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Pensions… February 20, 2020

Posted by WorldbyStorm in Uncategorized.
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Reading this in the IT it struck me just how iniquitous pension arrangements are. For example, as noted in the piece:

Should I join my company scheme?
Absolutely. A good employer will pay between 5 and 10 per cent of your annual salary into a pension scheme. If your company has a decent scheme and you earn €40,000 per year, the company will put between €2,000 and €4,000 into your pension pot every year. You will have to match at least some of this contribution.

But many employers are not good employers – for example, I worked for a good portion of a decade for a group of companies where only upper management were gifted pensions. All others, like myself, had nothing. And given that less than half of private sector workers have occupational pensions, and even there not all are subsidised in part by employers clearly there’s a massive deficit.

Moreover there’s something utopian about the requirements:

Pricewatch asked asked the number-crunchers at Standard Life to work out how much we would need to put aside. To retire with a private pension of €19,500 a year – which is half the average industrial wage – at at age 68, you need to save a fund of €463,900.
The cost of saving to get to the same final amount almost doubles every 10 years you delay saving. So if you start saving at 25 you will need to put aside a gross sum of €301 per month. With tax relief at the top rate, it is actually €164. If you start at 35, then you need to put aside €519 a month before tax, which works out at €283 with the reliefs in place. And if you start at 45 then the monthly gross savings come in at €969, which is €529 with tax relief.

Look at those sums. Someone at a point in their lives where they are likely facing huge housing costs, potentially some of them close to having offspring and so on, need to get €301 per month. Not even close to a runner.

And all the talk of auto-enrolment isn’t going to change that either.

The piece itself essentially pushes people towards private pension provision, but there’s an underlying tone that grates throughout given, say average and median wages in this state.

Comments»

1. Diarmaid Mac Aonghusa - February 20, 2020

Some fair points but worth noting that it would not be €301 per month, it would be €164 as stated in the article assuming you were on the higher rate of tax. What I felt the article failed to address was the huge amount taken in fees from pensions. All of the sources for the article were industry based. They should have had input from independent financial advisors who would have explained this and what other options were out there.

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WorldbyStorm - February 20, 2020

Fair point though a caveat – most workers wouldn’t be on the higher rate of tax. Re fees true but that in a sense is a subsidiary problem in the context of privatised pensions – part of it undeniably.

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EWI - February 20, 2020

The piece itself essentially pushes people towards private pension provision

I feel (very) fortunate to still have some expectation of a liveable pension through my employer. (we’ll see what happens over coming decades). I can only regard with horror the notion of entrusting it to the sharks and fraudsters of the private sector – and that’s only the company management with the workforce pots.

The private pensions industry seems destined to be an utterly futile effort (absent massive tax breaks gifted by the state) and attractive to thieves; and must surely represent one of the Four Horsemen of late-stage capitalism.

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2. Jim Monaghan - February 20, 2020

I had part time work with one British university. 6% from me and 14% from them. It was opt-in and some didn’t. Oh in the last 2 years of pension entitlement, you can put extra in and get the tax rebate. It is slightly complex, but essentially money for nothing. It really works for public servants who will not get the full 40 years.

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Stan - February 20, 2020

Part of the current dispute is that they now want 11% from us.

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Michael Carley - February 20, 2020

Good pickets up your way?

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Stan - February 20, 2020

Felt a bit thinner than the first day last time tbh: shit weather didn’t help. Usual suspects all out, and more students at the rally than I remember from before, so that’s something

Liked by 1 person

3. oliverbohs - February 20, 2020

And yet there persists the feeling, curdling into presumption, that the state pension as we know it can’t be sustained because of the ageing population, blah blah. So do we sleepwalk into old age penury?
Articles like this implicitly state that if u aren’t going out of your way to prop up the pension industry, u deserve what’s coming to you. Couldn’t agree with you more Wbs

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WorldbyStorm - February 20, 2020

Sickening isn’t it? And of course the proponents of private pension provision are only too eager to make that case…

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4. tafkaGW - February 21, 2020

Grrr.. don’t get me started on private pension funds of financialised ‘public’ pension funds in general.

They are a large-bore feeding tube for the financial “masters of the universe” – whereby workers are forced give their meagre savings to the rentiers so that the latter can skim off a good part of their savings. And there is no guarantee that you’ll get anything in the end.

Under capitalism, pensions with which people can live with dignity should be a basic universal service guaranteed by the state / federation of states.

End of.

And under socialism the needs of older people for housing, health care, food, transport etc. will be met outside of the money system anyhow.

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oliverbohs - February 21, 2020

Yes. The current religion whereby if you can’t make money out of it, it’s pointless, or inherently without value, or just morally wrong, is anathema to socialism

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