I will set out below the choices that deferred members will face in the coming months. At the same time, I will offer some guidance to assist members in making the right choices. But, before tackling the choices, it is essential that you understand what actually happens when you retire, and the impact your decision now will have on this.

Retirement Options made simple – as possible!

There is inequality in the process when dealing with Defined Benefit schemes over Defined Contribution schemes. Most Defined Benefit schemes have the following rules when it comes to retirement:

1.  1.5 times salary to be taken as a tax free lump sum, once you get to retirement age, and have minimum 20 years service completed 
2. The balance used to buy an Annuity

I have spoken to a technical pension group within one of the pension providers, and they have raised this inequality with the Minister for Finance. They are confident this rule will get changed, but unlikely in the next 12 months.

A Defined Contribution scheme offers the following additional choice at retirement:

1. 25% of your fund as a tax free lump sum
2. The balance transferred to an Approved Retirement Fund (ARF). This has restrictions, however.

An ARF is a type of pension investment account. Unlike an annuity, the fund stays within your control. Like an annuity, the payments/withdrawals are taxed. And, unlike an Annuity, you can out-live an ARF (if your withdrawals are greater than the growth of the fund over your life time).

The restrictions are as follows:

Under current pension rules, an ARF is only an option if:

• You have an annual income of €12,700 or
• You have an Approved Minimum Retirement Fund (AMRF) with a balance of €63,500 (an AMRF is like an ARF, except you cannot access the funds until you are 75, or meet the income criteria. You can only withdraw the growth in the fund). Of course, the income criteria may be satisfied by the state pension at 67/68.

Clear as mud? Great!

Or, your priority may be to maximize your tax free lump sum. Lets look at an example;

Bearing this in mind, we will now look at the options for the Transfer Value from the winding-up Defined Benefit pension scheme.

Your Options for a Transfer Value

Towers Watson are now looking after the old TSB scheme, and Allied Irish Pension Trust the IP scheme.
The following are the options you will receive in the post, along with an indication of your Transfer Value.

1. Transfer your benefit to the banks new Defined Contribution pension scheme with AON
2. Transfer your value to a new employer scheme
3. Transfer to a PRSA (if you had less than 15 years service completed)
4. Transfer to a default Buy Out Bond.
5. Transfer to a Buyout Bond of your choice

Transferring to the banks new Defined Contribution Scheme

This could be the most beneficial first step. As rules stand, the greatest advantage of transferring your fund into the banks new Defined Contribution scheme, even on a temporary basis, is that your fund is no longer governed by the more restricted rules of the DB scheme.
You could then transfer your fund out of the DC scheme, and into a buyout bond, with the rules of the DC scheme now attached. A small administration fee would apply for this “bed and breakfast” style transaction.
The disadvantage of leaving your fund in the DC scheme long-term, is that you give up a certain amount of control of your fund to the scheme trustees. Plus, you would still have a tie with your former employer for any queries regarding your pension in the future. And, you have no control over charges.

Transferring to your new employers scheme

The advantage of this is that all your benefits are kept together under the one roof. The downside, again, is that you will be giving up control of your fund

Transferring to a PRSA

This is only an option if you have 15 years or less service completed with the bank. The advantage of it is that you retain control of your fund, plus it also gives you the ARF option at retirement. The downside is that there is less flexibility as regards fund choice and charges

Transferring to an open market Buyout Bond

The advantage is that you retain control of your fund. There is greater flexibility when it comes to fund choice and charges. The downside, as mentioned already, is that as of yet, there is no option of an ARF at retirement (unless you transfer to new DC scheme first, and then subsequently transfer to a buyout bond.

Transferring to a default Buyout Bond
In my opinion, this is never a good choice. You cannot have a one-shoe-fits-all approach to investments which is exactly what a default buyout bond represents. It is designed to cater for the masses, not your individual needs.

Making the Right Choice

I cannot over-emphasise enough the importance of getting independent financial advice when you get this letter. You are responsible for ensuring you have an income in retirement. So take control. A default, one-shoe-fits-all strategy is not good enough.

As a former employee of permanent tsb who has been through the process of taking a transfer from the scheme before the win- up. I know the pain of having to give up the dream of the wonderful security in retirement, that once was the promise of our Defined Benefit pension scheme. But I also understand the importance of making the right decisions now.

