M
Excellent post Marathonic
I'm actually happy to see the value of my pension fall, as long as that fall isn't the result of excessive charges - as this means that any further contributions are buying more units in my chosen funds. I won't be seeing the money for 25-35 years anyway so the more I buy now, the better it is for me.
There’s a difference between buying units in individual companies and buying units in a fund or index tracker. A company can go bust, however you’d expect that over time most reasonably balanced funds to at least keep growing along with inflation.Cheap units are a myth. You are implicitly expecting that there is some ultimate pre-determined value to each unit purchased that is fixed at your particular retirement date.
This is only true if you felt that they were fair value at the higher price and so now represent very good value. If they were previously over-priced, they may now only represent fair value - and they could still be over-priced (it's like saying houses are now cheap/good value because prices have fallen value so much...)If you’re committed to investing in pension funds and you see that unit prices are say 20% “cheaper” than they were previously, then it makes sense to try to increase purchasing at this new lower level.
This is only true if you felt that they were fair value at the higher price and so now represent very good value.
There are many posts on various forums when the markets have plummeted and, as a result, people are posting about their plans on stopping contributions or, worse again, pulling all funds out of the market and remaining in cash.
If you’re committed to investing in pension funds and you see that unit prices are say 20% “cheaper” than they were previously, then it makes sense to try to increase purchasing at this new lower level.
Unless you understand the underlying reason for the fall, you cannot make any inferences as to whether further investment is a good idea e.g. if the possibility eurozone breakup has caused your fund to fall 20%, then loading more money into the fund would be a successful strategy only if the fears of break-up subsided.
Auto enrolment is in uk not Ireland marsthonic isn't it
The tax relief is not free money - it is deferred taxation. And you can be doubly taxed - USC now and then tax and more USC when the pension is drawn down. You need to consider your tax position now and in retirement before deciding that a pension is the best way to save for your retirement. I personally am never putting another cent of my own money into a pension again (the pension contributions referred to above are from my employer and I'm going to ask for this to be paid to me as salary instead from next year). Even on the current tax regime, there's not much incentive to invest in a pension. Take away some or all of the tax-free lump sum, increase marginal tax rates, prolong the pension levy ~ and the incentives disappear completely and the pension will be a worse investment than saving net cash. Pension are too tempting a target for the government - lots of locked away cash that the owners can do nothing about rescuing from the likes of the pension levy. The tax-free lump sum has to be an easy target too - I can't see the 25% rate surviving until I retire.tax reliefs are a huge incentive, hard to get a upfront 41% return on your monies anywhere.
If you could confidently predict the ups and downs of the market, I think you would be rich enough to not have to worry about pension savings...if you are prone to changing contribution levels, you should be increasing them on the way down and decreasing them on the way up
If you could confidently predict the ups and downs of the market, I think you would be rich enough to not have to worry about pension savings...
Even on the current tax regime, there's not much incentive to invest in a pension. Take away some or all of the tax-free lump sum, increase marginal tax rates, prolong the pension levy ~ and the incentives disappear completely and the pension will be a worse investment than saving net cash
That's a lot of things that need to happen before the incentives are gone - and does this, or any future, government want to disincenticise providing for our own retirement?
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