Follow @PoliticsIE
 
 
 
Page 1 of 4 1234 LastLast
Results 1 to 10 of 39

Thread: Is our approach to the so-called "pension crisis" wrong-headed?

  1. #1
    Politics.ie Member
    Join Date
    Dec 2006
    Posts
    4,996
    Mentioned
    0 Post(s)

    Default Is our approach to the so-called "pension crisis" wrong-headed?

    There's a common refrain that most people "aren't saving enough" to guarantee themselves a decent pension 30 years from now.

    What exactly would "enough" refer to?

    People seem to imply that they hace some clue as to how to save in 2013 so that you've got a decent nest egg in 2043. By and large they absolutely rule out a simple bank account. No, they mean put it into a pension fund. What's that? It's a legal fiction that takes the money and dumps it onto the world's stock exchanges and hopes for the best.

    What will stock markets look like in 2043? Maybe they will be stellar, with prices having grown far in excess of real inflation. Or maybe they won't. The crisis of 2008-present came extremely close to reducing the value of most pensions funds to zero. On what basis are we assuming that there won't be another collapse before 2043? Why are we assuming that such a collapse will be smaller than 2008?

    Sure, I would like to have a big fat pension fund that has risen in value. I would be satisfied with one that has maintained its value, but I would be really irked by one that had fallen seriously due to a stock market crisis.

    It's far from obvious that the world has a rosy future of economic growth left in it. Virtually all the developed countries are either shrinking or nearly shrinking. The only countries that are growing are backwards countries playing catch-up. Once they're caught up, where do they go? Why would their growth not stall the way all the developed countries have?

    What do I want out of old age? Same as most, I expect. Decent, responsive health care. A pleasant, tastefully-furnished place to live, regardless of who owns it. Access to the kinds of entertainment popular with the majority of adults.

    At least one of these we can start preparing right this minute, without trusting to the vagaries of the stock-traders of 2043, who are right now in nappies. We can decide what kind of dwellings we want to be in in our old age, take the money we were going to throw onto the stock market for 30 years, and use it to build those dwellings! We can do it deliberately and carefully, inspecting the buildings rigourously to ensure that they're the type that'll work well for 150 years.

    That's the housing costs of taking care of our 2043 retirees. What next? Medical care! Instead of putting billions of Euro onto the stock market year in, year out, we just put it into training lots of young medical pros, to look after us in 2043 onwards. Entertainment? Simple decree: every provider has to give out 10% of his sales for free to OAPs. It functions like a 10% tax on the vendors. Less than today's VAT (which we can phase out).

    This seems outlandish, to suggest that doing the sensible thing and spending the next 30 years putting away 10% of your earnings on what is, ultimately, a gamble on an entity that has recently proven itself capable of losing everything people had put into it.

    But really, with the benefit of hindsight, isn't it equally outlandish to say that even after the lesson of 2008, we still think that taking a huge punt on the stock market is the only way to provide good things to people in 2043?
    When you see the words "Mises" or "Hayek" in someone's post, just ask yourself: do I really want to ban paper money and go back to gold?

    You have to pity the kind of people who buy into conspiracy theories. I find the following to be the saddest words on the internet: "Re: connection between Bilderberg puppet lady gaga and viral outbreak in ukraine "

  2. #2
    Politics.ie Member
    Join Date
    Oct 2006
    Posts
    2,834
    Mentioned
    0 Post(s)

    Default

    Quote Originally Posted by feargach View Post
    Sure, I would like to have a big fat pension fund that has risen in value. I would be satisfied with one that has maintained its value, but I would be really irked by one that had fallen seriously due to a stock market crisis.
    Why are you worried about short term performance when you're investing for upto 40 years? If you're afraid of ever making a loss, put your money into a cash pension (and watch inflation eat your savings).

    The people I feel sorry for are those whose pension depended on someone else - e.g. Waterford glass workers. And because no-one wants to wait until they are at retirement age to find out that the person they depended on has let them down, the more choice and control we give people the better.

    BTW I think PS workers should be able to opt out of their pension scheme. Having to rely on the Irish government to provide for you is an unpleasant thought.

  3. #3
    Politics.ie Member ManOfReason's Avatar
    Join Date
    May 2007
    Posts
    4,321
    Mentioned
    0 Post(s)

    Default

    When you start saving you put your money in the stock market, index funds are the only sensible option for the individual non professional investor, because with the benefit of time you can ride out any setbacks and get the highest average returns. As you get into your 50's you should SLOWLY move your money into less volatile investments linked bonds.

    Unfortunately in Ireland you are hampered by two huge problems with your retirement investments:

    1) The fees for investment funds are way to high, often 5% of what you put in, 5% of what you take out, and 1% or more for every year you have it in there. It is nearly impossible to make anything but modest returns with these kind of charges.

    2) When you retire you MUST (assuming you took the tax advantages) put all your savings in a Retirement Annuity which in Ireland are really bad value for you.

    Of course these two situations exist because all Irish governments look out for special interest groups (in this case banks and insurance corporations and their hangers on) rather than the individual.


    The only financial advice you should consider is from an independent financial adviser who works for an hourly fee, that you pay them, rather than one who works for 'free' ie commission - those kind will not put your interests first, they are salesmen not advisers.

    - End rant.
    Clicking an ad a day keeps Politics.ie in business.