In my next blog, I will be covering how to make the correct investment decisions.
For more information please contact keelin@moneyadviser.ie
photo credit: Julian Stallabrass via photopin cc

According to a recent Standard Life Survey, only 30% of women have a pension. And this figure is on a steady decline.  Seriously, ladies, are we back to the days of relying on our husbands/partners  to support us?

And, this statistic is only part of the picture. The same survey highlights the fact that the average fund size is only €37,000. Do you know how much of an annual pension this can generate? About €1,800 a year; not even enough to cover the weekly shopping.

Get Real!

It is time to take our heads out of the sand. Many of the women surveyed said “I  can’t afford a pension”. But, the truth is you can’t afford NOT to have a pension. In reality, most people simply never get around to it.

Contributing to a pension is without doubt the best deal you can get in savings plans. You get tax relief on every contribution. So, if you are paying tax at the marginal rate of tax, a €200 contribution will only cost you €118. Even without looking at investment fund returns, you are on a winner.

Visualise your Retirement

It is very difficult to appreciate the true impact of not having an income when you retire without visualising yourself at 65. So, your income has stopped. You more than likely will not get the state pension (currently €11,976 p.a)  until you are 67 at least.

Ok, your mortgage should be cleared and your children may have left the nest, but do you want your standard of living to drop?  What do you imagine your retirement will be like? Leisurely breaks in the sun twice a year?  A pat on the back that you have got yourself and your children to this point in one piece. You deserve a stress-free life now. Enough money to cover your day to day expenses, and an emergency fund to cover any issues as they arise, be they health, car or house related.

Got the picture now?

Of course, there are other ways to plan for retirement. Some people have investment properties, or stand-alone investment funds. But, undoubtedly the pension plan is the most tax efficient.

It is your life too

And to the women out there whose job it is to manage the home, and who do not have an outside income source. Have the discussion with your partner. Is he maximizing his pension contributions to ensure an adequate income for you both in retirement.  Or, indeed, has he started a pension at all? You have joint responsibility for this. Sit down and consider what is your plan for your retirement . How much of an income do you envisage you could live on. You then need to look at any plans that you already have and see if they are meeting your requirements, or if there is no plan in place, you need to take action immediately.

In my line of business, I meet so many people who look at this when it is too late. There is no point in starting a pension of €200 a month when you are 52! The fund will be too small to generate any real income.

Take action now

So, come on Women, start doing it for yourselves. It is your life, and you need to plan for it.

Take the first step, and get in touch with me. Call 045 888 904 or email keelin@moneyadviser.ie.

photo credit: gnuckx via photopin cc

One sure thing to turn off any potential investor is to present him or her with a list of funds as long as the weekly shopping receipt. Both lists can be endless, and far too long to digest. Fund choice can be easily pruned back to reflect the specific needs and objectives of the investor.  The investor is an individual trying to make the right choices when managing their wealth, in order to fulfill their own dreams and goals and maybe those of their dependents.

Investors come in all shapes and sizes

• A young couple looking to accumulate a fund to buy their first home in the next 5 years.   The time horizon is going to be a factor for them.
• Parents wishing to build up a fund for their children’s education. Getting a good return on their investment may be of most importance
• A couple with an unexpected wind-fall. They might have a higher tolerance for risk
• A professional in his 40’s planning for his retirement. Tax benefits may be the main focus
• An ex-employee of a Defined Benefit pension scheme who has been informed the scheme has wound up. The fund he needs at retirement to generate an income is paramount.
• A company director in her late 50’s planning to take early retirement. Preservation of wealth will be her main concern.

As can be seen from the list above, the stage in life and the purpose of the investment will determine what choices are available.

Patrick’s Story

I first met Patrick in the office this time last year. Patrick is aged 53, a company director who loves his job. His plan was to retire at 65. He contributes to an executive pension every month. The current fund value is approximately €465,000. On the ESMA risk scale of 1 to 7, the Balanced fund he is invested in is 5 of 7. Equities account for 75% of the fund, with the remainder in cash and bonds. As regards performance though this fund was down 30% in 2008, it has grown 54% since then (including +13% in 2012, and +10.5% so far this year).

