What does your pension portfolio look like?

Gordon Gekko said:
If I have the choice to put €10k into my pension now or pay €10k off my mortgage, I have to look at it in the context that I have one shot at that €10k and could be forgoing €40k in my pension at retirement (based on a 7% return over 20 years).
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@Gordon Gekko do I read into that statement that you are working on the basis of roughly 7% real return from your pension fund per annum on average?

Gordon Gekko said:
And the thing with mortgages is that they tend to get paid off anyway. What is the point of being mortgage free 8 years early when the tax rules mean that you can’t backfund your pension with the excess cashflow at that point?
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Fair enough, but I guess this is the overall balance between carrying debt and investing in pension funds. There was a while when most of our mortgages were floating around 4.5%, and that would equate to roughly 9% pre tax return. The compounding of a mortgage at this rate of interest can be difficult as well, especially if people have over extended.

But yes, I do get your point on the tax relief on pensions and does make sense.
 
Hi gnf ireland,

No, not at all...I was just using 7% because of its simplicity in terms of compounding.

In my planning, I have always used 4.5% real and net of fees.

Gordon
 
39, 7.5 annual salary saved in pension. 20% Employee, 15% Employer. Was until the summer, 100% equities and now 80% IL Dev World Index(50% FTSE World/50% Euro) and 20% IL Bonds...not too many choices with company plan.

Partner is 40, 4.5 annual salary in pension. 25% EE, 12%ER. Also 80/20 split as of the summer with company plan with IL.

Pretty much make full AVCs then pay crèche for 2 wee ones, mortgage, a bit for rainy day and live off what's left.
 
Ndiddy said:
Pretty much make full AVCs then pay crèche for 2 wee ones, mortgage, a bit for rainy day and live off what's left.
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Impressive contributions during what is a very expensive period of childcare !
35-37% contributions should ensure a very comfortable retirement for you both ...
 
A question that I often ponder: does the 25% (200k) limit on tax free lump sum have a bearing on anyone's pension planning?

I'm 44 now and should hit that 800k number for pension pot size within 8-10 years max. Assume mortgage paid off and no other debt.

Is anyone using that 800k barrier to drive future plans? For myself, I would quite like to crystallise my pension in my early 50s when I hit the 800k, quit my (high-paying, high stress) career and find new work of my choice without too much concern as to the salary attached. Probably part-time.

Anyone else thinking along these lines? (Or am I the only nutter out there!?)
 
In a similar situation: 39, well paying but high-stress job, hoping to be mortgage free in a few years and able to retire or just move to something more rewarding/lower stress by 50 (which is also when I can access my pension).
I'm still working a lot of this out*, but there is a huge internet community around this stuff (the key acronym is FIRE (financial independence, retire early) and there is a vast amount of info on both the lifestyle and financial side. For an excellent example of the latter, search for "The Ultimate Guide to Safe Withdrawal Rates" on the earlyretirementnow site (sorry I can't post links).
 
Truffade said:
A question that I often ponder: does the 25% (200k) limit on tax free lump sum have a bearing on anyone's pension planning?

I'm 44 now and should hit that 800k number for pension pot size within 8-10 years max. Assume mortgage paid off and no other debt.

Is anyone using that 800k barrier to drive future plans? For myself, I would quite like to crystallise my pension in my early 50s when I hit the 800k, quit my (high-paying, high stress) career and find new work of my choice without too much concern as to the salary attached. Probably part-time.

Anyone else thinking along these lines? (Or am I the only nutter out there!?)
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notthatkeen said:
In a similar situation: 39, well paying but high-stress job, hoping to be mortgage free in a few years and able to retire or just move to something more rewarding/lower stress by 50 (which is also when I can access my pension).
I'm still working a lot of this out*, but there is a huge internet community around this stuff (the key acronym is FIRE (financial independence, retire early) and there is a vast amount of info on both the lifestyle and financial side. For an excellent example of the latter, search for "The Ultimate Guide to Safe Withdrawal Rates" on the earlyretirementnow site (sorry I can't post links).
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Don't let the tail wag the dog. In other words, don't see having to pay tax (of 20%) on some of the lump sum as the point in which you stop funding for your pension. The cost of your lifestyle (especially if drawing down early) may mean you need a pension of €1.5m. What are you going to do then? Carry on working? Have a less enjoyable lifestyle?

