State pours money into a massive black hole → irishexaminer.com/archives/2 … 28324.html
Letting someone else manage your pension worked well for 30 years of asset booms. It didnt matter what you bought, equities, property, government bonds… You made 7%+ easily and the fee structure still left you a reasonable return
Over the next 30 years the returns will be pathetic and after fees quite likely negative as the industry is still conditioned to think that equities etc will provide a 7% pa overtime, just because they did over the last 30 years of the greatest credit bubble known to man.
The rules of the game are changing fast, people need to take control of where their pensions assets get inevested and stop paying people lidicrous sums for adding no value.
The defined benefit timebomb is another issue. That deficit here will just continue to grow, some companies will be bankrupted over it and people will realise that defined benefit wasnt the free lunch they thought it was.
As for the public sector, at first the government will try plug the hole through higher taxes etc and changing the pension rules to the disbenefit of private sector pensions etc. At some point though there is a not immaterial risk that these pensions also get restructured along with other government liabilities that are growing beyond the point where they are realistically payable
You are half-correct. Investment managers charging 2%+ annual fees for essentially investing in index funds is ridiculous. People should take more personal responsibility for their retirement.
However, your guess at stock market returns over the next 30 years is silly. Remember, the stock market has already gone nowhere since 2000. When you get a decade of bad performance, the next decade that follows usually gives better returns. So when I hear that people are selling out their pension of stocks, and moving them into cash and gold, I am apalled. It’s essentially selling low and buying high.
Sounds a bit like early solutions for fixing our current account deficit - soak the private sector pensions and hey presto we can afford the likes of a (then heading for) 400k a year Taoiseach etc…
The problem with the calculations was that a big chunk of the foregone tax is on pension lump sums - which for average earners this is only a big deal if your a public sector worker - so the unions will scream blue murder.
The next problem is that now that public sector workers are making substantial pension contributions that changes to the tax relief on contributions affects both sectors equally - again a huge problem for unions.
Removing the tax relief on contributions is fine if it’s accompanied with changes that perhaps allow pensioners to buy government guaranteed annuities otherwise it’s just worsening an already dismal pension picture.
You will be correct if we get the V shaped recovery everyone is hoping for. We have had many of them over the last few decades, but what if this time that recivery doesnt materialise for another decade or more?
No one can be certain, but my guess would be that this recession is very different to the ones we have had in the past where it did pay to try and pick the bottom.
Those recessions were generally inventiry based and we got out of them quickly by adding more debt to the system
But what if, we have hit the limit to debt growth?
This is the first balance sheet recession for 100 years. Bank credit growth collapsing, rising savings rates, debt defaltion etc as we get to a more sustainable point. The only thing holding the anglo saxon economies up is government stimulus. Yet that has just about reached its limit and their balanve sheet rcession has either started, uk , ireland or is about to start, usa
So just because it has always paid to pick bottoms in the past, doeznt necessarily mean it will in the future. Japans balance sheet recession for example is one where the drip continued for over 20 years
Call for new pension contract for younger workers - Charlie Weston → independent.ie/business/pers … 92229.html
Charlie’s pension at the Indo would have taken a major hit while those already out on pension have been untouched.
Risky investment may be needed to avert Aer Lingus pension crisis - John Mulligan → independent.ie/business/iris … 45251.html
rte.ie/news/business/2013/11 … -pensions/
would love to be a fly on the wall
Great idea. Greek Bonds? Sure what could possibly go wrong? Why not throw a few hundred million at scratchcards while they’re at it?
rte.ie/news/business/2013/11 … ent-rules/
So, the levy on my defined contribution pension will go to bail out defined benefit pensions. That doesn’t seem very fair. I have no prospect of this change ever benefitting me but people like me with defined contribution pensions will bear the cost.
…and public pension scheme doesn’t have a pension levy
report from irish times too.
irishtimes.com/business/pers … -1.1599974
Of course the public pension scheme has a pension levy.
I am a public servant and the government passed legislation in 2009 to force me to pay an additional 8 per cent of salary pa on top of my other pension contributions towards my pension.
The same legislation also forcibly appropriate my pension fund and placed it in the national pension reserve fund which means it was ultimately used to bail out the banks. There was zero consultation with me about this and no right of appeal.
that’s not a levy, that is something else.
Oh hear we go again - you do realise the so called public sector pension levy is a salary based monthly contribution/deduction and the private sector pension levy is actually a levy on accumulated funds, If you can’t differentiate between the two don’t expect anyone here to take any further posts on the subject seriously.
heard guider on newstalk on this morning, essentially the pension levy will be used a slush fund to cover for defined benefit schemes that fall into trouble for the near future which noonan has confirmed which will cover for some very generous pensions
Pensioners with annual benefits over €12,000 and up to €60,000 will be guaranteed to retain 90 per cent of their pension, while those with benefits above €60,000 will be guaranteed 80 per cent.
irishtimes.com/news/politics … -1.1600542
so my meager defined contribution pension will be levied for the rest of my working life to pay for guys with pensions up to and over 60k.
this is one that really makes my blood boil, people on modest pensions subsidizing those on very generous pensions. I wouldn’t be surprised if this levy(pension steal) was up around the 5% mark in about 10 years to pay for all this.
AFAIUI, there is no “fund” for the public sector pensions, they’re simply paid from revenue. Govt can save a bit for it if they like (if they’re prudent) and NPRF may have been a stab in that direction, but there’s no fund as such, and certainly no fund you can point to and say is “yours”. All there is is a promise that in the future you’ll get 40/80 of your final salary (or some averaged final salary) after 40 years service.
This is fundamentally different to a private sector defined contribution scheme. In these cases, there is a fund only, which is made up entirely of monies either
- Paid in by employee
- Paid in by employer
- Earned through investment returns (which can be negative too!)
At the end of working life, you get the fund and buy an annuity, there’s no promise as to how much you’ll get, but there is a fund.
The bit about that that really annoys me is not even the issue of small pensions vs big pensions. It’s that defined contribution schemes would subsidise defined benefit schemes.
That is so warped and twisted. I’m sort of glad it’s coming from FG, because if it was coming from FF (and it would) one might be tempted (foolishly) to argue that they were worse than FG and it mightn’t be as bad if FG were in power.
It’s more bloody can-kicking and pissing around the margins, and robbing the piggy bank… and Noonan’s surely not long for this world and certainly not long more for politics, so if it doesn’t flare up now on him he certainly won’t live to see the repercussions. But hopefully he’ll get to cash in some more of his own pension chips.
These lads are revolting sacks of …
Some in the pensions industry should be mounting a court challenge to this levy - its fucking theft.
The spokesperson for the Irish Assoc of Pension Funds on the radio earlier was happy enough with the new proposals, though she did say she’d need to see the final detail.
Was surprised to hear her say that