Work until 70 - Poll added


#681

You should have contributions from the start that are well up by now. What is your portfolio allocation, what are the fees, what are the funds you are in, are you chopping and changing yourself?


#682

I’ve chopped and changed once in the 8 years (maybe another time at the very start). 50/50 split almost between low-medium risk and medium-high risk. I know there’s some BRIC shit in there and renewable energy stuff on the high risk side. I’ll have a look myself and PM you if I can’t make sense of it just to save dragging the topic off track. It’s with BoI by the way.


#683

Have pensions been made compulsory in Ireland yet?
I`ve been in Australia a few years now and have been paying into a pension fund since almost day 1 here.

I have self control over where the fund is invested and have dodged property and other risks. In fact had I not self directed the investment strategy of this fund I would have made a serious loss. Despite managing the fund to actually be in positive investments the fees and insurance and other shocking costs have cost over $900 AUD December - June. It isn’t a massive fund in fact it is quite modest and the fees are generally standard fees and not % of your savings.

This makes my pension barely grow at all and this is the flip side to locking people in by law to pensions.
Captive market that benefits the financial sector massively. Gravy train!

Ive had a look at some friends pensions here for comparison and am utterly shocked at how poorly some of their pensions are faring. The problem often isn't performing assets but fees and costs. Appalling. Ive been looking around for alternative funds and it really isn’t encouraging.

Just to clarify my setup - I manage my own pension investment strategy as part of a work setup fund. You can change funds (some charge large exit fees, some don’t). My money is in a fund from a previous employer. I have my current employer pay into this. I looked into a DIY totally self managed fund and you need it audited annually and the costs involved are worse - probably only done by the very wealthy.

Also at this stage in life I would be best served by putting this money off a mortgage (assuming a healthy property market) as the interest savings over the life of the mortgage would be better.

What is the solution? Compulsory pensions past a certain age? or an increasing payment % as your age? Some of these things would distort the labour market with possible unintended consequences. Better regulation? Strict rules on fees charged ?


#684

@Blindjustice BATONEFFECT
You have listed many of the major issues with pensions:
fees are not that much of a concern with big growth but now that that is not the norm, they eat into any growth.
Increased longevity impacts pension planning a lot: when life expectancy was 72, that was 7 years on a pension (72-65).
Increased life expectancy to 79, with the same retirement age, doubles the time on the pension.

Low-cost index funds (for example: Vanguard) are an answer to the fee issue but they also distort the market once a high percentage of the market is in them. Along with contributions, return and fees, tax efficiency is the other big thing to look at with pensions.

It looks that there will be a crisis in years to come. I guess the way it will be handled is that the age for the non-means tested state pension will be moved later and later in most countries, so that you have to work longer or cover early retirement from your private pension.


#685

Is there a very low fee product in the Irish market?


#686

I’d love to know.

Tied in with work but I should really explore going alone. Of the 10 or so employees there are only 2 of us that even look at the statements each year.


#687

Here is a reference. (I am not invested there as I am living overseas.)

BlackRock GIF Europe Eq Index A2 EUR Acc
RaboDirect Fees
Exit Fee 0.75%
Entry Fee 0.75%
Fund Fees*
Annual Management Fee 0.45%

rabodirect.ie/investments/our-fund-range.aspx
Category: Index Tracking

There is capital gains tax on investments - not sure if these details are up-to-date:
bogleheads.org/forum/viewtopic.php?t=148184

If you can engage an investment advisor for a fixed fee, it can be worth it.
If going independently, I would research further (check out revenue.ie + other resources on pension tax exemptions/costs).


#688

Thanks DM. I’ve bookmarked your post.


#689

Pharma staff are constantly on the move in my lab anyway and in other places Ive worked, you often ask about someone and get told they’re gone to Pfizer or one of the others, we’re permanently training new people.


#690

Thanks.


