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New SSIA like Pension Scheme - Anyone got any info?

  • 12-09-2009 6:52pm
    #1
    pandamoanium
    Closed Accounts Posts: 453 ✭✭


    I remember reading about an SSIA like pension scheme whereby the Government would lodge E1 for every E3 you saved in a special pension in a few different papers over the past few weeks.

    Does anyone here know anything about this?

    I gather it's only been recommended at the minute so perhaps it may not even happen!


Comments

  • #2
    smallcapmac
    Registered Users, Registered Users 2 Posts: 14 ✭smallcapmac


    hey, this is my understanding of the proposal.

    As it stands if a person contributes to a pension they get tax deduction at their marginal rate of tax. so if someone paying tax at the higher rate of 41% and they put €100 into a pension thet get €41 back in tax (if you do this through your employer this al happens within your pay check. Now this is the bit that they are trying to address..if you are paying tax at the lower level (20%) and your invest €100 then you get €20 back.

    It is argued that giving high earners a greater subsidy than low earners is inequitable (and argueably it is low earners who need the greatest subsidies given that they may perhaps feel the greatest pain in forgoing spending today in exchange for income in the future at they have less disposable income).

    Whats all this got to do with SSIA style saving? Well instead of having two deductions rates (one for high earners and one for low earners) the proposal is to have a single incentive of 30% (or 33% or something). This may then be repackaged as a marketing gimmic - and rather than tax deductable it may be "added" to your pension - SSIA style.
    The new rate will encourage low income earners as they get a higher incentive (30 v 20%) but will be at the expense of higher earners who will recieve a lower incentive (30% v 42%).

    Anyone have a feelings on the rights or wrongs of these proposals?


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