  4. #4
    Politics.ie Member
    Join Date
    Oct 2006
    Posts
    2,834
    Mentioned
    0 Post(s)

    Default

    Quote Originally Posted by ManOfReason View Post
    2) When you retire you MUST (assuming you took the tax advantages) put all your savings in a Retirement Annuity which in Ireland are really bad value for you.
    ARFs are available for many people, but as per usual in Ireland there are too many regulations and finickity tax implications.

    An ARF should be open to everyone, who can then decide whether they want to hand their money over for a guaranteed (and low) annuity or manage their investments themselves.

  5. #5
    Politics.ie Member Sync's Avatar
    Join Date
    Aug 2009
    Posts
    27,590
    Mentioned
    2 Post(s)

    Default

    Quote Originally Posted by feargach View Post
    TSimple decree: every provider has to give out 10% of his sales for free to OAPs. It functions like a 10% tax on the vendors. Less than today's VAT (which we can phase out).
    Can you spend literally 15 seconds on this and see what's wrong with that idea?
    I'm living in America, and in America, you're on your own. America's not a country. It's just a business. Now f***ing pay me.

  6. #6
    Politics.ie Member
    Join Date
    Nov 2010
    Location
    Near a field
    Posts
    3,716
    Mentioned
    0 Post(s)

    Default

    Funding a pension privately for many working people is simply unaffordable after paying mortgage, rearing kids etc. a solid state pension is vital with top ups being encouraged for those with surplus.
    "I can see that your head has been twisted and fed with worthless foam from the mouth" (Bob Dylan)

  7. #7
    Politics.ie Member
    Join Date
    Nov 2010
    Location
    Near a field
    Posts
    3,716
    Mentioned
    0 Post(s)

    Default

    Quote Originally Posted by hmmm View Post
    ARFs are available for many people, but as per usual in Ireland there are too many regulations and finickity tax implications.

    An ARF should be open to everyone, who can then decide whether they want to hand their money over for a guaranteed (and low) annuity or manage their investments themselves.
    Wrong. arfs are available for all except those in defined benefit schemes who enjoy a better value annuity provided the scheme is correctly funded.
    "I can see that your head has been twisted and fed with worthless foam from the mouth" (Bob Dylan)

  8. #8
    Politics.ie Member
    Join Date
    Dec 2010
    Posts
    470
    Mentioned
    0 Post(s)

    Default

    Quote Originally Posted by ManOfReason View Post
    When you start saving you put your money in the stock market, index funds are the only sensible option for the individual non professional investor, because with the benefit of time you can ride out any setbacks and get the highest average returns. As you get into your 50's you should SLOWLY move your money into less volatile investments linked bonds.

    Unfortunately in Ireland you are hampered by two huge problems with your retirement investments:

    1) The fees for investment funds are way to high, often 5% of what you put in, 5% of what you take out, and 1% or more for every year you have it in there. It is nearly impossible to make anything but modest returns with these kind of charges.

    2) When you retire you MUST (assuming you took the tax advantages) put all your savings in a Retirement Annuity which in Ireland are really bad value for you.

    Of course these two situations exist because all Irish governments look out for special interest groups (in this case banks and insurance corporations and their hangers on) rather than the individual.


    The only financial advice you should consider is from an independent financial adviser who works for an hourly fee, that you pay them, rather than one who works for 'free' ie commission - those kind will not put your interests first, they are salesmen not advisers.

    - End rant.
    Also, Government currently raiding pension funds for "job creation"
    Talking tough is easy when it's other people's evil - DBT

  9. #9
    Politics.ie Member
    Join Date
    Nov 2010
    Location
    Near a field
    Posts
    3,716
    Mentioned
    0 Post(s)

    Default

    Quote Originally Posted by ManOfReason View Post
    When you start saving you put your money in the stock market, index funds are the only sensible option for the individual non professional investor, because with the benefit of time you can ride out any setbacks and get the highest average returns. As you get into your 50's you should SLOWLY move your money into less volatile investments linked bonds.

    Unfortunately in Ireland you are hampered by two huge problems with your retirement investments:

    1) The fees for investment funds are way to high, often 5% of what you put in, 5% of what you take out, and 1% or more for every year you have it in there. It is nearly impossible to make anything but modest returns with these kind of charges.

    2) When you retire you MUST (assuming you took the tax advantages) put all your savings in a Retirement Annuity which in Ireland are really bad value for you.

    Of course these two situations exist because all Irish governments look out for special interest groups (in this case banks and insurance corporations and their hangers on) rather than the individual.


    The only financial advice you should consider is from an independent financial adviser who works for an hourly fee, that you pay them, rather than one who works for 'free' ie commission - those kind will not put your interests first, they are salesmen not advisers.

    - End rant.
    In fairness I know many tied agents who give excellent, professional and honest advice very often for free.
    "I can see that your head has been twisted and fed with worthless foam from the mouth" (Bob Dylan)

  10. #10
    Politics.ie Member
    Join Date
    Oct 2006
    Posts
    2,834
    Mentioned
    0 Post(s)

    Default

    Quote Originally Posted by Cooperate for freedom View Post
    Funding a pension privately for many working people is simply unaffordable after paying mortgage, rearing kids etc. a solid state pension is vital with top ups being encouraged for those with surplus.
    So who's funding the pension instead if the "working people" cannot afford it? Someone has to pay for it.

Page 1 of 4 1234 LastLast

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •