Why I will not contribute to a pension (yet). THREAD BANS IN FIRST POST

You can choose not to have your pension invested in government bonds.

The real benefit to pensions is the tax free contributions and withdrawal, which is much better than any other investment opportunity now.

You’re talking about relative value losses rather than absolute capital losses which are two completely different things.

if the CBDC is equivalent to the Euro, how will this cause an issue to pension funds ?

Surely putting anything into a pension, making sure that pension is in really really low risk funds (if in any funds at all) is benefical purely for the taxation element of it? Easy money no?

Well, you're putting fiat currency in; makes sense that you will get fiat currency out.

But you don't have to invest in fiat currency. Currency is just the medium of exchange by which you put value into the pension fund, and by which, in due course, you will take value out. While your money is in the pension fund, you don't have to invest in currency; you can invest it in any asset class you like, so long as that's an investment which a pension fund is permitted to make. If the currency depreciates in the meantime, that's not a problem, because your investment will hold its value.

You don't like government bonds as an asset class and, it seems, you don't like equities. But the important question is not what you don't like; it's what you do like. What investments do you want to make?

If the answer is, you don't want to make any investments at all, then obviously the question of whether to use a pension fund or not doesn't arise.

If the answer is, you want to invest in something that an Irish pension fund cannot invest in — e.g. you want to invest in a drug smuggling enterprise; you want to invest by lending all the money to the company that employs you/that you own — or you want to invest in something so off-the-wall that no pension fund is willing to accommodate you, then that would be a good reason for not making your investment through a pension fund.

But, other than that, if you want to invest money, and you are unbothered by the restrictions associated with pension funds (mainly, on when you can get your investment out) then you would need some good reason for not using a pension fund, given the tax advantages involved.

Short of having the gold/wheat/frozen concentrated orange juice delivered to your house so you can hide it under your own bed, if you want to invest in commodities (or, indeed, almost anything else) you're going to have to trust someone, and probably multiple people. Investment markets operate on trust and credit; if you don't have confidence in that, investment is not for you. Maybe you should just buy land with your money? But you'll still have to trust the land registry.

I think you have to start making some judgments about risk. All investment involves risk, obviously, and among those risks is the risk of dishonesty. Dishonesty is shocking but, in the scale of things, this is a minor risk compared to others that investors face. Some amount of money has been lost by investors who have been victims of dishonesty, but it's roundings of a fraction of a percent compared to the amount of money that investors have lost through adverse asset value movements. It's not entirely rational to be willing to face the greater risk but to baulk at the lesser risk.

That's not to say that you just ignore the risk of dishonesty. You can minimise it by, e.g., investing through regulated markets and using investment mechanisms that are backed by guarantee schemes. Of course, not all investments can be made this way, in which case you may have to weigh up making your first-choice investment using unregulated intermediaries of uncertain reputation, or making your second-choice investment in a more regulated environment. Only you can make that trade-off for yourself.

If you have many years to retirement, you should not be holding any bonds in the pension plan.

Was the 100% guarantee in writing?

It's your loss but I'd suggest you talk to somebody who actually understands investments and pensions.

OP - maybe pensions are not for you if you have major trust issues.

Or maybe do some proper research and get a meaningful understanding of what you are investing in next time and how they work? Having your pension invested in government bonds is really stupid unless you are very close to retirement or have knowledge of a pending global economic catastrophe.

Auto-enrolment is happening soon, so you might be automatically enrolled in a pension plan.

Of course, within the plan, you can choose to avoid bonds.

Have not gone through the thread from start to finish, bet others have flagged this.

if you are in the higher tax bracket (40%) this is most certainly the wrong train of though…a big misstep.

if you are contributing in the higher tax bracket, every contribution made immediately sees a 66.66% return. That is before your pension does anything. Markets would need to implode for you to only break even.

Note: in the higher tax bracket, for every 100e you add to your pension, it only costs you 60e. So a 60e investment results in an immediate 40e return. Please pause to understand this, and if you don’t understand (no problem there) just please please ask to clarify.

^ Post more so for others reading through the thread.

If a person did believe it wasn't a good time to invest, a pension can still provide a cash fund or deposit options to at least benefit from the tax relief.