Patrick contacted me last week to tell me he had suffered a heart attack, and though he had recovered well, was now considering retiring at 55.  He was looking for advice on what to do with his existing retirement fund. There is a bit of a gambler in Patrick, which made his decision all the more difficult.

Since this fund would be his main source of income post retirement, moving to a secure fund immediately is the safest option, tying in the growth to date, and insuring against any future losses. Bonds are no longer as attractive, so a fixed interest rate is the next best thing. However, because of low interest rates in the current climate, what is on offer out in the market is less than 2% per annum. Now, when you deduct the 1% Annual Management Charge, the 0.75%  pension levy (2014) and inflation, this will return zero growth.

Patrick has to consider whether he can afford to take a risk. If 2008 was repeated, and his fund lost 30%, this would have a huge impact on his post-retirement income. He loves the fact that his current fund is up 10%, and wasn’t too bothered by the fact that it was down so dramatically in 2008 as he understood that with time, equities do recover. But, Patrick does not have the time. He has a time horizon of, at most, 2 years.  So, if the fund fell dramatically in that period, he would not have the luxury of letting the fund sit to allow it recover.

Patrick has decided to go with the secure option. He has a high “appetite for risk” but he does not have a high “capacity for risk”. It is a matter of sacrificing potential growth in the future, for the security now. Patrick’s stage in in life dictates that.

Understanding where you are

Whether you have just won the lotto, or are about to receive a cheque in the post relating to a wound-up Defined Benefit pension scheme or you simply want to start saving for the kids education, which fund you invest in will depend on;

• Your age and health
• Your time horizon – when do you need to access the fund
• Your goals and objectives – what target fund you need at the end of the investment period
• Other income you have
• Your attitude and capacity for risk

A reputable financial planner is able to select a small choice of investment funds suited specifically for your needs – in cases like these, less is often times more.

To get a better handle on how you should be investing over the short, medium and long term, contact the office on 045 888 904 or drop me an email to keelin@moneyadviser.ie

photo credit: Freddy The Boy via photopin cc

If you are still working in the organisation, then the scheme will more than likely be transferred to a defined contribution (DC) scheme, and there is very little else you have to do, apart from accept. Accept that the promise of a pension at retirement of one-half, or two-thirds your final salary is now gone. Instead you will get a pension fund at retirement, and it is then that action will be needed. It will be up to you, with the help of a good financial planner, to make decisions based on current pension rules, and sound investment advice, to maximize the fund available to generate a sufficient retirement income for you.

However, if like me you have left the organisation, you are a deferred member, and decision time is much closer.

My Story:

As I explained in my last blog, in 2010 I left work in the Permanent tsb, after 23 years. At the time of leaving I received a benefits statement from my defined benefit (DB) pension scheme, and an option to take a transfer value. I decided to leave my deferred benefit in the scheme.

In early July of this year, I requested an up to date Transfer Value. It was now valued at €30,000 more than the original value, reflecting the recovery in the markets over the last 3 years. So, considering that and the fact that it was very likely the scheme was about to wind up, I decided to take my money and run. I sent a request to the scheme trustees to take my money out of the scheme on July 22nd and luckily for me I did. The defined benefit scheme began the wind-up process on July 26th. My transfer request was in on time. A week later, I received a cheque in the post, made payable to my new pension provider.

Choices Choices

Once the wind-up of a defined benefit scheme has started, decision time has been postponed for the deferred members. Deciding whether to stay or go is no longer an option. You have to go, but not until the wind-up of the scheme is complete. Like those scheme members still employed in the organisation, deferred members also have to accept that the promised pension at retirement is now well and truly gone, and you are now responsible for your own post retirement income.

If you have more than 15 years services completed, then your only options are;

• Transferring to a Buy-Out-Bond (a type of investment account, which grows tax free, and is governed by pension rules)
• Transferring to an occupational pension scheme with a new employer, if this is available

If you have less than 15 years’ service completed, you also have the option of;

• Transferring to a PRSA

For most people with more than 15 years’ service completed, the Buy-Out-Bond will be the only choice.

But there are still are so many decisions to make, and this cannot be done without the help of an independent financial planner.

