Terrible pension rates?

Haz619

Hi all, I was looking at signing up for a pension plan through my workplace, they match certain pension contributions so it seemed appealing.. I have since been shopping around various pension companies and the rates seem terrible? Am I messing something big here because when I do the math of how much the pension company will receive from Myself and my company I would have to live till about 105 to only see the money that has gone in. Anyone else found this?

Thanks

No you are probably not missing anything.
You are probably better informed than most of the population.

Have you been putting figures into online calculators?
General things to consider:
Your age - the earlier you start the better.
Your contributions can be tax efficient.
Your employers contribution varies by employer.
Interest rates/annuity rates are very low.
People are living much longer.

Edit - I misread - you feel that you are paying too much?
Use a pensions calculator to figure out how much you want to live in when you retire and then figure out how much that will cost.

beechwood55

How old are you?

bmwguy

With the tax relief available and your company matching contributions it's virtually impossible for there to be less in the fund at retirement than you put in personally. Unless you are about a year out from retirement. Personally my own pension will return far far more than I put in once we don't have a load of 2008 type years.

Henry Ford III

Are you talking about annuity rates OP? They are indeed pretty awful due to rock bottom interest rates.

Haz619

Ok just one example, my employer will match up to 7% of my salary towards a pension fund. Let’s just say I put 150e a month into a pension company. They will receive a total of 300e a month.

I’m just gone 31 so here is my calculation.
I have 444 months left until I’m 68
€300 a month for 444 months = €133,000
The pension company is offering me €5400 annually when I hit 68
€5400 goes 24 times into €133,000
24+68 years = 92
I’d only break even when I’m 92, I don’t reckon I’ll live that long lol
I think that’s a terrible return, if I was to simply save that €150 a month I’d have €66,000 at 68 plus the interest gained on the way, all would be accessible immediatly, tax would have already been paid and if I died it wouldn’t die with me like a pension, it could be left to someone.

My opinion would be why have a pitiful €5400 a year plus the state pension of course when you could have he state pension and 64 grand to spend when I’m still young enough to enjoy it?

I’d love to hear other people’s opinions
Thanks

ANXIOUS

Haz619 wrote: »

Ok just one example, my employer will match up to 7% of my salary towards a pension fund. Let’s just say I put 150e a month into a pension company. They will receive a total of 300e a month.

I’m just gone 31 so here is my calculation.
I have 444 months left until I’m 68
€300 a month for 444 months = €133,000
The pension company is offering me €5400 annually when I hit 68
€5400 goes 24 times into €133,000
24+68 years = 92
I’d only break even when I’m 92, I don’t reckon I’ll live that long lol
I think that’s a terrible return, if I was to simply save that €150 a month I’d have €66,000 at 68 plus the interest gained on the way, all would be accessible immediatly, tax would have already been paid and if I died it wouldn’t die with me like a pension, it could be left to someone.

My opinion would be why have a pitiful €5400 a year plus the state pension of course when you could have he state pension and 64 grand to spend when I’m still young enough to enjoy it?

I’d love to hear other people’s opinions
Thanks

They are just indicative rates, the company isn't guaranteeing you those rates. Generally people will increase contributions as they get older and there are other options rather than taking an annuity. Also you need to remember annuity rates are at historically low levels and that the pension company may have built in you taking a tax free lump sum into that figure.

bmwguy

That's just the annuity rates. Don't mind them I certainly won't be going down the annuity road. They didn't offer you anything, they were just indications of an income for life.
That would be after you took a tax free lump sum of either 25% of fund or 1.5 times final salary. Which based on your age and amounts etc I guess would be in the region of 100k lump sum.


Look at ARF and AMRF, Talk to your advisor. And if, at 31 you put 300 a month in it will be worth far more than 133000 probably significantly more than double if not triple that amount wìth the growth and compounding. You have missed quite a lot of key info here.

Haz619

I sure I have missed some info there, but regarding the lump sum, I’m sure that would have been a pretty big selling point when signing up to a pension, surely they would have disclosed that at this stage

bmwguy

Haz619 wrote: »

I sure I have missed some info there, but regarding the lump sum, I’m sure that would have been a pretty big selling point when signing up to a pension, surely they would have disclosed that at this stage

Well it is alright. I look after organising the pensions in my company as financial controller. My own is going to be a six figure lump sum tax free and I will draw down the rest as i need it, which is taxable. We have a guy come into us he explains it all very well we all know we have a lump sum and then an amount we can use when we need. There is an alternative where they offer you a fixed amount every year for life but I personally don't think i will do it. Get chatting to your advisor. I know some of our staff had a tough time getting heads around it at the start but I think it's an absolute no brainer to get going at 31. I'm mid 30s and have it going 10 years it's building very nicely.

coylemj

Haz619 wrote: »

Ok just one example, my employer will match up to 7% of my salary towards a pension fund. Let’s just say I put 150e a month into a pension company. They will receive a total of 300e a month.

