The figure above is an actual quote based on someone going to the market ‘today’ with a purchase price of €220,004.

Found time for a quick scan.

At least positive that this issue is being addressed - and the equation has to be citizen, capital, state - course I know these terms not used around here - ……. but no mention on the ’self-employed’ ……… a neglected species ………….. but a start ………. something to build (sic) on and get stuck into in the next few years.

The Equation to be addressed is: Citizen, Capital, State = Pension

There is an interesting observation in the 3rd Letter in the IT today re ‘life expectancy’
http://www.irishtimes.com/newspaper/letters/2010/0305/1224265630587.html

I just ran an annuity quote using the details above (assuming 3% escalation rate on pension and that the pension would be payable for a mimium of 5 years) and the equivalent annual pension works out at €10,031.

According to the framework document the ARF option will be available to all DC pension scheme members from 2011. However, they are considering raising the bar on the guaranteed income for life condition [to become eligible for ARF] from €12,700 to €18,000.

Do we really need to give the pension tax break at the moment? Would we not be better off if people saved less for the next couple of years and we could tax their entire earnings? What would Krugman say?

I intend opting out of paying into a private pension fund based on Mr. Kay’s advice.

Why pay 2% per annum of my savings to people whom I have no faith in to act intelligently with my interests being paramount? I’d rather play a game of soldiers.

One area where this approach may be useful - and I have not seen anything substantive published on it - all these senior people in Garda, Revenue, other public service taking ‘early retirement due to fear of pension sump sum’ being taxed etc ……….. the effect : serious loss of experienced human capital in certain areas - particularly in Garda re organised crime - but also in other areas - and simultaneous embargo on ‘promotions’ due to present fiscal policy ………… all leading to less effective institutions of state …………… and other anomalies - such as young mental health professionals emigrating to UK while those who have ‘retired’ being re-hired as ‘consultants’ and in the education sector as well …………… and all this ‘guff’ on ‘reform of public sector’ ………. plenty for behavioural economists to get stuck into here ……….. btw - how many such economists in Irish 3rd level at the mo? How many Master degrees, PhD grads etc ………….

1) many people in the private sector are currently contracted to retire at either 60 or 65 so they will have a big hole to fill until they reach 67 or 68 or possibly even 70,

2) a disgrace to leave the guards, defense forces (what after all are we defending), judiciary and the body politic entitled to their current entitlements- retiring at 50, pensions whilst in the Dail etc

3) a major shortcoming in expecting people not to opt out if there is no guarantee that their funds will still be around when they come to retirement age-some form of insurance e.g. insuring that at least the capital value of what has been put in is there in the end when you come to retire

4) public sector practically ignored there simply will not be enough money there to meet existing commitments

5) the late Seamus Brennan referred to the possibility of mandatory pensions in 2005 what has Cowen been at since then

I presume they got this figure from reliable sources which makes my estimate in an earlier post look rather more pessimistic. It puzzles me though, because that makes the annuity rate about 4-5% and I know for a fact it was 3% about 4 years ago. With lower interest rates now I would expect the AR was also down - not up.
Can anybody (John?) confirm if the figures in the green paper are correct
Still it makes no sense to me why anybody with even €220,0004 would anything so stupid as use it to purchase an annuity worth 10,000 a year. First of all they would need to survive a further 22 years to just get their own money back so-to-speak. A deposit
ARFs OK are a better option but most existing DB scemes I suspect are locked into purchaisng annuities at those kind of costs. Which is a large part of the reason why there is a major probklem with pension funding right now. If they didn’t have to purchase annuities a lot of the apparent “underfunding” issues would disappear.

Other Peoples Money. This is the source of all sustenance for parasites who produce nothing themselves. The demise of all the banks and the loss os such sustenance must be made up somehow. I know, get the working poor to do it. Tell them it is for their good. But make it mandatory. We can decide what to use it for and when it is big enough we can use it for the natuional good and appoint some ex-politicians and public servants to it.

OPM:- U KNOW IT MAKES US WEALTHY!

I linked this before, but it is worth linking again. The guys have a great sense of humour about the whole thing - and describe so well, how their particular generation got away with a free ride, so to speak.

The U.S. Economy: The Last 50 Years and the Next 50 Years

Franco Modigliani
Paul A. Samuelson
Robert M. Solow HM

September 18, 2000

http://mitworld.mit.edu/video/76

Re: retirement at 68
I’m not fit for much than I already do at 41. By 65, I was expecting to be fit for nothing. 68 seems a looooong way away.

Permagrowth, and its accompanying financial paradigms are dying - the most recent credit boom did for them. The dreadful debt overhang cannot be cleared absent an approx +7% annual increase in economic activity for 10 years. Anyone believe this is remotely possible? No, I thought not. So you had better conjure up some scheme to deal with this debt which allows for only an annual +1% - if we can even achieve this, which I doubt. Current real interest rates are allegedly in excess of 6%??? Should be funny when this climbs toward 10%.

Growth, if any, will occur east of the 90th Meridian. Mercantilism at its worst! Good part about this is, they will have to buy their own trash - we won’t be able to buy it. We will be existing on the clippings after all those levies etc, have been taken from our earnings. Interesting Times indeed.

Better start that lateral thinking.

B Peter

http://www.kiwisaver.govt.nz/

British System also strongly moving toward automatic enrollment

http://www.dwp.gov.uk/docs/pa-personalaccountsfull.pdf

@Joseph, I was debating this with my 51 year old father last night (who narrowly avoids having to work until he is 68 for the moment) and he made the same point re: employers not wanting to employ people of this age. Is there no case to be made that 65 year olds+ in this day and age are far more productive than they were 20 years or so ago?

One of the Elderly Action groups, possiblt Age Action, made the point that someone who has being undertaking physical labour their whole life won’t appreicate this. Can’t help but agree.

Surely part of the package should be State-guaranteed bonds with a return matching inflation, easily available with no/minimal mark-up by the industry. Not as good a return as the equity numbers used in the pensions industry promotional literature, or even by actuaries, but a potentially low-transaction-cost approach for the risk averse and a good way to fund government borrowing.

BTW, you hit the nail on the head without realizing it as far as the life expectancy issue is concerned. The vast majority of improvement in life expectancy at birth since 1840 has come due to improvements in child mortality. Life expectancy at 50 has probably not doubled since 1840. it has undoubtedly increased but not by as much as life expectancy at birth.

i think it’d only be a relevant issue if there was a difference in the rate of change of average life expectancy vs the rate of change of life expectancy for a 68 year old. I’d suspect they’re broadly similar, no? I agree with your basic principle, but im not sure its a problem here which one you use, provided, in fairness, we understand that there is a difference between the two.