Why enlist the support of a Certified Financial Planner?

We consider all options;

• Fund choice – This will depend on how many years you have to retirement, and how much of a fund you will need to generate, to give a sufficient income at retirement
• Get personal – what are the correct options for you?
• Tax Free Lump Sum – Did you waive your right to a tax free lump sum when you took a severance package? This will have an impact on your pension at retirement
• Structure – It might make sense to split your pension transfer in two. Want to know why? Contact me!
• Access to pension from age 50 – There may be some circumstances where it makes sense to draw down your pension from age 50 and a Buy-Out-Bond will usually accommodate this. But there are things you need to consider…
• 15 Year Rule – If you have less than 15 years’ service, you may want to transfer your fund into a PRSA. This will have an impact on your future pension contributions and how you take your benefits at retirement.

Make no mistake about it pensions are governed by a lot of rules, many of them senseless. At The Money Advisers, we are equipped to advise you on your options. We tailor our advice to suit your needs.

To schedule a financial consultation with Keelin, you can email her at keelin@moneyadviser.ie or call 048 888 904. 

I received a letter from the trustees of my permanent tsb bank pension scheme. The letter stated that the bank had informed the trustees that they would make no further contributions to the scheme after the end of June.  This, inevitably, will lead to the winding up of the pension scheme.

I am a deferred member of this scheme, having left the bank in March 2010. At the time I was given an option to transfer my benefit to an alternative arrangement. After much deliberation, I had decided to leave it in the scheme – admittedly the easy option at the time.

Hindsight is a wonderful thing

The reason for my inaction? I could have taken the transfer value, which effectively was an estimate (minus a discount) of my contributions, plus the bank’s contributions, during my time there. My transfer value was €120,000, which I could have elected to have transferred to a defined contribution scheme in my own name, in the form of a buy-out-bond or personal retirement bond.   At retirement, it would have been up to me to take my fund and find the highest annuity rate the insurance companies were offering to secure the best pension – an annuity rate is like an annual interest rate, but guaranteed for the rest of your life.

Or, I could have remained in the defined benefit scheme, and been “entitled to” a pension at retirement of €18,000 per annum for the rest of my life.

Naively, I balanced one against the other. To get a pension of €18,000 from an investment bond would require a fund at retirement of approximately €520,000 and an annuity rate of 3.5%. Therefore I would have to make my investment bond of €120,000 grow to €520,000 by retirement in 17 years. This would require a growth rate of around 9% p.a.

You can kind of see why I stubbornly stuck with the defined benefit scheme.

But, in hindsight, it was a crazy comparison as the golden promise of defined benefit was quickly turning to an empty one.

I wonder now, had I gone to a financial adviser at the time, would he or she have made me see that my 18 grand a year was becoming pipe dream?

This letter finally put an end to the dream of defined benefit schemes, pipe or otherwise, and I find myself, once again, having to make a big decision about my retirement plans.

Questions, questions, questions

What do they mean by wind up anyway?

Winding up means that the “preferred creditors” are paid first. What is left in the pot after winding-up expenses are deducted is divided among existing employees and deferred members (like me) equally. The preferred creditors are all Additional Voluntary Contributions (AVCs) and existing pensioners in receipt of pensions. My share of the leftovers would then be transferred to a defined contribution scheme in my own name (aka a buy-out-bond, personal retirement bond or PRSA).

Luckily for me, I have recently completed the Graduate Diploma in Financial Planning and spent over 20 years in the financial services industry. However if I was in a different industry, I don’t know how I could possibly be expected to navigate the murky waters of pension wind-ups and defined benefit schemes.

So once more I am facing a few questions:

What does it do to my retirement plans?

Well, I have accepted that my potential annual pension on retirement of €18,000 pa is well and truly a thing of the past. I now will have to take charge of my own retirement by making best use of the fund assigned to me.

Do I take the fund now or wait until the fund winds up?

I have requested a transfer value, which I expect will be discounted by up to 35%, based on the recent valuations of those members who left employment in December 2012. My transfer value will be calculated by an actuary. Whatever the transfer value now, there is a chance that it could be worth more when all the calculations are done after the wind up. But the more likely scenario is that it could be worth less, after assets are realised, AVCs and existing pensioners taken care of and wind-up costs deducted.. The company is not pumping any more cash into this sinking ship. At this stage I am leaning towards the view that a bird in the hand now is better than a bad egg in a few months’ time. I think I’ll take the money and run. 

