Using pension pots to buy a home, it is logical – and to increase the coverage

  • Using pension pots to buy a home, it is logical – and to increase the coverage
    Independent.t. E.
    A large number of Irish people are not saving for retirement, and the Government is taking a very reasonable step to ensure that 2022, workers are automatically enrolled in the Pension plan.
    https://www.independent.ie/business/irish/using-pension-pots-to-buy-homes-makes-sense-and-will-boost-enrolment-rate-37176106.html
    https://www.independent.ie/business/article37176105.ece/821ea/AUTOCROP/h342/2018-08-02_bus_42945349_I1.JPG

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A large number of Irish people are not saving for retirement, and the Government is taking a very reasonable step to ensure that 2022, workers are automatically enrolled in the Pension plan.

Anyone who wants to unsubscribe can do it, but I hope that most people will be neatly pushed into the path of a decent standard of living in Retirement.

To minimize the number of abandoning them, a person must be convinced that pensions are really attractive. This is something that, despite the real and valuable incentives, pension providers, employers and governments around the world have had very limited success to date.

Low interest and engagement with pensions due in part to our instinct, I think mainly in the short term – the evolutionary aspect of our humanity that cannot be changed.

But it is also is quite rational desire of people in their 20’s and early 30-ies in the priority of getting a house Deposit for saving for retirement. The risk is that the incentive, many of these people will opt out of auto enrolment – and perhaps you are comfortable to be refused.

But what if we allow people to conclude, tax-free, with their defined contribution (DC) pensions at any time – if they showed the intention to use the money to buy first house?

It can be argued that this would mean less money for pensions in the longer term. However, the purpose of a pension is not a pension in this financial sufficiency in retirement. The inclusion of people in their own homes fully consistent with this objective.

A more serious objection is presented the current state of the Irish housing market in which demand far outstrips supply: the sudden infusion of new money from pension plans may contribute to higher prices.

Now really may not be the best time to introduce this facility. However, auto-enrollment is not due until 2022, and it is hoped that by the time the housing supply and demand is more in balance.

To solve the problems of the pension money driving up housing prices, we offer a conclusion should be limited to 25pcs of accrued pension of the individual pot (which for someone in their 20-ies and 30-ies is unlikely to be that large). The output should be announced in a separate final retirement lump sum, thus ensuring that the Treasury provides no significant tax losses from the measure (owners of DC pension plans are entitled to a lump sum in the amount of not less than 25 PC in the retirement – withdrawal simply allows a person to bring a small amount forward).

Amounts are unlikely to be huge: individual pension contributions 10pcs from €35,000 annual salary over 10 years is only contributed €35,000. Even if we assume that the investment growth, it is likely that the level of 25pcs pin will sit in the €10,000-€17,000 range. However, such a conclusion would probably greatly assist in the delivery of a house Deposit, not completely covering it.

Reference pensions (a topic people find stupid) task of buying a home (the subject people are obsessed with) and you have a way to rouse interest and enthusiasm, the prospect of us retiring with subsequent enthusiasm for automatic enrolment.

This kind of enthusiasm is needed to avoid a situation where many of us become economically dependent on unsustainable public pensions, the aging of the population.

  • Danny Mansergh headed member communications at Mercer Ireland

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