how safe are private pension money

zielarz

Does anyone know if there is any kind of protection against government confiscating money from a private pension?

From a purely logical point of view if it's legal to tax pensions at 0.6% it must be also legal to tax them at higher rate, even 100%.

Riskymove

well there is a difference between a levy and a tax

pensions being paid to people are taxed like income


the levy is a different kettle of fish

I suppose theoretically the Government could take all your money through implementing certain measures but the liklihood is very slim

in Cyprus people forfeited a certain amount of their savings in banks that went bust etc.

Manach

On the one hand, it would be unlikely. Although it has happened in the past in emergencies that states can seize private liquid assets, there is always the lack of confidence and follow on flight of capital from that jurisdiction. On the other, there is a measure of protection for private property in the constitution, but AFAIK this does not apply to pension money.

murphaph

The levy on people who have bothered their backsides to make some provision for their old age and be less reliant on the state pension (which is unsustainable at current levels) is one of the most insidious taxes of all.

zielarz

murphaph wrote: »

The levy on people who have bothered their backsides to make some provision for their old age and be less reliant on the state pension (which is unsustainable at current levels) is one of the most insidious taxes of all.

That's the thing. I am paying into it but nobody seems to be talking about the 'government risk'. Private pensions were nationalised in Hungary and partially in Poland. Ireland with its high debt level could be next.

_Kaiser_

murphaph wrote: »

The levy on people who have bothered their backsides to make some provision for their old age and be less reliant on the state pension (which is unsustainable at current levels) is one of the most insidious taxes of all.

Unfortunately pensions, like private heath insurance, are fast becoming luxuries for many people as they struggle with the day-to-day stuff and bills.

I myself have 2 pensions to-date (which are worth very little in the scheme of things), but haven't started one here as I can't afford any more out of my paycheque. Health cover is equally unmanageable.

That's what happens when you tax people into the ground.

RichardAnd

murphaph wrote: »

The levy on people who have bothered their backsides to make some provision for their old age and be less reliant on the state pension (which is unsustainable at current levels) is one of the most insidious taxes of all.

I agree. The CEO of the company I work for was especially outspoken in his criticism of the tax. I believe he likened it to the actions of Dick Turpin. As a result, the company covers the pension levy for its employees. It's says a lot when a capitalist entity makes an munificent gesture like that...

Nody

zielarz wrote: »

Does anyone know if there is any kind of protection against government confiscating money from a private pension?

From a purely logical point of view if it's legal to tax pensions at 0.6% it must be also legal to tax them at higher rate, even 100%.

What you should fear is not the tax but that the government decides to declare all private pensions savings to be part of a new government pension fund as there are quite a few precedents...

Personally my pension savings are not listed in any way as pension savings and spread over multiple accounts and countries (limits the possibility of losing it all at the cost of greater risk and complexity).

sock puppet

The pension systems in Ireland and Poland are completely different. In Poland, the assets that were transferred to the state did not belong to "private" pensions as such. They were mandatory contributions under the governments pension scheme, where a portion of each worker's taxes was invested through private funds.

Nody wrote: »

Personally my pension savings are not listed in any way as pension savings and spread over multiple accounts and countries (limits the possibility of losing it all at the cost of greater risk and complexity).

Em, and the far greater cost that you lose tax relief for your pension.

hfallada

zielarz wrote: »

That's the thing. I am paying into it but nobody seems to be talking about the 'government risk'. Private pensions were nationalised in Hungary and partially in Poland. Ireland with its high debt level could be next.

I wouldnt exactly call those countries prime examples to compare Ireland with. Ireland is probably the most capitalist friendly country in the EU. Low taxes and regulation. Although our GDP is high, we were able to take care of a similar amount of debt in the 1980s and 1990s. Plus why would we destroy our reputation when we know we can always borrow from the IMF.

If there was any risk of someone losing their wealth. It wouldnt have been the bank bailout and wiping out all savings over the guaranteed amount of 100k. But the Government didnt as it would destroy confidence in our banks for the next few generations

quadrifoglio verde

Kaiser2000 wrote: »

Unfortunately pensions, like private heath insurance, are fast becoming luxuries for many people as they struggle with the day-to-day stuff and bills.

I myself have 2 pensions to-date (which are worth very little in the scheme of things), but haven't started one here as I can't afford any more out of my paycheque. Health cover is equally unmanageable.

That's what happens when you tax people into the ground.

Next you'll see them set up universal pension plan to match universal health care.....oh wait:eek:

zielarz

hfallada wrote: »

But the Government didnt as it would destroy confidence in our banks for the next few generations

I disagree with you. Foreign investors don't really care about pensions of Irish citizens. Nationalisation of pensions may actually increase their confidence that Ireland has enough money to repay its debts. IMHO they just care about low corporate tax and keeping the tax avoidance loopholes in place.