What are my choices as to what I can do with my share of the remaining pot?

I certainly can’t leave my pension in the old TSB pension scheme. My choices as regards what to do with my fund are governed by pension rules. I could:

A)     Transfer to a Buy-out Bond or Personal Retirement Bond. The advantage of this option is that I would have access to the fund from the age of 50. And the rules of the old Occupation Pension Scheme carry to the buy-out bond in relation to tax-free lump sums

B)     Transfer to a new Occupational Pension Scheme

C)     If I had less than 15 years’ service with permanent tsb (which I didn’t), I could have transferred the fund to a PRSA. This option allows a tax-free lump sum at retirement of 25% of fund, and other investment options

These options may not guarantee an income in retirement anywhere close to the false promise of the defined benefit scheme. Rather than retreat to sandy area for a bout of head-burying, or spend an unhealthy amount of time engaging in teeth-grinding and gnashing, I need to start working on it now to make the best of what I have.

The moral of my story

Don’t let difficult decisions lead to inaction.

If you are in a similar situation to me, do not be put off by the pension jargon and pension rules. If it all seems too complicated, take advice from people who will take the time to fully understand your personal circumstances and offer you the best advice. Take action by contacting someone who can help you. And take control of your own retirement planning.

What Can I offer?

I am an independent financial planner with Money Adviser. Myself and my colleague, Bob Quinn, both about to be assigned the designation of Certified Financial Planners (CFPs), have a wealth of experience and knowledge. If you find yourself in the same position me and need advice, get in touch. We will identify the best options for you. You can be assured that the information you are given is totally in your best interests.

Give me a call on 087-2606505 or check out our website www.moneyadviser.ie.

The reason for my reverie is a bill on my mantelpiece from Douglas Travel for €2,435 as final payment for my family holiday in France. I have to stop myself from having that sinking feeling when I look at the bill. It seems such a lot of money for a two week holiday. And what if it rained for two weeks? Right beside it is a list of endless jobs yet to be completed in my new kitchen. My mind does a quick calculation as to how much I had spent in the last two months, and how much I could do with that €2,435.

A little self-indulgence is ok

I don’t normally take a two-week holiday abroad. I love holidaying in Ireland, but it has been such a busy year with work, kids, matches, training, exams, committees, ageing parents, extended family. We need a foreign holiday. And, I have to remind myself, there is nothing wrong with a little self-indulgence. There is nothing wrong with wishing for a sun holiday – once you plan for it. And I do.

Emergency funds are one thing. A slush fund is another. It is there to pay for these additional pleasures in life, whether it is taking a foreign holiday, getting that new kitchen, spending money on furthering your education, taking up an expensive hobby. Slush funds come from different sources. Part of it is made up of regular savings, but it can also be added to by redundancy payments, inheritance, bonuses etc; things that are part of life in your 40’s.

In these times of recession, positivity sometimes can be hard to find. It is almost sinful to have dreams of grandeur and enjoyment. This feeling of guilt associated with self-indulgence is something probably more prevalent among us 40-year-olds who grew up in the “hard 80s”. And maybe children of this decade will make similar 40-year-olds.

It’s not how much you have, it’s how you manage it

There are people out there with money, and people without. Both groups of people face similar problems when it comes to financial planning. I meet clients on €120,000 in need of budgeting advice, and people on €30,000 in need of budgeting advice. The surplus or deficit at the end of each month is quite similar. The latter group on high incomes have equally high expenses, the mortgage usually forming a large part. So, it is not about how much you have, but how you manage what you have to the best of your ability, to achieve those things to which you aspire.

No matter what your financial situation is right now, you have a right to have aspirations. Do not write them off because of your current financial situation. They may take a little longer to realise, but you can achieve them. You have to start focusing now, you have to start taking control of your finances now. This may include making a decision to not to on holiday this year, or this summer, because you really don’t have the funds in place or have other financial priorities. However, with some planning, you will get your holiday.

