Show me where the value is in a lifetime of contributing to a private pension?

[NoRegretsCoyote]

I don't think so. The fund size you are quoting is on the low side. Most people I know, its a lot more.

Your friends is not a representative sample!

Very few pensioners pay income tax at the higher rate on their pension income.

I'll dig out the CSO statistics later.

 

[RedOnion]

I'll dig out the CSO statistics later.

Why bother?
Just think of a few random people you know, and then say it's representative of the entire population, and criticise others fact based comments.

 

[Saavy99]

Bronco Lane

Very few people can do without their pensions, half the country rely solely on the State pension and the next generation of young people are squeezed to the limit, paying huge income taxes, Hugh mortgages and travelling up two and half hours each way to their jobs in Dublin every day. High childcare costs. How can they contribute towards investments for their retirement, impossible. You are one of the very lucky ones when you sat that you don't need your pensions.

 

[Bronco Lane]

Very few people can do without their pensions, half the country rely solely on the State pension and the next generation of young people are squeezed to the limit, paying huge income taxes, Hugh mortgages and travelling up two and half hours each way to their jobs in Dublin every day. High childcare costs. How can they contribute towards investments for their retirement, impossible. You are one of the very lucky ones when you sat that you don't need your pensions.

Do you think that we didn't have similar problems back in the 1970's and 1980's. Mortgage rates at 14%? Higher income tax. Blackouts, petrol shortages, no computers, internet etc
Your pension will take care of itself....... concentrate on generating extra wealth for yourself.

 

[NoRegretsCoyote]

Very few pensioners pay income tax at the higher rate on their pension income.

CSO SILC data show that only13% of over 65s have a net income of over €650 a week (€33,800 a year). That includes all income, not just pension income and bear in mind some over 65s are still in employment. So the vast majority of pensioners are not paying any tax at the higher rate.

Median income for over 65s is around €350 a week which will see you pay little or no tax at all!


The major draw of pension contributions is that in general you'll get relief at the higher rate as you pay in, but will pay tax at the lower rate as you draw down.

 

[Sarenco]

The major draw of pension contributions is that in general you'll get relief at the higher rate as you pay in, but will pay tax at the lower rate as you draw down.

It's probably more accurate to say that pension contributions are relieved at your marginal income tax rate but drawdowns are inevitably taxed at a much lower effective rate - possibly as low as zero.

And, of course, all investment income and gains within a pension wrapper compound tax-free in the meantime.

It's also worth bearing in mind that, as things stand, the over 65s don't pay PRSI and there's no USC on social welfare payments (including the State Pension (Contributory)).

 

[ashambles]

It's also worth bearing in mind that, as things stand, the over 65s don't pay PRSI and there's no USC on social welfare payments (including the State Pension (Contributory)).

Just for accuracy that age I believe is 66, currently planned to be 67 in 2021 and 68 in 2028.

Going on memory on something I read - I think the main people taking out annuities now are people forced to do so due to their lump sum being larger than 25% - but I'm sure someone will know the details better.

 

[Gordon Gekko]

Which is why some of us remember when a few years back Michael Noonon raided Irish pensions. Made me think that there was no way I'd go for an AVC and that the best bet was to only contribute the amount that got the tax benefit and that got the employer contribution.

You shouldn't have governement uncertainty into the mix. Not on something as important as pensions.

If such restrictions didn’t come to pass,I’d be pretty annoyed to be sitting here 30 years from now having followed your lead.

 

[LS400]

@LS400 made a claim of 700% growth 1995 to date

You are claiming max 400% growth and over a longer period.

You're not contradicting me, if indeed you were trying to.

I see you have a difficulty with one my investment.
The irony of this being, had more finances been made available, I would have purchased a better house in a better area, and made less of a profit over all. Luck did play a part, but it does in every walk of life. Had I known how well it was to worked out, I regret not investing more in the area (Dublin)

So Throwing around this % growth and that % growth means diddly squat... until you cash out.

Im in my 50s, and for the usual suspects on AAM to be peddling the "only way is Pay as much into a pension as early as possible", Get a grip. I paid off my mortgages with every thing I had. Paying into a pension was way down the list. I had great holidays with the kids, grown up now, great memories, and still pay a modest amount into my private pension. Spreading the egg baskets around.

Variety is the spice of life here. Ive done well out of the property market "to date", ie, if i were to cash out now, and Im saying this without any smugness, would be very comfortable, and, many times better off than any Pension i could have afforded.
At the same time, 10 years from now, it could be wiped out with a terrible property crash.... Which expert here wants to stick their head above the parapet and claim to know what lies ahead. ??

The hard fact still remains, my €30k is worth a heck of a lot more than had I given it to an Expert ( No disrespect here to Stephen) to handle for me. Yes I invested time in this, but so did the expert in monitoring the performance of their clients investments. Luck played a part with its location not being as undesirably as it was then, but Luck plays its part every day with investments.

