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Tricky Pension Situation

  • 22-10-2006 8:01pm
    #1
    flory
    Closed Accounts Posts: 3 ✭


    My employer avoided paying me a pension which I was entitled to (as contracted employee) under the fixed-term workers act which was first introduced in July 2003. Recently they were forced to pay the pension (10% of total co-ordinated salary, approx 25k) retrospectively from July 2003 but will only do so if I make a employees contribution of 6.5% (13-14k). The other option given to me is too forgo the retrospective pension payment (including my 6.5% contribution) and only set a current starting date for the pension.

    I am from overseas, been in Ireland for 4 years, and planning to head home in the next few years. I'm needing advice on this situation. Do I need to these employee contributions in this situation? If so, would it be worthwhile making this 6.% contribution if I eventually wanted to close the pension (thus losing a signficant portion) and take my money home.

    Much appreciated.


Comments

  • #2
    Reyman
    Registered Users, Registered Users 2 Posts: 1,297 ✭✭✭Reyman


    A very simple question. You're investing 13k and getting 25k return in a matter of days. Sounds like 200% return to me and maybe 300-350% return if you consider that you will get tax & prsi relief on your 13k contribution reducing it to 7-10k depending on your tax rate.
    You can mothball your pension if you leave and allow it to accumulate gains (tax free) till you're 60-65. Then reclaim it no matter where you're living.

    Anyway it's nice to nail your employer who was too mean to pay your pension in the first place! He (she) won't be pleased.


  • #3
    dingding
    Registered Users, Registered Users 2 Posts: 4,940 ✭✭✭dingding


    You would have been paying your contributions all along anyway. :)


  • #4
    Sponge Bob
    Banned (with Prison Access) Posts: 25,234 ✭✭✭✭Sponge Bob


    flory wrote:
    I am from overseas, been in Ireland for 4 years, and planning to head home in the next few years. I'm needing advice on this situation. Do I need to these employee contributions in this situation? If so, would it be worthwhile making this 6.% contribution if I eventually wanted to close the pension (thus losing a signficant portion) and take my money home.

    Get advice from whoever 'forced' them to create the scheme or let you into it such as a co worker who is a trustee of the scheme.

    Also remember you may be able to claim 40% of the 6% back in tax but should talk to the tax office about doing this retroactively (as you COULD not do it in the correct tax years. ) at least have a note on your tax file now about it saying you are coming back to them before end 2006 . The tax office will be reasonable once you explain you were kept out of the scheme in 2003 2004 and 2005

    Therefore you effectively pay 3.6% contribution once the back tax is paid to you .

    You should talk to a tax accountant except they are all really busy with the self employed until about the middle or end of November.

    Maybe ask a trade union who deals with this kind of scumbag employer all the time.


  • #5
    dingding
    Registered Users, Registered Users 2 Posts: 4,940 ✭✭✭dingding


    Or someone like your local citizens advice office. :)


  • #6
    flory
    Closed Accounts Posts: 3 ✭flory


    Thanks for your comments which gave me some confidence when going into bat. Knowledge is power.

    I spoke to a consultant on the scheme. The pension is transferable after 2 years membership. I have fortunately been moved to a higher pay schedule retrospectively which offsets the 6.5% contribution to only 1.5%.

    cheers


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  • #7
    Sponge Bob
    Banned (with Prison Access) Posts: 25,234 ✭✭✭✭Sponge Bob


    flory, its your money mate so never be afraid to discuss it with a trustee of the scheme.

    you may also claim 40% of the 1.5% back in tax, again talk to the tax office, they are very helpful I assure you (not like 20 years ago) and will explain what you can claim back a few years.

    also claim back your allowances (small) if you are a technical person while you are in there


  • #8
    Blackjack
    Registered Users, Registered Users 2 Posts: 3,628 ✭✭✭Blackjack


    Sponge Bob wrote:
    flory, its your money mate so never be afraid to discuss it with a trustee of the scheme.

    you may also claim 40% of the 1.5% back in tax, again talk to the tax office, they are very helpful I assure you (not like 20 years ago) and will explain what you can claim back a few years.

    also claim back your allowances (small) if you are a technical person while you are in there

    The 40% back only applies when you are on the higher rate - if you are on the lower rate, you'l only receive the lower rate back though, unless I've misread something.


  • #9
    Sponge Bob
    Banned (with Prison Access) Posts: 25,234 ✭✭✭✭Sponge Bob


    Blackjack wrote:
    The 40% back only applies when you are on the higher rate - if you are on the lower rate, you'l only receive the lower rate back though, unless I've misread something.

    You are correct blackjack, I presumed he was on c.€28k a year or more which puts him on 40%


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