Create your Financial Plan for Life

Give myself or Bob a call here in Money Adviser. Take that 2 hour “time-out” to make that financial plan for life. We typically charge a fee of €500 for a full financial review. This service focuses on your current financial situation and your vision for the future. We then come up with the most effective way of managing your money and put a plan in place to ensure you achieve your goals. One of these goals should be that you have enough money put aside for life’s pleasures.

I will go on my two week holiday in France, and I will finish my new kitchen. It may all put a huge dent in my slush fund, but that is its purpose. And, hopefully, it won’t rain in France…but then, that is something even I can’t plan for!
photo credit: eutouring via photopin cc

I remember the day it all changed. I was at a mortgage lenders meeting back in 2005. I walked in as a conservative lender, reflecting the policy of the bank; the mortgage advanced was typically 2.5 times the first income plus once the second income. A potential borrower had to prove an ability to repay through savings, rent repayments and so on. Furthermore, the bank would lend a maximum of 92% of the price of the home. Things were about to change drastically.
At that meeting we were told to forget everything we had practised up to now. From that point on, mortgage lending would not be based on multiples of the gross annual income, but on what the repayment would be as a percentage of net income. So, for example, a couple on a combined gross annual income of €100k (€60k plus €40k) would have qualified for a mortgage of around €190,000 under the old lending criteria. Now, based on the new criteria of between 35% and 40% of their net monthly income of approx €5,800, they would qualify for at least €385,000.
And as for proof of repayment capacity, forget it. The customer will have the discipline to make the repayments once the mortgage kicks in, we were assured. And the final bombshell – the bank was now doing 100% mortgages.

The reason for this U-turn? International deregulation of the banking system had opened domestic markets to foreign banks, leading to more competition, new products on offer, and the scramble for market share. We live in a capitalist economy, so at the end of the day, the shareholders want to see a profit. They want to see an increase in market share, not a decline. Bank of Scotland had entered the Irish market. They were seen as more “generous” mortgage lenders, and had introduced the 100% mortgage. My bank, under pressure from its shareholders, had to compete.

But everyone else is getting a mortgage, why not me?

And how did the customers respond to the new attitude to mortgage lending? If I had to decline a mortgage application based on previous lending policy I was quickly told by the customer; “My friend, Mary, has just been approved for a mortgage of €400,000 by Bank of Scotland, and she is on less money than me”. It didn’t matter if the people sitting in front of me couldn’t afford it – they were fixated on the fact that their friend had been approved for more, and fixated on getting on the property ladder before it was too late. This was the constant pressure on a daily basis. The bank responded to the threat of losing market share by relaxing its mortgage policy and allowing more reckless mortgage lending to take place. And the rest, my friends, is history.

Barry the brick-layer

I do remember one particular customer. Barry, from the Midlands, was employed as a brick-layer. By now, with a booming construction industry, the brick-layer had replaced the doctor and solicitor as the new high-earner, and was lent to accordingly. Job security and income sustainability weren’t as important as what a client was earning right there and then. The non-guaranteed income such as overtime, commissions and bonuses was taken into account. The traditional long-term security of the jobs of teacher and civil servant was no longer as important a factor. I approved Barry for a mortgage of €320,000 based on his gross annual income of €90,000. As he walked out the door of the bank, delighted that the bank had approved him for that two-bedroomed apartment in the small village “only an hour from Dublin”, I had an uneasy, niggling feeling. I knew that had he walked into the bank a year earlier, he would have been declined. And I wondered if I had done Barry a huge disservice.

Two years later, with a downturn in the construction industry, I got a call from Barry. He had lost his job, and couldn’t afford to pay his mortgage. I still remember my response to him; “But Barry, you have to pay your mortgage. If you skip a repayment you are in danger of your home being re-possessed, as per the terms and conditions of your mortgage”. There was no mortgage restructuring department at that stage, no interest-only options or payment holidays to assist borrowers in difficulty. So there was nothing I could offer to help him. If Barry is still even in the country, he may, by now, have had his mortgage re-structured, let his apartment to help with the repayments, or maybe he is in arrears and will never get a mortgage in this country again. I do think of Barry, regretting my unsympathetic response, and hope that things have worked out for him.

