Paying a pension is like donating your money to a stranger

Mine is paid by the company without a contribution by myself

Eh...I'm not too sure how to respond to this.

If you're on a higher tax rate, you're getting around 50% extra plus company contributions for your future self.

Enjoy your holidays and cheap beer. I'll enjoy my retirement.

Once you get use to it, you budget accordingly. Won't miss it.

I feel people should manage their pension breakdown/split more. Everyone seems to put their faith in the pension providers. For example I change my pension a few months ago to have less equity/shares and it has already saved me a few bob. Not many shares have risen in last few months. I will increase equity when I feel market has neared the bottom.

If you've ever been unfortunate enough to be on social welfare, you'll see how limiting, stressful and soul destroying it is. Absolutely no way I want to live like that for my retirement. A pension/future investments are the way forward.

Yes please 🙏

None, but I've heard quite a few saying they wished they started a pension earlier, if not for themselves but for next of kin.

I started one at 22. Don't miss the outlay as I'm used to it.

Don't be asking me for fiver in a few years.

You have 5 decades before you retire. In the past 3 decades we have had the Tech bubble market crash, the 2008 financial crash, the housing crash, the 2023 crash.... All of these wiped out pensions (which were in turn bailed out by tax payers)

You not only need to invest for your pension, you need to be lucky in those investments or else you could see your savings wiped out or inflated away several times between now and your retirement.

A lot of the people who are living it up now with good pensions had defined benefit pensions from the golden age before the ladder was hoisted up behind them and we're all left with defined contribution pensions that could be worth nothing if another crash happens just before your retirement

You could try to hedge your pension by buying land or gold or gambling on bitcoin or tulips or NFTs, but it's all just the luck of the draw for the middle classes.

Why the good old taxpayer of course!

If she is living from pay check to pay check now, how do you think she will get on living of the state pension if she doesn't top it up with her own contributions?

There is a period about 8 years before you retire where the pension company winds down your exposure to equities, after each of the crashes you mentioned, the S&P still reached record highs afterwards.

Think of all the poor souls who lived beyond retirement age but didn't have a pension, I would suggest they lived a far worse life than their neighbour who was prudent and did have a pension, even if I die before retirement age, its a nice nestgg for my family to do as they please with.

2008 ended up being a great boost for pensions in the long run as stocks were cheaper to accumulate in your pension fund, basically every crash in the stock market thus far has been an opportunity of a lifetime to accumulate wealth, this is a fact to this point in time.

Look, it's a way to go but why not hedge your bets or don't put all your eggs in the public pension other investments I can make basket (even though in theory that could be quite diversified etc)

I've often met older people that seemed to have rolled along and almost made a pension an aftetthought...not one of them ever whinged about having it

At the end of the day if you are on the high rate of tax your getting what 40% of your contributions back in that you would have contributed it to the govt for nothing? unless you can claim it back some other way...see it like a long term savings scheme with instant 40% interest, it may be locked up but unless you croak it before you get to it thats a decent savings account

Then you do have choice of companies/fees etc so you can tailor to a degree within the rules to suit your strategy

Just contribute what you can to get the tax relief would be my initial thought...obviously though maybe do that after you have raised the capital for the other investments ...

Investing in banks is stock picking, investment funds are diversified which protects them from the shocks like the banks had in 2008.

As I said previously, Pension funds start unwinding equity positions in pensions approximately 8 years before the pension falls due to protect the bulk of the investment, this is a default position and you have to request this unwinding not to happen to stay fully invested in equities/bonds for the remainer of the pension term.

OP, you are not investing in a pension in your 20's just for the benefit of your 70's. You are doing it for the benefit of your 30's and 40's. Because if you leave it to 40 to decide it's time to care about your pension, you will find it is too late to achieve a decent one. Every euro you put away in your 20's is worth many, many times that by the time you retire, even with inflation taken into account.

At the age of 25, if you put €1 into your pension fund, if matched by your employer, that euro becomes almost €4 straight away. By the time you are 35, it will likely be worth double that adjusted for inflation (€8). By the time you are 45, it will hopefully have doubled again (adjusted for inflation), giving you €16. Moving into lower risk funds after that, you might hope that it will double again over the next 20 years (adjusted for inflation), giving you €32 on your retirement.

For most people, it will simply be the best thing they ever did with money.

Yes, during your 20's and 30's you may have a lower wage (especially in your 20's), and lots of competing priorities for that money, so nobody expects you to be putting away huge sums, but you will be grateful for every euro you invested by the time you are in your 40's and realise you still have a long way to go before reaching your pension goals.

For example, if, at the age of 40 you decide you need €1 million in your fund by retirement to sustain the lifestyle you currently have, you may find that, if starting from scratch, that it is simply a mountain too big to climb. But even having €200K of that already in your fund will go a long, long way to helping you achieve that target (i.e. that €200K at 40 may result in €400K to €500K by retirement age simply through investment returns, meaning you only need to build up the remaining €500K to €600K from age 40), which would be a more realistic option for you.

I'm not sure what you mean by "wiped out", or "bailed out by the taxpayers".

Yes, when investing, there are good years and bad years, but the good years more than make up for the bad ones, leaving you with a good average over a long term. If we look at the S&P 500, a poplar index and measure of "wall street performance", since January 1993 (the last 30 years), it is currently up over 1,050% as of today. Yes, that means an investment 30 years ago is worth 10 times that today. Obviously, we need to adjust for inflation, which brings that down to 580%. Not bad, given we are currently in the middle of a huge bear market and suffering ridiculous inflation rates.

Crashes don't result in the entire fund being wiped out, simply that some of the gains from previous years are surrendered. This is not a problem in any way. And it is why one typically invests in high risk funds up to their 40's (so there is sufficient time to recover from the most recent crash) before de-risking to low yield funds, and then finally moving to very-low risk/yield funds in the years approaching retirement.

I was wondering why such a scheme was needed as people are surely smart enough to plan ahead but with the OP's approach to planning for retirement I understand why its needed.

Well, financial companies are looking for investors, state is looking at keeping the economy running.

My question is why does the state offers tax free AVC? If it's in good faith why they don't offer gouvernmental bonds or give you other ways of investing your money, such as buying a rental/business with your own tax free money?

I'm a bit skeptic of Uncle Sam, retirement age keeps increasing, thinking that it's just a plan for the state to stop the state pension and leave us on our own.

The state doesn't offer tax free AVC. The only "tax free" element to your pension is the lump sum. The rest is tax deferment. Instead of paying tax at the marginal rate now, you are putting the money aside before tax and investing it and then drawing down post retirement when you have no other taxable income.

The state does offer government bonds, and some of your pension fund may even end up investing in them, but they don't even match inflation, so why would you think that's a good idea?

You can be sceptical of Uncle Sam all you want, but this is Ireland, so I have no idea what you think the US Government have to do with your pension.

I really don't think you do!

And what do you intend to live on when you are too old to work? And how rich do you think you will be that you will be happy to forego such an amazing investment return?

If you start making €150K in your 40's, and haven't started a pension, then you are double-fcuked. You will need a significant pension fund to enable you to retire at the living standard you will have grown accustomed to, and thus need an even larger amount saved by the time you are 40. Basically, while all pension planning is based on assumptions etc, whatever amount you aim to retire on, you should aim to have approx 40% of it funded by your contributions/investment prior to 40.

I really have no idea what you are trying to say here.

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