No Pants

RichardAnd wrote: »

I agree. The CEO of the company I work for was especially outspoken in his criticism of the tax. I believe he likened it to the actions of Dick Turpin. As a result, the company covers the pension levy for its employees. It's says a lot when a capitalist entity makes an munificent gesture like that...

I take it the company is not publically listed.

beardy_smith

murphaph wrote: »

The levy on people who have bothered their backsides to make some provision for their old age and be less reliant on the state pension (which is unsustainable at current levels) is one of the most insidious taxes of all.

i thought it was common knowledge that the old age pension was a pittance in this country ?

Godge

murphaph wrote: »

The levy on people who have bothered their backsides to make some provision for their old age and be less reliant on the state pension (which is unsustainable at current levels) is one of the most insidious taxes of all.

That is a matter of opinion.

In actual fact, at a time when the country's finances were at an all-time low, the levy on pension funds was a very clever way of raising revenue.

Usually taxes directly affect economic activity and reduce it. So while raising revenue, by taking money out of the Irish economy, a tax can reduce consumer spending and economic growth. Obviously, unless the tax is penal, the reduction in consumer spending and economic growth don't outweigh the benefit to the government's finances.

Where the levy on pension funds was clever was that the pension funds were not economically active, were not 100% invested in Ireland and were not 100% owned by people living in Ireland. Therefore the negative effect of the levy was lessened. For example, if a person living and working in Berlin had an Irish pension fund which was invested in UK property, a levy on that pension fund had no detrimental effect on the Irish economy as the person in Berlin suffered the loss or had to make extra contributions and there was less to invest in UK property.

The secondary effect of the levy on pension funds was to make people more reluctant in the short-term to invest in their pension. This meant they spent more money on consumer goods etc. this keeping the Irish economy from sinking further. At a time when all other taxes and spending cuts were reducing consumer spending, this helped in a small way to reduce that effect.

Of course, if that incentive not to put money in a pension persists, there will be a long-term problem. However, the acute financial crisis for the State made long-term problems something for the long-term. It also explains why Noonan put a fixed end-date on the levy.

Godge

RichardAnd wrote: »

I agree. The CEO of the company I work for was especially outspoken in his criticism of the tax. I believe he likened it to the actions of Dick Turpin. As a result, the company covers the pension levy for its employees. It's says a lot when a capitalist entity makes an munificent gesture like that...

It says a lot that if could afford to do so in a recession and could have been paying more into the pension fund for its staff for years in the good times.

murphaph

Godge wrote: »

That is a matter of opinion.

In actual fact, at a time when the country's finances were at an all-time low, the levy on pension funds was a very clever way of raising revenue.

Usually taxes directly affect economic activity and reduce it. So while raising revenue, by taking money out of the Irish economy, a tax can reduce consumer spending and economic growth. Obviously, unless the tax is penal, the reduction in consumer spending and economic growth don't outweigh the benefit to the government's finances.

Where the levy on pension funds was clever was that the pension funds were not economically active, were not 100% invested in Ireland and were not 100% owned by people living in Ireland. Therefore the negative effect of the levy was lessened. For example, if a person living and working in Berlin had an Irish pension fund which was invested in UK property, a levy on that pension fund had no detrimental effect on the Irish economy as the person in Berlin suffered the loss or had to make extra contributions and there was less to invest in UK property.

The secondary effect of the levy on pension funds was to make people more reluctant in the short-term to invest in their pension. This meant they spent more money on consumer goods etc. this keeping the Irish economy from sinking further. At a time when all other taxes and spending cuts were reducing consumer spending, this helped in a small way to reduce that effect.

Of course, if that incentive not to put money in a pension persists, there will be a long-term problem. However, the acute financial crisis for the State made long-term problems something for the long-term. It also explains why Noonan put a fixed end-date on the levy.

I would rather they had tackled the over spend in a meaningful way than pillage people's private pension funds.

State pension hasn't dropped a single cent since the crisis hit around 7 years ago now! (just one example)

daveohdave

Riskymove wrote: »

well there is a difference between a levy and a tax

No, there isn't. It's called a levy because they didn't want to call it a tax. End of story.

Manach

Godge wrote: »

It also explains why Noonan put a fixed end-date on the levy.

Some VG points, but Noonan has extended the tax. Sort of like income tax, once the state sees a revenue source, it is loath to walk away.

hmmm

The government would never be stupid enough to start stealing private pension money, money that people have agreed to save without being able to access for 30/40 years. The government would know that such an act would set back pension provision in this country decades, and would make it all but impossible for them to get people to agree to put money into a pension in the future. Despite the government being full of teachers and politicians who have public sector pensions and have no idea what it's like to have to provide for your own future, they're not thick.