There are lots of people in well paid but high demanding jobs. We all know that there isn't going to be gold watch at the end of your career for 40 years service. So you need to put the structures in place now so that you have that choice of leaving early and taking a job that pays less but with less stress. If you aren't organised and don't plan, you will be stuck in a job that you begin to find too demanding but you need the income that comes with it.


Steven
www.bluewaterfp.ie
 
Going back to the original question of allocation

I would be worried as evidenced by the recent correction that the global equities are "toppy" these days. Particularly with the rising US rates and other business indicators.

Therefore while previously 100% global equities I recently moved a portion to cautious equities and some to cash.
 
I'm curious. What are cautious equites?

If you can lose 100% of your investment how does that meet the definition of cautious?
 
There is a fund in my list of Irish Life funds into which I can switch and it's called

"Cautious equities"

It's composed of equities, bonds, cash, property.
 
Couple of questions
1 - For those quoting "x times salary", is there a benchmark you are following? I've seen references elsewhere to 1 times salary at 30, 3 times at 40, 6 times by 50?
2 - For those quoting distributions / breakdowns - are these something you are controlling individually? I'm with Irish Life and have a list of about 6 funds available, and all have various breakdowns within them, but not direct control. Is this the general approach of a breakdown by fund, or do other providers allow a more granular breakdown?
 
Thos

I quoted salary to follow the previous examples but my goal is to get to 25 times my annual expenses- what my family need to live on modestly but comfortably which is a totally different number. Creche fees for 2 pretty much wipe out any significant saving outside of the pension, so we put in the max allowable for tax relief and live off the rest.

For your second question, are your 6 choices MAPS or a fund made of other funds? My company plan has and option for that and the option to choose my own funds, albeit from a limited choice of IL funds. I DIY and for now choose 80% in Global equities( which is 100% stock) and 20% in Euro Government Bond fund.
 
Ndiddy said:
Thos

I quoted salary to follow the previous examples but my goal is to get to 25 times my annual expenses- what my family need to live on modestly but comfortably which is a totally different number. Creche fees for 2 pretty much wipe out any significant saving outside of the pension, so we put in the max allowable for tax relief and live off the rest.

For your second question, are your 6 choices MAPS or a fund made of other funds? My company plan has and option for that and the option to choose my own funds, albeit from a limited choice of IL funds. I DIY and for now choose 80% in Global equities( which is 100% stock) and 20% in Euro Government Bond fund.
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Thanks for the reply.

I have the PLS - Personal Lifecycle Strategy option, or I have a list of 6 or so funds, varying risk levels, all EMPOWER branded Cautious / Growth / High Growth, look to be similar to MAPS alright, and are mostly multi-asset, with 1 'World Equity Fund' available.

moneymakeover said:
What do you mean not direct control?

You mean you have to request any changes?
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The question was more about direct control of the distribution. So I can pick a fund with 70% shares, 20% bonds, 10% property, or another with different but still 'fixed' distribution, but not decided to pick my own mix.
I use Irish Life Pension Planet, which has the feature & functionality to switch, but for some reason my company don't allow, so needs to be written submission to switch funds.
 
Thos
I'm similar

Currently distributed across
Empower Cash
Empower cautious
Empower world equity partially hedged

The list of funds seems to allow a mix of equity / cash / property / bonds as required
 
Ok hi all, new here but curious about pensions, currently 16% of salary, roughly half by employer. 2/3rds equities 1/3rd Irish propertys REIT with aviva. Pension pot of €320k running for the past 20 yrs . I am 45. Any comments on this?
 
I would question the wisdom of the allocation to Irish property. Most of us are already over exposed via our homes and if you didn’t live in Ireland, would you still invest here?
 
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