swiss retirees there for the winter. They are not there because the are rich, they are there because they can’t afford to live in Switzerland full time.

Every time I visit Ireland or talk with relatives I’m always shocked at the level of consumerism! The amount people spend on first communion, confirmation and weddings is just mind blowing! Here kids have a device - smartphone, tablet or laptop, not two or three. Pocket money equals age, so a 15 year old gets 15 Euro per week. So yes people learn the value of money early and are careful with it.

The J Stands for Jay

Jim2007 wrote: »

Every time I visit Ireland or talk with relatives I’m always shocked at the level of consumerism! The amount people spend on first communion, confirmation and weddings is just mind blowing! Here kids have a device - smartphone, tablet or laptop, not two or three. Pocket money equals age, so a 15 year old gets 15 Euro per week. So yes people learn the value of money early and are careful with it.

I couldn't agree more. It's mind boggling, the amount of conspicuous consumption. We live in a country where ads for new cars mention only the manufacturer and the number plate: "Visit your local Ford dealer and order your 212 today."

AndrewJRenko

Paul Mears wrote: »

is there any good irish companies I can speak to regarding my pension?

THat's like asking "Is there any good garage to bring my car to?". No-one can answer unless you tell us what your car is and what problem you're having.

Where are you in pension terms and what decisions are you looking for help with?

PhilOssophy

Paul Mears wrote: »

is there any good irish companies I can speak to regarding my pension?

Go to an independent financial advisor, pay them for a couple of hours of their time and see what they suggest.

The problem is, and always has been, how independent they really are....

Never take a "free consultation" because you will pay massively long term for the few hundred quid you save short-term. Because they will flog you the products they are on commission for.

Henry Ford III

PhilOssophy wrote: »

Go to an independent financial advisor, pay them for a couple of hours of their time and see what they suggest.

The problem is, and always has been, how independent they really are....

Never take a "free consultation" because you will pay massively long term for the few hundred quid you save short-term. Because they will flog you the products they are on commission for.

That's just not correct.

All fees and commissions must be disclosed and agreed.

Cork Lass

Paul Mears wrote: »

is there any good irish companies I can speak to regarding my pension?

Wondering this myself - does anyone have a recommendation for an independent financial advisor in Cork.

PhilOssophy

Henry Ford III wrote: »

That's just not correct.

All fees and commissions must be disclosed and agreed.

Must be? Really? Or should be? Or may be?

So I go in to financial advisor x, he has to tell me if he is on commission for any pension provider?

Unknownability

PhilOssophy wrote: »

Must be? Really? Or should be? Or may be?

So I go in to financial advisor x, he has to tell me if he is on commission for any pension provider?

Must be and yes.

PhilOssophy

Unknownability wrote: »

Must be and yes.

And how do I know he's telling me the truth?

domrush

PhilOssophy wrote: »

And how do I know he's telling me the truth?

It will be written in the documentation you receive from the pension provider. It’s not a verbal thing

Calahonda52

Henry Ford III wrote: »

That's just not correct.

All fees and commissions must be disclosed and agreed.

Yes disclosure but they will still show a preference for what pays commission.
so the original comment is true when using a tied agent.

The real evil is churn

Henry Ford III

PhilOssophy wrote: »

Must be? Really? Or should be? Or may be?

So I go in to financial advisor x, he has to tell me if he is on commission for any pension provider?

Yes. It's mandatory.

Bass Reeves

PhilOssophy wrote: »

Must be? Really? Or should be? Or may be?

So I go in to financial advisor x, he has to tell me if he is on commission for any pension provider?

Not only that if you were moving money from a fund ( maybe changing employers) to another fund people have negotiated part of the Comission to be paid into there fund

Henry Ford III

Calahonda52 wrote: »

Yes disclosure but they will still show a preference for what pays commission.
so the original comment is true when using a tied agent.

The real evil is churn

I agree on churning. Tied agents just don't care. The potential liability is someone else's. Avoid them.

Higher commission, if that's the route you're taking, means higher charges.

Another mandatory requirement is for a "reasons why" letter to be issued when making a product recommendation.

So unless there's some pretty compelling other reason to go with a higher cost contract there's a big issue there.

p.s. The principal of best advice applies too.

Henry Ford III

Bass Reeves wrote: »

Not only that if you were moving money from a fund ( maybe changing employers) to another fund people have negotiated part of the Comission to be paid into there fund

Not really. What happens is that reduced fees are agreed and that a higher allocation rate is used for the transfer.

Bass Reeves

Henry Ford III wrote: »

Not really. What happens is that reduced fees are agreed and that a higher allocation rate is used for the transfer.

Is that not what I said in another format.

Henry Ford III

Bass Reeves wrote: »

Is that not what I said in another format.

No it's not.

Bass Reeves

Henry Ford III wrote: »

No it's not.

