Pension, is there any point?

Fat_Fingers

Private pensions are decimated, i see my pension report is much much less of what I’ve put in so i would have been better off with cash in the bank (or foreign bank by the look of the state the banks are in here) . This abysmal performance didn’t stop pension fond taking out their high fees for this stellar achievement.

At the moment contributions avail of relief at the individual's higher rate of taxation. By 2012, relief will be cut to 34pc, then falling to 20pc by 2014.
However, employee pension contributions will no longer be able to claim relief from Pay Related Social Insurance (PRSI) and the health levy (now renamed the universal social charge) from the beginning of next year.
Up to now, PRSI and levies are applied to wages after pension contributions have been made. But from next year the PRSI and social charge will be applied before money is put into a pension.

So is there really any point for PAYE worker contributing to pension? People I work with have already made arrangements to reduce their pension contributions to bare minimum that is allowed, apparently you can’t cancel it fully.

Am i missing something obvious ? Has private pension contribution become just another stealth tax that PAYE workers will see no benefit on the other end?

Cookie_Monster

Fat_Fingers wrote: »

Am i missing something obvious ? Has private pension contribution become just another stealth tax that PAYE workers will see no benefit on the other end?

pretty much.

Ireally fail to see the logic behind the changes, short term small gain for a hell of a lot of pain later on. The gov should be doing almost everything it can to support private pensions on the understanding that if you have one of x value your not getting any state pension and so reducing future pension spending which is only going to go up and up and up

Sand Wedge

Out of interest, how much is your pension fund worth in % terms of contributions that you have made?

Fat_Fingers

Sand Wedge wrote: »

Out of interest, how much is your pension fund worth in % terms of contributions that you have made?

If i got my calculation right , looks like i'm on 76%. Mind you, it was worse last year.

newmug

Its all a load of balls, just another scam.

1. Say i take home an average of E400 per week, for 40 years.
2. I then expect to live say another 20 years.
3. That means, to live on a constant wage all my life (ie the entire 60 yrs), I would have to contribute E133 per week for the 40 years and live on a meager E266, just to continue living on E266 when I retire?

Its all a load of bollox:mad:

Cookie_Monster

Fat_Fingers wrote: »

If i got my calculation right , looks like i'm on 76%. Mind you, it was worse last year.

is that of your personal contributions or 76% of combined your and employers?

ouch

Sand Wedge

Fat_Fingers wrote: »

If i got my calculation right , looks like i'm on 76%. Mind you, it was worse last year.

So currently your fund is about 20% better off assuming that you are a higher rate tax payer than if you did not contribute to the pension fund and lodged money to savings account instead!

Japer

Fat_Fingers wrote: »

Private pensions are decimated, i see my pension report is much much less of what I’ve put in so i would have been better off with cash in the bank (or foreign bank by the look of the state the banks are in here) . This abysmal performance didn’t stop pension fond taking out their high fees for this stellar achievement.

you are not the only one. your best bet is to hit the pension providers where it hurts, by stopping your pension contributions, and instead putting the money in to a savings account in to a foreign owned bank.

Fat_Fingers

Cookie_Monster wrote: »

is that of your personal contributions or 76% of combined your and employers?

ouch

its combined, employers contributions were 4% but there is a talk now of that been removed also.

Fat_Fingers

Sand Wedge wrote: »

So currently your fund is about 20% better off assuming that you are a higher rate tax payer than if you did not contribute to the pension fund and lodged money to savings account instead!

Ok, i see you make a valid point. So in your opinion going forward with relief falling to 20pc and PRSI and social charge applied before money is put into a pension is there still any benefit considering the taxation once you start using pension?

James.

Fat_Fingers wrote: »

apparently you can’t cancel it fully.

This is the real problem here.

Why do companies force employees to join a pension fund ?

Is it part of a deal with Government to get grants ?

dissed doc

Fat_Fingers wrote: »

Am i missing something obvious ? Has private pension contribution become just another stealth tax that PAYE workers will see no benefit on the other end?

No you are spot on. The pension systems are there to ensure a steady income from the individual to the banks - they are a product you buy, that has depreciated before you even get the end product.

The government will legislate to make it mandatory for everyone to buy a pension from a limited number of state-approved pension schemes, all of which will pocket a lot more than you will ever see from a pension.