I knew the bank when it was just a baby

I was with the bank from its infancy right up to full PLC status. I started in Permanent tsb in 1987. It was Cork Savings Bank then. It later became Cork and Limerick Savings Bank, then TSB and following the merger with Irish Permanent, Permanent tsb was born. I have to say there was a time when it was a wonderful bank. I remember the induction course when I started in 1987, and the chant of the then Chief Executive; “The customer is king”. Customer care was the core of its business and this was instilled in its staff. It was a bank for personal customers. Deposit and current accounts were opened, lodgements were taken, term loans and mortgages were approved, in a conservative manner. But the books balanced. I worked for a number of years in the finance department and there was pressure to have the month-end detailed reports sent to the Central Bank showing the level of deposits, lending and so on. It all seemed so closely monitored.

Back then, we were service providers, not sales people. But that doesn’t make huge profits. With the merger of TSB and Irish Permanent, there was the bringing together of two good banking institutions. The ethos in both institutions was very strong on customer focus. Then you introduce an insurance company (in its own right, a reputable, respected financial institution) with a different business focus, though similar customers, and you have Irish Life and Permanent. In hindsight, alarm bells should have been ringing. The focus became moving customer deposits into long-term profitable insurance products, which amounted to stripping the banks’ deposit books. The lending book grew and grew and the whole balance sheet went out of kilter. Downfall seemed inevitable, especially to us seasoned bankers.

Getting Back to Basics

As I watch the new Permanent tsb ads, I have great hope for the future of banking in Ireland. “Getting back to basics” is a great tagline. The focus seems to be back on customer care and providing an excellent current account service. I am lead to believe they are open for mortgage business again, though with more conservative lending criteria. I would encourage people not to be suspicious of their local banker, not to make bank workers, and former bank workers, the pariahs of our society. They have great expertise in the area of current accounts and term and mortgage lending, but lost their focus in recent years. I hope the other banks follow the lead of the Permanent tsb, and get back to basics.

Horses for courses

It is good to have a separation. Let the banking institutions focus on their areas of expertise: current accounts, deposits, credit cards, term loans and mortgages. Let the financial planners, like Money Adviser, focus on their areas of expertise, such as retirement planning, long-term investments, life cover. That way, conflicts of interest and mis-selling won’t happen and bank policy will be driven by good banking practice rather than by acquiring market share.
With this structure in place, I believe the people of this country will have a very sound financial service system going forward, though I fear it may be too late for Barry.

Today, I am a financial planner with Money Adviser. I use my fantastic experience from my time in the bank, in particular the conservative attitude and due diligence I learned at the beginning of my banking career and exercised through the majority of my career, to help people get the most out of their money. I am not interested in selling products. I don’t care about market share.

“Back to basics”. Let’s hope it’s more than a tagline.
For independent advice on personal finance, don’t hesitate to contact myself or Bob on 045 888 904 or info@moneyadviser.ie.
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I scared myself recently at my six year old son’s swimming lesson. He may be great at any sport with a ball, but, boy, the child has no buoyancy. He started swimming lessons when he was four and he is still in Beginners!  The cost of each term is €90 and there are four terms a year, bringing the annual cost for this water baby to €360.  For a while I had two sons attending, doubling that cost.  So when I found myself talking to the swimming instructor and suggesting that maybe it was time for my son to progress to the next level, I had to question my motives. And the sympathetic look on the instructor’s face hit home as he announced, “I don’t think he is quite ready yet. But,” he added, encouragingly, “He is nearly there“. Cha ching. Another term at this stage, and then there are four more stages!

So back to my motives. The first was sanity. Could I possibly spend another 12 weeks sitting at the edge of the pool watching my son learn the same stroke being told, repeatedly, to keep kicking. The second was the cost; the longer he spent at this stage, the longer the whole process was going to take, and the more expensive it would turn out to be.  But we live on an island and the child needs to learn to swim properly, and we do spend summer holidays sailing down in beautiful West Cork. I checked myself. Safety should never come before cost! I just wished he’d keep kicking.

The True cost of being a “Soccer Mom”

But it got me thinking about the cost of all the kid’s other activities – the cost of being a “soccer mom” if you like. Having two sports-crazy boys, this cost is inevitable and I wouldn’t swap it for the world. The magnificent benefits of having your kids involved in sport cannot be over emphasised. They gain confidence, skills (both social and sporty) and fitness.  But nevertheless there is a big cost involved, and one to which I hadn’t given much thought.

And then you have music lessons, and if you have daughters it’s hip-hop or ballet lessons, maybe on top of the sports.

As Financial Planners, we encourage our clients to have rainy day funds and education funds, but do we ever factor in the Developing your child’s skills and talents Fund?

This is what my children’s development is costing my household. Jot down yours and see if you don’t get a shock.

• Swimming  (2 children)        €720
• Guitar lessons                         €600
• After-school sports               €120
• Tennis lessons                        €240
• GAA membership                  €120
• Soccer membership             €160
• Sports summer camps        €400

Total per annum                               €2,360

That’s nearly €200 per month! And this is without taking into account the cost of ferrying them to and from matches every weekend, possibly at three different venues, not to mention kit and equipment.

We haven’t even considered the cost of creating those perfect teeth in teenage years, a cost which it seems has become inevitable, but that’s another story, and another fund.

As a result of this enlightenment, next time I talk to clients about their rainy day fund and their kids’ education fund, I am going to ask them to consider the Developing Your Kids Talents Fund. It is, for certain, a cost we all need to factor in to our household budget.

And we wonder where all our money is going. So if you have active kids, talented kids or kids that just need to keep kicking, start setting aside that €200 per month.

The alternative, of course, is to wait until our darlings are old enough to fund, from their own pockets, the development of those hidden talents.

To create a realistic household budget that you can stick to, contact myself, Keelin Fitzgerald, or Bob Quinn at Money Adviser. We’ll make sure you know the true costs of being a soccer mom or pop and that they are part of your budget.

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photo credit: Kman999 via photopin cc

And it’s amazing how many people believe that they will never fulfil their dreams, since their chances of winning the Lotto in Ireland are 1 in 8,145,060. Well, I have news for you; there are other ways to do it.

What exactly are your dreams?

The first step is easy. Ask yourself a few questions: do you truly know what your dreams are? What is that one thing that would really make you happy? Do you know where you want to be in 5, 10 or 20 years’ time?  Have you ever visualised where you will be?  If the answer is “No”, then tell me, how can you ever experience the excitement of living your dream? You don’t even know what it is.

So part of this first step is writing down exactly what your dreams are. There is no point in saying, “I want to win a million euro”. That’s too general. Know the specifics. Here are some examples to get you thinking:

• Clearing your mortgage before the age of 55
• Owning a bigger house
• Retiring to the Caribbean
• Being a size 12 again
• Taking one amazing holiday each year
• Climbing Kilimanjaro
• Making sure every one of your children qualifies from college
• Clearing all your debts
• Being healthy and living long

Step one – knowing what you want – is half the battle. The subsequent steps are just the mechanics

Ok, so you might still believe that winning a million euro can give you all these things at once. But you don’t need them all now. Some dreams are a few years down the road. But start planning now and you can achieve them without buying a single lottery ticket.

A full financial review can help here. I’m talking about a genuine, honest look at where you are financially and where you want to be in the future. A review helps you prioritise your goals. All of a sudden, dull financial terms like savings, pensions and investments become a means of your achieving your dreams.

Visualise your future and where you want to be

I did it when I was about 21. I hung a picture of a yacht up on my bedroom wall and looked at it every night, imagining a day when I would own it.  I didn’t imagine winning the Lotto, no, I just imagined owning the yacht.

I, for one, am a firm believer that everyone has an equal right in this life to achieve whatever they want, however daft it might sound to someone else.  And we should not put any obstacles, like doubt, in our way.

Fifteen years later, I got the fancy yacht. And I’m not earning a six-figure salary, nor did I marry a rich man …or win the Lotto!

If you have a goal that drives you, but no clue as to how you’d go about planning your finances in order to make it happen, get in touch with me. If you’re not clear what your priorities are, get in touch anyway – helping people identify goals and sorting out their finances to reach them is my specialism. Some call it a financial review. I call it ‘The Yacht Plan’. Let’s make one for you.

T: 087 2606505

E: keelin@moneyadviser.ie

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