Raiding our pension pots!

tenchi-fan

Two suggestions appeal to the government regarding pension funds.

Horrible idea #1 (from Fine Gael) is to charge a tax on the balance of pension funds. Essentially a negative interest rate on your long-term savings.

Horrific idea #2 is for the state to nationalise private pensions and invest them in energy saving initiatives, roads, internet and generally squander hundreds of billions in a similar way they invested the national pensions reserve fund.

But what about this idea, #3, that will discourage long-term saving and potentially release hundreds of million into the economy, not to mention a windfall tax take: Let people access their pensions early! They can be taxed at their marginal rate on any withdrawals they make & possibly higher reflecting tax free growth or if a high tax relief had been received.

There is only one reason the government would never allow this, and it's nothing to do with ensuring people can provide for themselves in future.

The government view workers as indentured servants. They are afraid that if people with any amount in their pension fund had access to enough cash, they would use the money to emigrate or simply "take it easy". Not only is there a risk that the pension funds will leave Ireland, but the government would lose an invaluable indentured servant.... someone who will literally work their life away in order to continuing picking up the tab for public servants and welfare recipients.

Personally I only have about €10,000 in my pension fund, I'm 29 and no longer contributing (no point, I don't earn enough). I'd love to take it out and do some repairs on my home and go on holiday. Yet Fine Gael just want to drain it by a few hundred every year until they get the country sorted out :rolleyes:

Uuuh Patsy

Eh' I think the fact that the NPRF has been obliterated is a much bigger scandal than FG trying to take your piddly PRSA.

helimachoptor

Patsy multiply tenchis prsa by a million people and you get the jist, it's a lot if money.

tenchi-fan

helimachoptor wrote: »

Patsy multiply tenchis prsa by a million people and you get the jist, it's a lot if money.

That's my point. Even ignoring the big pension pots which obviously FG are going after, there are plenty of people with paid-up PRSAs with amounts ranging from €1,000 to €20,000 (which "Uuuh Patsy" obviously considers a "piddly" amount of money) but which has the potential to make a big difference to the person who can access it early, the economy the money will be spent in, as well as in terms of the taxation the government could receive.

I don't mind the 3% distribution on ARFs though, and perhaps something similar could be introduced for larger PRSAs and private pensions rather than the proposed negative interest rate for people who wisely invested their money (rather than blew living above their means). Another option is to suspend tax-free growth on pensions turning them into a regular savings account, but once again, only if the option of early withdrawal is made available.

http://www.finfacts.ie/irishfinancenews/article_1026143.shtml
Latest news on this (article is from Jun 18, 2013)

Joan Burton, minister for social protection, on Monday launched the Pensions Board Annual Report and Accounts 2012 and in response to questions from journalists, she refused to rule out another raid on private pensions.

This came days after the announcement that the residue of €6.4bn in the public pension fund is to be transferred to a jobs fund that will be under more direct control of ministers in the second half of the election cycle

Last April, the European Court of Justice ruled against the Irish Government in a case concerning pension entitlements, that was brought by former workers of Waterford Glass and Burton was asked on Monday about the implications for the compensation of workers, which is to be decided by the High Court.

“It’s not possible for me to pre-judge, nor is it appropriate to pre-judge, what decision the courts will arrive at but I think it will be a very significant and important judgment,” she said, and would have “consequences” for the Exchequer.

Asked if she would rule out a new levy, she responded: “I don’t think you can rule out anything in relation to this particular case until the courts have made their decision.”

It is already fact that they see both private and public pensions are a sponge to be squeezed to pay for both their failed policies and their predecessors failed policies.

http://www.finfacts.ie/irishfinancenews/article_1026100.shtml

Duggys Housemate

I thought you could take money out of the PRSA with the penalty.

