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MayoMark View Drop Down
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    Posted: 23 Nov 2020 at 2:30pm
Have been thinking of getting started on a private pension in the new year, even if it's putting in a small amount.

Have no idea how they work. Anyone here work in that area have any advice?
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It's a very broad subject so this mightn't be the best place to discuss it. In a nut shell the money is paid in before tax so it's a great way to reduce your tax. Loads of different funds depending on you attitude to risk but in general the funds are a mix of equities, bonds and cash with the fund moving towards 100% bonds/cash in the latter years to insure the arse can't fall out of it.
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Talk to a broker is your best bet Mark. Pensions are considered a "complex product" so you can't really buy it direct from a company. All the brokers have special deals with the providers, there's a good few online ones these days too.

Definitely a good idea to get one, getting it tax free is basically 40% free on your savings.

With regards to funds and company you chose from, the biggest this to look at is the allocation % (what % of every €100 you put in goes to your fund) and the Fund Management Charge (in my experience the lowest are best, the fancy fund managers taking 1% of your money each year aren't worth it in the long run).
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the earlier you start the better. I started mine at 34 and even that was a late time to be starting.
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Thanks lads

It's hard not to be worried about losing your investment at some stage and ending up back at square one. But is it the case that this is very unlikely because these funds are generally so diverse?
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Originally posted by MayoMark MayoMark wrote:

Thanks lads

It's hard not to be worried about losing your investment at some stage and ending up back at square one. But is it the case that this is very unlikely because these funds are generally so diverse?

You can chose the level of risk you are willing to take on what your pension is invested in. So if big risk isn't your thing, then you can select accordingly. 
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Are you self employed?

If not, your employer should be making a monthly contribution on your behalf into your pension.
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don’t believe I’ve ever worked for a company that paid into a pension for me, and I’m working a looong time!
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Originally posted by horsebox horsebox wrote:

Are you self employed?

If not, your employer should be making a monthly contribution on your behalf into your pension.


I don't think they are obliged to contribute anything

They can set one up alright and have a portion of my salary paid into it
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Originally posted by MayoMark MayoMark wrote:

Originally posted by horsebox horsebox wrote:

Are you self employed?

If not, your employer should be making a monthly contribution on your behalf into your pension.


I don't think they are obliged to contribute anything

They can set one up alright and have a portion of my salary paid into it
 
Yep, employers are obliged to facilitate a pension for you but are not required to pay into it for you.
 
And where they do contribute it can vary wildly from matching to x5 times your contribution!  
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Originally posted by sausy sausy wrote:

Originally posted by MayoMark MayoMark wrote:

Originally posted by horsebox horsebox wrote:

Are you self employed?

If not, your employer should be making a monthly contribution on your behalf into your pension.


I don't think they are obliged to contribute anything

They can set one up alright and have a portion of my salary paid into it
 
Yep, employers are obliged to facilitate a pension for you but are not required to pay into it for you.
 
And where they do contribute it can vary wildly from matching to x5 times your contribution!  

Yeah, that's it. And a lot have different pension schemes depending on your rank/role in the organisation. 

Blue collar slob, no contribution. White collar, 5% +
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I would definitely recommend a broker and the main thing to consider is fees (plus customer service.)

The pension provider (Say Aviva) will charge you a monthly/annual fee for managing your account.

Then the fund(s) you invest in will also charge you an amount - this is based on how active they are.

It’s tax efficient savings so the best thing is to pay monthly so it’s an outgoing direct debit and you are not trying to time the market.

Then you need to decide on how much risk you want to take on. 

For me I split this up - 

I have 50% in a passive US Equity index fund that costs about 10bps
And the other is in an Active global Equity fund but the cost is close to 1% each year (tbf they have generated 28% annual returns over the last 3 years)

Your best friend in the market is time. The longer you are in it the better the return.

For me personally I don’t like the passive global indexes that cover equities / bonds / cash etc (low returns) or the UK index. As I live in the UK , if the stock market goes up, my house price will reflect that so I’m already in that market.

The US market is a beast. It does have huge corrections but it’s constantly going higher .... they have cheap access to capital and they innovate like nobody else.
The US market returns are about 10% over the long term so your money doubles every 7 years. 

For my daughter I’ve started investing in Tech specific sector funds (FB, Apple, Google, Microsoft etc). She is only one so she can handle the risk. 

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Originally posted by Zinedine Kilbane 110 Zinedine Kilbane 110 wrote:

I would definitely recommend a broker and the main thing to consider is fees (plus customer service.)

The pension provider (Say Aviva) will charge you a monthly/annual fee for managing your account.

Then the fund(s) you invest in will also charge you an amount - this is based on how active they are.

It’s tax efficient savings so the best thing is to pay monthly so it’s an outgoing direct debit and you are not trying to time the market.

Then you need to decide on how much risk you want to take on. 

For me I split this up - 

I have 50% in a passive US Equity index fund that costs about 10bps
And the other is in an Active global Equity fund but the cost is close to 1% each year (tbf they have generated 28% annual returns over the last 3 years)

Your best friend in the market is time. The longer you are in it the better the return.

For me personally I don’t like the passive global indexes that cover equities / bonds / cash etc (low returns) or the UK index. As I live in the UK , if the stock market goes up, my house price will reflect that so I’m already in that market.

The US market is a beast. It does have huge corrections but it’s constantly going higher .... they have cheap access to capital and they innovate like nobody else.
The US market returns are about 10% over the long term so your money doubles every 7 years. 

For my daughter I’ve started investing in Tech specific sector funds (FB, Apple, Google, Microsoft etc). She is only one so she can handle the risk. 

 
When you know what your doing it's great but when you don't people will read the above and run a mile!!! How many people would be like yourself and manage their own pension, I reckon it's very low.
 
Thank God the mainstream option is managed funds. Pick your risk appetite and off you go. 
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What would be the minimum contribution to make it worth while do ye think?

The state pension now is 12k per year. That would be more than enough in today's terms living here if you have no debt etc

But likelihood is that there will be little or no state pensions in 30-40 years
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It varies but anywhere that has defined benefit pension schemes tend to get from 1/2 to 2/3 of their final salary as a regular pension payment. Idea is that when you retire the mortgage is gone and kids out of the house so you don't need the same level of income.
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My employer pension is with Mercer and then come in give examples.

Say if you contribute X now at age Y. You'll end up this figure.

From what I recall, and I am open to correction. You'd need about 600k plus to live some way reasonably post retirement.

That's what I took from the last meeting with them.

I contribute 5% and my employer contributes 6% and then I make AVC's every month too.

If you are saving 500 per month in your back, you'd nearly be better off making an 800e AVC to your pension, because your paying tax on the 500e savings.
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Originally posted by horsebox horsebox wrote:



From what I recall, and I am open to correction. You'd need about 600k plus to live some way reasonably post retirement.



I guess that would be about right. Say you lived 20 years after retirement age, that's 30k a year. Be grand if you have house paid for etc. 

600k would make people gulp though. 
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Originally posted by McG McG wrote:

Originally posted by horsebox horsebox wrote:



From what I recall, and I am open to correction. You'd need about 600k plus to live some way reasonably post retirement.



I guess that would be about right. Say you lived 20 years after retirement age, that's 30k a year. Be grand if you have house paid for etc. 

600k would make people gulp though. 

This is where compound interest comes into play.
You need to be putting money in early - in your 20’s 30’s and 40’s so they are invested over a significant period.

Or work for in the public sector where defined benefits are gold.

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