#691

Defined benefit pension fund deficit grows by £100bn in a month - -> theguardian.com/money/2016/ … -month-pwc


#692

Pension deficit at largest Irish firms surges by 160%

rte.ie/news/business/2016/1117/832335-pension-deficit-at-top-irish-firms-surges-by-160/

There’s a monumental sh1tstorm approaching.
I wonder at what stage will it affect pension payouts - within 10 years ?


#693

It already has - many of the defined benefit pension schemes filed section 50 orders with the pensions authority up to 2/3 years ago.

Anyone retiring after that got huge reductions in their benefits. I know of a number of funds I audited where the cuts were in the 35-45pc region.

The problem is someone of the funds that made these cuts are now back in deficit again as they didn’t cut deep enough and match assets with liabilities (i.e didn’t buy bonds to exactly match their liabilities profile)


#694

Call to raise retirement age to at least 70 - bbc.co.uk/news/business-40057117


#695

So calls to raise retirement age to 70, meanwhile we’re told that AI and robots will mean there mightn’t be jobs available in a couple of years time, let alone in 30 years.

At risk of drifting into “wealth cannot be created or destroyed” territory… there are some other bits I don’t understand in the whole pension picture (I’m going to be incautiously naïve in this).

How does saving today really fix things in the future? When I’m old, if I want to retire it means I’ll not be working. So I won’t be doing anything that I can trade with other people for “value”. If we were living on the land, then if everyone did what a retiree needs to do, the fields would sit unploughed and there’d be no food to eat. If I retire, I’m going to rely on other people giving me the fruits of their labour, in the shape of things and of services.

So in the end, doesn’t the sustainability of a pension model hinge on how much of a burden the pensioners make for the working population, and the working populations willingness to shoulder that extra load. If I’m 1 pensioner on the land with 100 working people, then I’m probably a small enough burden, even with the same lifestyle as theirs. If I’m 1 pensioner with 1 worker, then it’s a tougher sell and I’d better be very spry and charming!
Even if I save like crazy during my own working life, I don’t really see how that helps. I’ll maybe have foregone consumption etc., meaning I left more for others during my working life (e.g. for other pensioners). But come retirement, that’s all gone really, since I’ve got to live from the current-account production of the world.

I suppose one way out I see is that I acquire non-perishable consumables (the Beans and shotgun cartridges we used to discuss here), and store them up. Consuming them later doesn’t really impoverish others, but you cannot live from that entirely. Another being to accumulate capital and means of production, but that still requires me to persuade working people to pay my “rents” later on.

At the end of the day, the current pension model involving saving and investment is pretty daft. I could imagine it making sort-of sense if the idea was: looking ahead in 30 years we’ll have 2X% dependency rate, vs 1X% dependency rate today. So we’re going to collectively forego consumption today to invest in automation and technology that will make it possible to sustain the lower rate of labour participation and maintain a steady state living standard somehow. There’s still the challenge whether the future generation 30 years from now will feel it’s a good deal (they didn’t make it), but there’s at least a plan/logic.


#696

I don’t get the whole robots and AI problem (except for strong AI wiping us out, which is a real threat).

I mean, society already has enough resources to provide for the material needs of all citizens at substantially less than full employment. The reasons we (arguably) don’t do that very well - see housing “crisis” for example - are choices, not fundamental economic or technology forces.

More tech means more labour saving. This is a good thing.


#697

But if you are a wage earner, and live by selling your labour, then it can get problematic. Meanwhile the increased productivity of capital is a boon to capital owners.

You’re right it’s a choice, at a societal level, but if you want to change the choice, there’ll be a lot of folk agin it


#698

your best pension is probably having purchased a house at popped bubble prices and not having to rent. Limiting bills through solar hot water or wind or solar electric and even a vegetable patch.


#699

Have you been peeking at my plan?!


#700

Don’t you mean owning two houses outright when you retire and selling one and living in the other.
Ideally located where you can avail of a decent bus service, plus solar & wind to supplement the electricity requirements (buy the battery pack before retirement)