Oh wait....

ART6

hmmm wrote: »

The government would never be stupid enough to start stealing private pension money, money that people have agreed to save without being able to access for 30/40 years. The government would know that such an act would set back pension provision in this country decades, and would make it all but impossible for them to get people to agree to put money into a pension in the future. Despite the government being full of teachers and politicians who have public sector pensions and have no idea what it's like to have to provide for your own future, they're not thick.

Oh wait....

Oh wait indeed! It seems to me that every Irish government for decades has responded with a knee-jerk reaction to every problem, the philosophy appearing to be that as long as the consequences don't occur "in my term of office" then that's OK because the new administration can be blamed. That means that any measure can be justified because even if those responsible end up cast out by the electorate, they will still retain their severance payments and non-contributory pensions before going on the the lecture trail and the appointments to state quangos. This provides a comfort zone that permits lies, false promises, u-turns that are breathtaking, because there is no personal comeback. Politicians are singular in that respect -- if a company director adopted that philosophy he would be pursued to an inch of his life!

You suggest that these people who have elevated spin to a new level, with fees, levies, charges etc. that are not taxes of course, are not "thick." There is a difference between mental disability and cunning. They are not stupid by any means, and they do know very well how to ensure their own position in the financial heirachy for the two years or so necessary to trigger a vast ministerial pension, when the rest of the population has to work for forty years to earn even a meagre one.

Perhaps the latest opinion polls suggest that at long last the electorate are beginning to wake up to just what these people are. And before the inevitable criticism of that remark, I would state that I don't personally look forward to the demise of FG, FF, or Labour. I just hope that their "old guard" of Kenny, Martin, Noonan, Hogan, Gilmore et-al are ousted by party members who finally realise that those days are gone, and that the people demand the transparency and integrity that was promised but never delivered.

jmayo

ART6 wrote: »

...
Perhaps the latest opinion polls suggest that at long last the electorate are beginning to wake up to just what these people are. And before the inevitable criticism of that remark, I would state that I don't personally look forward to the demise of FG, FF, or Labour. I just hope that their "old guard" of Kenny, Martin, Noonan, Hogan, Gilmore et-al are ousted by party members who finally realise that those days are gone, and that the people demand the transparency and integrity that was promised but never delivered.

That would be all well and good, but look what the electorate are flocking towards.
sinn fein and some other looney left independents are now flavour of the month.
And their economic policies are based on the belief that there are some eejits out there somewhere who will continue to lend to the Irish to keep the wastage and high public spending in place.

We have another crowd of loons in the unions, who no doubt Labour will be cosing up to, who think public sector workers deserve their pay being restored even though we still have a budget deficit.

People are not demanding transparency and integrity, otherwise they would not be supporting a party led by one of the ministers that sat at the table with bertie and cowen or a party led by a kidnapping and murder suspect who hid his child abusing brother from authorities.

People just want no cuts and the money they got used to during the bubble.

Godge

murphaph wrote: »

I would rather they had tackled the over spend in a meaningful way than pillage people's private pension funds.

State pension hasn't dropped a single cent since the crisis hit around 7 years ago now! (just one example)

Yes, but say you, living in Berlin, have a pension fund in Ireland. Taking money off your pension fund does not affect the Irish economy as much as cutting the old age pension.

Similarly, if you are paying income tax in Germany but own a property in Ireland, a property tax in Ireland takes less from the Irish economy than an income tax rise in Ireland as some of the money comes from you.

Godge

beardy_brady wrote: »

surely you mean ( taking money from private pensions does not effect the goverment as much as cutting the state pension )

?

No, it does not affect the Irish economy as much. Cut the state pension tomorrow by €100m and you take most of €100m out of consumer expenditure.

Levy pension funds for €100m tomorrow and you probably only take about €30-40m out of consumer expenditure.

The first one is a better option in times of austerity when you also need growth. For the same reasons, so is a property tax better than an income tax etc.

harpsman

Riskymove wrote: »

well there is a difference between a levy and a tax

pensions being paid to people are taxed like income


the levy is a different kettle of fish

I suppose theoretically the Government could take all your money through implementing certain measures but the liklihood is very slim

in Cyprus people forfeited a certain amount of their savings in banks that went bust etc.

As a matter of interest what is the difference between a tax and a levy?

No Pants

Godge wrote: »

Of course, if that incentive not to put money in a pension persists, there will be a long-term problem. However, the acute financial crisis for the State made long-term problems something for the long-term. It also explains why Noonan put a fixed end-date on the levy.

That'll be sorted when they make pensions compulsory for all.