RTE Drivetime: Talking Money on pensions (week 2)

In the second instalment on pensions we looked at the situation people may find themselves in if they have waited until their 40’s or 50’s to start saving towards retirement. There are some scary valid concerns but also some good news when it comes to retirement provision started late.

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RTE Drivetime: Talking Money on pensions (week 1)

On Monday the 27th of October we had the first of two parts about pensions, the focus this week was that people are passing up money that is on the table for the taking. The other issues were about the kind of advice you get, and the best ways to structure your pension as well as to demonstrate the available funds if you save for retirement. 

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Could the new AIB split mortgage be illegal?

In the Sunday Business Post yesterday an article appeared which explained the new AIB split mortgage deal. We sought details of this from AIB but only scant ones were provided which we posted already.

How it works in money terms was not disclosed by AIB but they equally didn’t retract any statements showing up in the press so we can assume that the information published is correct as they haven’t publicly retracted any aspect of how it has been covered. For that reason there was an aspect to this which we see as being of grave concern.

However, if Mary and Tom get a pension lump sum at retirement, they must use this towards paying down tranche B. This only applies to pension lump sums and doesn’t apply to any other lump sums a person may receive e.g. inheritance, bonus payments, gifts, lotto win etc. On this matter it is always advisable to seek professional pension advice.

Read the highlighted parts again, ‘they must use’ the lump sum …

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Pensions: Public versus Private – nobody wins

This article appeared in the Sun on Sunday on the 2nd of June 2013

Sometimes we hear how people in the public sector make more than the private sector, or that big private sector earners don’t pay enough tax. This is a simple divide and conquer strategy where the end game is to make us all less well off in order for the Government to hold on to more resources and then pay for things in a demonstration of their own largesse.

In every version of this script the State is the hero and the public and private sector take it in turns to be the greedy bad guys.

Much of welfare funding, including many aspects of pensions, isn’t just about figuring out the strategy for preventing poverty in the first place, or curing it long term, or about reducing poverty in the elderly. It’s about feeding the ego’s of policy makers while using other peoples money. And by demonstrating how they, as a third party, can make the world a better place because they are the anointed ones who …

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State pensions – how they work and what’s available

There are two State Pension Systems, the Social Insurance System and the Social Assistance System, so you should normally qualify under one of these systems. Both systems provide a pension in retirement, or a pension to next of kin in event of premature death or a pension in the event of long term disability.

To qualify for the Social Insurance System pension  you must satisfy the PRSI conditions and have made at least 260 PRSI contributions during your working life.

To qualify for a  Social Assistance pension you will have to satisfy a “means test”.

The Social Insurance Pensions provided are;

The State Pension (Transition): you must be  aged 65 or over, retired from full time work, satisfy the PRSI conditions. The personal rate is €230.30 per week, a dependent adult (over 66) rate is €206.30. so the maximum claimable for a retired couple is €436.60. At 66 the claimant is moved onto the State Pension (Contributory), this pension will be abolished in 2014, claimants will have to wait until at least 66 to claim the State Pension (Contributory). This …

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Preparing for retirement

Most people need to work to earn an income to support their family and themselves. When we reach retirement age and stop working, this earned income stops, so naturally there is a fall off in the level of our income. Therefore making plans to replace this income, in part or whole is a priority.

There are four possible means of making provision for your retirement and these are usually referred to as the “Four Pillars”.

First Pillar – State pensions, there are two types of State Pension systems in existence. The Social Insurance System, pensions are provided as of right at the age of 66 (earliest), to individuals who have paid the required Pay Related Social Insurance (PRSI) contributions during their working lives. The Social Assistance System, pensions are provided as of right at the age of 66 (earliest) this is by way of a “means test”, so only those who can prove they have a very limited financial means and resources. An individual come only qualify for one state pensions.

Second Pillar –  Private provision. Again, there two main …

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Looking at the make up of the mortgage market

Delighted to see the Central Bank getting some granular detail on our market! … Literally, we have been waiting for years to go beyond the overview figures.

We see now that 25% of Mortgages are buy-to-let’s (representing €24.6bn in lending), so almost 200,000 loans are secured for the purpose of investment, which raises an interesting taxation point when it comes to retirement.

Recent figures by the pensions board show that 40,000 fewer people are in pensions and that of the 2.1m workforce that about 800,000 have pensions; naturally this doesn’t factor in many property investors who use that as a retirement plan.

And that is where I think we’ll see some traction, people may move to paying down their debts (which they view as a retirement plan via a RIP loan) rather than putting funds into pensions. Perhaps with the changes in interest rates for many residential investment loans they are doing neither and merely trying to stay afloat.

The recent pension …

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News of the World: Money Saving Expert

Our sister company Advisors.ie has been working with the Irish News of the World, presenting their ‘money saving expert’ piece every week since January.

This week we covered the area of pensions and the necessity of pension provision.

Currently there are just over four people working for every pensioner, it has been calculated that by 2036 that this may be as low as only two people working for every pensioner.

That would be a massive problem because it would mean that most of the taxes raised would be going toward provision for an ageing population.

The new issue is that we may find it causes a pincer on our public finances as we struggle to pay back the money we have borrowed from many sources such as the IMF and EU, this move towards a lower pensioner to worker ratio won’t just arrive magically in 2036 rather it will manifest over time and as people live longer it will reach a tipping …

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