House sold and left with 160K debt

I'm aware not everyone has a pension in the private sector and yes all pensions income is taxable.

Sorry I didn't ask the question correctly. I meant an equivalent person in the private sector.
Typically, if a 25 year old took out a defined benefit pension and made contributions at a reasonable % of his salary eg 40,000 euro(yearly average wage from the age of 25-65 years old) for 40 years, what would he expect to receive upon retirement. Estimate?

The 18000 comes from my pension department based on an average earning salary (40,000) after 31 years service in my public sector job. 18000 x 30 years of drawing pension = 540,000 Euro.
 
It really depends on what is contributed to the pension fund and the performance of that fund

For simplicity, let's say a private sector worker earns €40,000 per annum and contributes 10% of their gross income to their pension fund over 40 years. Let's say their employer generously throws in an additional 5% of this worker's gross salary every year and the fund grows by a compounded rate of 4% per annum after inflation.

After 40 years, this worker would have contributed a total of €160,000 and his employer would have contributed €80,000 to the fund. Including investment gains over 40 years, you might be looking at a pension pot of around €600k in 2015 money and that might buy you an annuity of around €12k per annum at today's rates.

You will appreciate that the above is a very rough example - it is pretty unlikely that anybody would earn the same amount for 40 years.
 
TigerDebt said:
The 18000 comes from my pension department based on an average earning salary (40,000) after 31 years service in my public sector job.
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Perhaps I am wrong but my understanding is that a public sector pension is based on the average of the final 3 years salary not the average salary over the working life.

TigerDebt said:
18000 x 30 years of drawing pension = 540,000 Euro.
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This is not a valid way to value a pension. Money in 30 years is not the same as money today. It does not account for pension increases. It does not account for survivors benefit.

An imperfect but more valid way is to ask how much it would cost to buy a similar pension from an insurance company. Any such pension would be similar to a public sector pension but not as good. It would only be backed by the insurance company not the state. It would only be indexed linked, not linked to increases in earnings.
 
Sarenco,

I agree with your numbers but I doubt that there are many if any private sector workers earning more than the average wage for 40 years and contributing 10% of their salary to a pension for that entire time.

Your example is, I suggest, at the extreme end or beyond, what is possible for the average private sector worker.
 
TigerDebt said:
Hi Brendan

I have considered all the ISI facilities but am worried about the future implications of a DSA etc when applying for a mortgage/finance at a later date.
I am looking to see if anyone has gone informally to a bank and got a deal(one of payment/writedown/significantly better terms) post voluntary sale for loss scheme??

Tiger
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1K a month for twenty years is 240K. 1 K a month is a lot of money. Time to renegotiate. I wonder what they'd do if you stopped paying and corresponding. What is your monthly income and outgoings.

I really think you need professional advice. Mabs, or the new UK based Mabs (I forget their name - they are now in place for your bank I think I read last week, it's an over the phone advice service).

Well done on getting rid of the house which you find was a noose around your neck, next step is to get rid of the debt legitimately if you can.
 
cremeegg said:
Sarenco,

I agree with your numbers but I doubt that there are many if any private sector workers earning more than the average wage for 40 years and contributing 10% of their salary to a pension for that entire time.

Your example is, I suggest, at the extreme end or beyond, what is possible for the average private sector worker.
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Absolutely.

I was really just putting down some very crude figures to give a very rough indication as to how difficult it really is for an average private sector worker to build up a sufficient pension pot to purchase a meaningful annuity to supplement the contributory OAP. I'm not suggesting that the example is in any way realistic.
 
Sorry, don't have much to help the OP but regarding public service pension, well CS anyway. I pay full rate PRSI. If I retire on €40k, I will receive a pension of €20k per year but €12k of that is the state pension. So a pension of €8k a year after paying into it for 40 years. People with a private pension will receive a separate state pension.

New entrants have a worse deal as pension is now based on career average.

I guess the OP works in the emergency services with a career of 31 years and ability to retire at 54?
 
The Oggster said:
I pay full rate PRSI. If I retire on €40k, I will receive a pension of €20k per year but €12k of that is the state pension. So a pension of €8k a year after paying into it for 40 years. People with a private pension will receive a separate state pension.

New entrants have a worse deal as pension is now based on career average.
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Are you paying pension contributions over and above PRSI.

IS €40,000 an average salary for people in the last 10 years pre retirement.
 
TigerDebt said:
The original mortgage was 1300 but in 2013 we lost the TRS, had to pay back 50 per month for one months arrears and an interest rate hike sent us over the edge. This pushed the mortgage to up over 1550 per month. Coupled with the fact that we are both public sector employees our salary took a huge hit quite soon after we took the original mortgage out.
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Was the mortgage not stress tested when you took it out? At least you still had secure jobs, and a pension to look forward to so no big need for savings. By cutting back on holidays or luxuries could you not afford the mortgage?

The Oggster said:
If I retire on €40k, I will receive a pension of €20k per year but €12k of that is the state pension. So a pension of €8k a year after paying into it for 40 years.
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You also get 18 months salary tax free on retirement though, as well as 50% of your finishing salary per year as a pension,do you not? That is not to be sniffed at. And most public servants I know retire on a considerably higher pension than 20K, given average public sector pay is over 48k a year ( http://www.irishtimes.com/business/...higher-than-those-in-private-sector-1.1907313 ).
 
Apparently half private workers have no pension other than state @ k12.
Most of the rest do not have Defined schemes but rely on the value of fund @ retirement.

To get a non-index linked pension of 10,000 you need contribution fund of 240,000.

to add spouse + index linked seems to need contribution fund of 400,000.

The danger on Public pensions is that they are at the whim of the state.
(bear in mind the state has robbed even from private pension funds).
...........................
Josephine in (fluffy) times stress testing was a joke, people in their naivety trusted Mr Bank to not walk them into a hole.
 
josephine said:
You also get 18 months salary tax free on retirement though, as well as 50% of your finishing salary per year as a pension,do you not? That is not to be sniffed at. And most public servants I know retire on a considerably higher pension than 20K, given average public sector pay is over 48k a year ( http://www.irishtimes.com/business/...higher-than-those-in-private-sector-1.1907313 ).
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If average is €48k that means a pension of €24k a year, 12 of which is state pension. Also if average is €48k, it means there is an awful lot of people on a lot less.
cremeegg said:
Are you paying pension contributions over and above PRSI.
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I'm paying full rate PRSI and pension, spouse pension, children's pension and 'pension related deduction'.
 
No, you're paying PRSi (like everybody else) and your income is (not very sigificantly) reduced by way of a temporary PRD to reflect the fact that you will qualify for an extremely generous public sector pension. Government policy is to wind down PRDs as resources allow.

The spouses' and children scheme is a benefit to you - not a cost.

Irish public sector pensions are exceptionally generous by any reasonable standards.
 
cremeegg said:
Are you paying pension contributions over and above PRSI.
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PS hired since 1995 pay full-rate PRSI, and their normal pension conts of 6.5% of wages applying to most PS.

Recently, they also pay the PRD, which is up to 10% - 10.5% of wages.
 
Protocol said:
Recently, they also pay the PRD, which is up to 10% - 10.5% of wages.
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That's not really true. PRDs are applied on a tiered basis and the first €15,000 of income is completely exempt.

A PS worker on €40,000, to take one example, would only have 5.3% of their income deducted.
 
Firstly to the OP I recognise that you have a difficulty with your mortgage at present and this cannot be pleasant for anyone. Unfortunately the responses here have not been of much help. Your situation is not very bad but it must be immensely frustrating to be unable to move on. The only constructive advice I can give is don't be in any hurry to tell the bank that a relative can lend you money.

Regarding the public sector pension matter which has taken off in this thread.

So for a person who joined after 1995.

You pay ordinary (why do we say full?) PRSI
You pay 6.5% pension contribution
You pay 10% or higher pension related deduction, PRD

For this you get contributory state pension (see further question below)
You get pension top-up to 50% of the average salary, 3 best years of the last 10

Further question, if the state pension were to be cut or just increase less than average public sector wages does the top-up increase to keep the pension at 50%?
 
The Oggster said:
If average is €48k that means a pension of €24k a year, 12 of which is state pension.
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Taking the average public sector salary of 48k means the average public sector pension is worth more than 24k for existing p.s. pensions, as
(a) the average public service salary in the last few years before retirement is considerably more 48k, due to increments, promotion etc
(b) the 18 months tax free lump sum bonus in addition to pension.
Think I read in the business pages somewhere it averages out being worth about 35k. However for new entrants I think pension is based on 50% career average rather than 50% finishing salary.

Sarenco said:
Irish public sector pensions are exceptionally generous by any reasonable standards.
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Correct
 
Post was headed
{Feather beds for wealthy retired}

1. Most retirees are not wealthy .
2. All retirees are those who in 1950,s onward, by their efforts have ensured a much higher standard of living for those who give out about Retirees.
3. Do the complainers want OAP reduced , so when their time comes a pittance will suffice to keep them ?
4. It irks me to see retirees getting picked at.

I do accept all present and future pensions need reviewing , but leave off the tone of some comments !
 
Josephine,

josephine said:
Was the mortgage not stress tested when you took it out? At least you still had secure jobs, and a pension to look forward to so no big need for savings. By cutting back on holidays or luxuries could you not afford the mortgage?
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Yes it was stress tested but at the 2006 pay levels (pre bust). Because of the crash, we had already cut back on luxuries and holidays etc since 2008. So six years of that cemented our decision to cut our losses. Also I was living off less than the dole a week just to keep the house and I had no dependents.
 
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