Yes it is


Not only that if you were moving money from a fund ( maybe changing employers) to another fund people have negotiated part of the Comission to be paid into there fund



Not really. What happens is that reduced fees are agreed and that a higher allocation rate is used for the transfer

Please explain the difference between the two statements above.

Not only that but people have also negotiated when moving from pensions/AVC's to receive part of the Comission paid to them as a lump sum.

Henry Ford III

Bass Reeves wrote: »

Yes it is


Not only that if you were moving money from a fund ( maybe changing employers) to another fund people have negotiated part of the Comission to be paid into there fund



Not really. What happens is that reduced fees are agreed and that a higher allocation rate is used for the transfer

Please explain the difference between the two statements above.

Not only that but people have also negotiated when moving from pensions/AVC's to receive part of the Comission paid to them as a lump sum.

Firstly. I said in post #111 "Not really". I then explained how it's done, which is not how you suggested.

Secondly commission refunds don't work because the broker would need to claim a tax deduction for it, and it therefore becomes taxable in the hands of the recipient.

Enhancements are done by way of reducing charges and therefore commission.

Now that's more than enough on that. We're way off the original topic and unless it goes back there I'll close it. Any more comment or unsubstantiated claims on commission rebates will lead to infraction.

Jim2007

Henry Ford III wrote: »

No it's not.

Bass Reeves wrote: »

Yes it is.

At one stage a company I was involved in sold software for performing these calculations, it offered 1013 possible combinations, so not sure where this is going….

You could both be right or wrong or any combination.

* Posted at same time #115

Bass Reeves

Henry Ford III wrote: »

Firstly. I said in post #111 "Not really". I then explained how it's done, which is not how you suggested.

Secondly commission refunds don't work because the broker would need to claim a tax deduction for it, and it therefore becomes taxable in the hands of the recipient.

Enhancements are done by way of reducing charges and therefore commission.

Now that's more than enough on that. We're way off the original topic and unless it goes back there I'll close it. Any more comment or unsubstantiated claims on commission rebates will lead to infraction.

...snip....

Henry Ford III

Bass Reeves wrote: »

...snip.....

You were warned. Do not post on this thread again.

Raoul Duke III

Did we reach a consensus on the original question?

I'm sticking with '€1 million'.

The other question of course would be 'are you realistically going to reach your target by your target retirement date?'. I suspect a lot of the non-PS cohort have unrealistic expectations here.

Henry Ford III

Surely it depends on what income the pension is replacing?

Incomes vary enormously so there's no "one size fits all" answer.

Jim2007

Henry Ford III wrote: »

Surely it depends on what income the pension is replacing?

Incomes vary enormously so there's no "one size fits all" answer.

Pretty much. Most popular consumer affairs articles here (Switzerland) take that approach, suggesting a lower figure of about 60%. I think that is probably a bit low, so I aimed for 70%.

If and when you can achieve those levels is the question. Retiring at say 55 or so does not just depend on hard work and saving, it takes a certain amount of luck as well as an awareness to start preparing at an early age.

It was possible, but I don’t know about now….

Back in the 80s on average a Swiss banker could expect a bonus of around 6 months salary in a good year and 2 in a bad year or maybe 3 if they really wanted to hold on to you. Today the average is zero, yes bonuses still exist but you need to do something special to get one.

Likewise the chemical industry had crazy money back then. I remember doing an evaluation for a guy moving from the US to Basel. The company was covering the loss on the sale of his house in the US, the moving costs, 6 months rent in Basel while his family searched for accommodation and the really big ticket a fully paid up Swiss private pension. The guy was a software tester!

I don’t know where the crazy money is these days.

The Mighty Quinn

Jim2007 wrote: »

It was possible, but I don’t know about now….

Back in the 80s on average a Swiss banker could expect a bonus of around 6 months salary in a good year and 2 in a bad year or maybe 3 if they really wanted to hold on to you. Today the average is zero, yes bonuses still exist but you need to do something special to get one.

:eek::eek:

That's incredible and surely was never sustainable. Imagine 6 months salary as a bonus, even at 50% tax it'd be an incredible sum of money to most as a bonus. I get a €250 voucher at Christmas and I'm delighted with it

I didn't have the financial intelligence, or life intelligence, to start retirement planning early. I was a late in the day 29 before I started a pension, and it was only small money per month until the last year really, I'm 35 now with c.40K in a pension. Between employer contribution and tax relief, I'm adding about 12K a year to the pot.

All going very well - assuming I can continue payments as they are, that things don't crash etc, ignoring any potential growth - I'll have about 100K in the pot by 40 years old. While this feels like a lot of money to me, It's a long long long way from having an 800K pot by retirement haha, I reckon if I'm lucky, I'll have 300-400K by 65.

No chance of retiring in my 50s. It's a lovely dream, but I haven't the means to do it. I'll be 57 at best before my daughters finish college (should they choose to go) which I intend to finance for them.