Pete_Cavan

Deleted User wrote: »

http://www.finfacts.ie/irishfinancenews/article_1026143.shtml
Latest news on this (article is from Jun 18, 2013)





It is already fact that they see both private and public pensions are a sponge to be squeezed to pay for both their failed policies and their predecessors failed policies.

http://www.finfacts.ie/irishfinancenews/article_1026100.shtml

Actually, a recent ruling from The European Court of Justice has held that under EU law the State had an obligation to protect the pension entitlements of workers in the event of a company becoming insolvent. This ruling exposes the taxpayer to the massive potential liabilities of such pension schemes. Perhpas it is the ECJ who sees taxpayers money as a sponge to be squeezed to pay for insolvent company's insolvent pensions. If the Irish government needs a pot of money to pay for this, it makes sense to levy those who stand to benefit from this ruling.

Pete_Cavan

Pete_Cavan wrote: »

Actually, a recent ruling from The European Court of Justice has held that under EU law the State had an obligation to protect the pension entitlements of workers in the event of a company becoming insolvent. This ruling exposes the taxpayer to the massive potential liabilities of such pension schemes. Perhpas it is the ECJ who sees taxpayers money as a sponge to be squeezed to pay for insolvent company's insolvent pensions. If the Irish government needs a pot of money to pay for this, it makes sense to levy those who stand to benefit from this ruling.

The Irish government saw it as a sponge before that ruling and hit people both public and private with pension levies.

hmmm

Deleted User wrote: »

It is already fact that they see both private and public pensions are a sponge to be squeezed to pay for both their failed policies and their predecessors failed policies.

If they are going to impose a levy, it should be on DB schemes only. It would be awful to think that people in DC schemes, who take all the risk themselves, would be asked to bail out those people in DB schemes with their "guaranteed" payouts.

If you want a DB pension, pay for it yourself.

thebman

Well it seems clear to me what the objective of governments is.

They want to get away from the model where they incentivise people to invest in their future with tax breaks.

They want to make pension contributions with no guarantee of returns mandatory and then they will take away the tax breaks to invest.

So workers get the worst of both worlds...

srsly78

Did you guys miss that we are already paying a 0.6% levy on our pension funds? http://www.finance.gov.ie/viewdoc.asp?DocID=6830

Is this thread about the 2 year old levy, or some new levy?

hmmm

srsly78 wrote: »

Is this thread about the 2 year old levy, or some new levy?

The old levy is supposed to go next year, but there has been some chatter that they would retain a levy as a consequence/excuse following the Waterford glass debacle. The option of stealing locked-in private sector pensions is far too tempting a target for politicians.

View

hmmm wrote: »

The old levy is supposed to go next year, but there has been some chatter that they would retain a levy as a consequence/excuse following the Waterford glass debacle.

Usually, there is nothing more permanent than a "temporary" tax!

Manach

View wrote: »

Usually, there is nothing more permanent than a "temporary" tax!

I am sure that any day now Income Tax will have finishing paying for the Napoleonic wars.

Hootanany

How about squeezing that abomination Ahern of some of his 3 grand a week

Pete_Cavan

hmmm wrote: »

The old levy is supposed to go next year, but there has been some chatter that they would retain a levy as a consequence/excuse following the Waterford glass debacle. The option of stealing locked-in private sector pensions is far too tempting a target for politicians.

In fairness, following the ECJ ruling, it would be very negligent of the government not to impose a levy on DB pensions in order to provide a pot from which to pay out for insolvent company's insolvent pensions, for which they are now liable. If the government are required to make such a payout but have no reserve fund, the money will have to come from elsewhere in the national budget with the opportunity cost passed onto the general taxpayer which is hardly fair. As has been said earlier, DB pension holders are the ones who stand to benefit, therefore, they should pay for it.

RichardAnd

I was signed up to a pension scheme by my employer after finishing my probation. They take 5% of my salary each month and place it in a fund. I asked to be removed from the scheme but they made such a fuss over it that I simply didn't want to bother with them.

Thankfully, if I leave within the next 18 months (which I intend to, though for more reasons than a pension!) I will get the money back. Whilst I appreciate the sagacity of saving for the future, I would much rather do so on my own terms rather than simply donating money into a fund. Like to OP, I don't believe that any pension fund is save from the sticky fingers of the lads in the Dail or to be more precise, the ones standing over them...