I said before here, there is a roll for (Good) pension advisers, I just want more out of life!!,

As for paying into a pension for your working life?,
This really only applies to the high earners who can afford to load their payments into it, and at the same time enjoy a very comfortable life style.


Look at Bit coin, It was almost dead in the water 9 months ago, Intelligent people had it all but buried!! Luck has a lot to do with it .

Uncertainty is part of life.

You need to absorb what you say.

 

[cremeegg]

Variety is the spice of life here. Ive done well out of the property market "to date", ie, if i were to cash out now, and Im saying this without any smugness, would be very comfortable, and, many times better off than any Pension i could have afforded.
At the same time, 10 years from now, it could be wiped out with a terrible property crash.... Which expert here wants to stick their head above the parapet and claim to know what lies ahead. ??

I am happy to take this up.

Although I firmly believe that you cannot tell the future, there is no doubt that there will be another property crash , at some point.

The question for the property investor is, will you be a forced seller when that happens. Forced either by finances or by personal circumstances. If not then the property price is not hugely important.

 

[Sarenco]

I purchased a property for €30000 24 years ago, and I just let it run its course also, its value is €240k.

So, you purchased a property for IR£23,600 (€30k) back in 1995, "just let it run its course" and you now reckon it has a fair market value of €240k. Right?

Sorry but that's just not plausible.

You couldn't possibly have picked an individual property that outperformed the broader Irish property market over the last 24 years to that extent.

 

[LS400]

Well that's just it, my property prices today are totally meaningless. They will only become an issue for me within the next 10 years.
Also, as an aside, I just completed a sale very recently, all the advice from the "experts" was how this is the wrong time to buy, maybe it is, maybe it's not, but this is part of my pension for the next 10 years. And I'm happy to take a punt on it... Speaking of Punts.. It was 30000 punts spent on1995..

Il let the "experts" split the hairs over that one..

Don't take it personally lads, but I'd be a lot poorer today if I were to follow the advice of some folk here.

LS

 

[Sarenco]

Speaking of Punts.. It was 30000 punts spent on1995..

Ok, so the purchase price in 1995 was €38k - and not €30k as per your original post.

And you reckon that property has increased in value by well over 500%, during a time period when Dublin property prices in general increased by around 300%.

Sorry, that's still not plausible.

 

[sidzer]

Interesting thread!

I had thought that an annuity would pay out @5.5%. It seems that I need to readjust my expectations!

After reading this thread I am going to re-look at buying back years notional service.

 

[Bronte]

If such restrictions didn’t come to pass,I’d be pretty annoyed to be sitting here 30 years from now having followed your lead.

And how would you feel if you were one of those affected by what Noonan did?

 

[Gordon Gekko]

And how would you feel if you were one of those affected by what Noonan did?

I wouldn’t really care to be honest. A quasi solidarity tax of a fraction of a percent of my fund during one of the most difficult periods in the history of the State certainly wouldn’t stop me building wealth for my family via my pension fund.

Turning one’s back on pension funding seems like a serious overreaction.

 

[Bronte]

So, you purchased a property for IR£23,600 (€30k) back in 1995, "just let it run its course" and you now reckon it has a fair market value of €240k. Right?

Sorry but that's just not plausible.

You couldn't possibly have picked an individual property that outperformed the broader Irish property market over the last 24 years to that extent.

Are you saying he's making things up. I bought in early 98, sold in late 2002 and the propety went up 100%. That's cost price, renovations, a bit of extra ground, more renovations. Rented in between. Thank goodness for indexation and CGT at 20%.

And I've two siblings I know bought low and sold high. One went on to build a mansion (since sold) and the other, well it's all gone now, the gains and more besides.

 

[Bronte]

I wouldn’t really care to be honest. A quasi solidarity tax of a fraction of a percent of my fund during one of the most difficult periods in the history of the State certainly wouldn’t stop me building wealth for my family via my pension fund.

Turning one’s back on pension funding seems like a serious overreaction.

I'm not advocating that at all, just that not to have all your eggs in one basket. Stories like Enron, Waterford Glass and something in Cork make people like me worry about guaranted pensions.

 

[Sarenco]

Are you saying he's making things up.

I said it wasn't plausible that an individual property in Dublin had increased in value by well over 500%, during a time period (1995 to 2019) when Dublin property prices in general increased by around 300%.

Are you suggesting the figures are plausible?

 

[Gordon Gekko]

I'm not advocating that at all, just that not to have all your eggs in one basket. Stories like Enron, Waterford Glass and something in Cork make people like me worry about guaranted pensions.

But they’re complete red herrings; Defined Benefit pensions can turn out to be magic beans but my defined contribution “pot” is “mine”. In the worst financial crisis in history, a fraction of one percent was “raided” for a few years; no big deal in my view. It’s still the best way for me to buy rioja and fillet steak in retirement.