I’m just gone 31 so here is my calculation.
I have 444 months left until I’m 68
€300 a month for 444 months = €133,000

....if I was to simply save that €150 a month I’d have €66,000 at 68 plus the interest gained on the way, all would be accessible immediatly, tax would have already been paid and if I died it wouldn’t die with me like a pension, it could be left to someone.

You're using poor annuity rates to justify not paying into a pension which is not a good idea. I also don't agree with the numbers you are using to compare you simply saving money to putting it into a pension fund.

When you talk about putting €150 a month into a pension and that being matched by your employer then assuming you are paying PAYE at 40% on the top of your income, that gross €150 p.m. is only going to cost you net €90 p.m. because you pay no PAYE on income that goes straight to a pension fund.

So for the same net monthly contribution, either the pension funds gets €300 p.m. or you put €90 p.m. into a savings account but which will carry the risk that you will occasionally dip into it for cars, to help buying a house or anything else that takes your fancy.

If the pension funds achieves an annual (pretty conservative) 3% return on investment, that €300 p.m. will be worth €241K after 444 months. Even if you managed to find a bank paying 1.5% and pay no DIRT, your alternative scheme of putting €90 p.m. into a savings account would be worth just €53,000 after 444 months.

While the money in the savings account would be tax-free, you would still be able to take a sizeable amount of cash tax-free out of the pension fund when you retire and you could leave the remainder in an ARF and draw an income from it if annuity rates are still as low as they are today.

I quoted a 3% return on investment above, the Zurich Balance fund which is a managed fund that has a sizeable equity element has achieved an annualised return of 6.9% over the last 20 years, a period which includes two major market crashes. If that ROI was achieved in your case with with €300 p.m. contributions, it would be worth €581K at the end of 444 months.

737max

reason not to have a private pension:
noonan's ghost might steal it during a crisis between now and retirement. precedent has been set.

jamesthepeach

737max wrote: »

reason not to have a private pension:
noonan's ghost might steal it during a crisis between now and retirement. precedent has been set.

You are not wrong.
This has scared me and many others from putting money into pension funds.
The fact that the govt havent come out and put in bulletproof protection for pensions against raids like this in future speaks volumes. And the next raid will be worse.

Squatter

jamesthepeach wrote: »

And the next raid will be worse.

Source?

jamesthepeach

Squatter wrote: »

Source?

Precedent setting cut is always the worst.
But I'll let you know the source after the next raid. :eek:
Of course it would be much better if there was zero chance of another raid.
As the govt havent moved to protect pension funds against, them, they are on the table.

coylemj

The Govt. dipping into private pension funds was one of the worst pieces of money grabbing I have ever seen. When everyone is saying that we won't be able to afford the current old age pension with an ageing population, giving provide people an excuse not to invest in their own pensions (for fear of a future grab) was a very retrograde step.


But..... what they did take was miniscule compared to the tax break you get for the money you invest so don't cut off your nose to spite your face, it is still the best deal you will ever get from the taxman.

737max

I don't think over 2 thousand euro is miniscule. they took over that from me with no guarantee that if need to bail out the establishment when the next self-inflicted crisis hits they won't do the same or worse again.

I'm still saving for my pension but I'll never save in an Irish pension scheme again. It is just too important for me to risk it.

Regardless of whether you are ignorant or knowledgable of how pensions work the message that the Government sent was crystal clear; you pension is within their gift to you and they'll take it if they want it.

People who never had to worry about financing a pension for themselves made a disasterous decision and made Ireland's demographic timebomb even more explosive.

The pension industry have to paint as good a picture as they can to continue to drum up business but the Public can't view Pensions as necessarily a wise decision any more.

beauf

I wonder how the Govt think people are going to finance old age, if they can't get work, or are unable to work. None of pension, or investment vehicles (like rentals) seem viable anymore. Whats left?

jamesthepeach

beauf wrote: »

I wonder how the Govt think people are going to finance old age, if they can't get work, or are unable to work. None of pension, or investment vehicles (like rentals) seem viable anymore. Whats left?

If the govt made sure a grab was never allowed again may people wouldnt feel so strongly that their pensions are at risk.

As it it they have stolen money from them before and at any time could steal whatever they like.
Once bitten.
Very easy to repair the damage by passing making sure pension funds were legally untouchable, but the fact they don't take this easy step speaks volumes.

beauf

Looks like they are doing the opposite. For both public and private.

coylemj

jamesthepeach wrote: »

Very easy to repair the damage by passing making sure pension funds were legally untouchable, but the fact they don't take this easy step speaks volumes.

There is no point in putting that into legislation because a new Govt. could simply overturn it with new legislation. The only way to absolutely protect pensions would be to write a provision into the Constitution saying that they couldn't go dipping into existing funds as Michael Noonan did but it's highly unlikely that that will ever happen.

coylemj

737max wrote: »

I don't think over 2 thousand euro is miniscule. they took over that from me with no guarantee that if need to bail out the establishment when the next self-inflicted crisis hits they won't do the same or worse again.

Whatever was taken from your fund was miniscule compared to the tax breaks that you got over the years which allowed you to accumulate your fund.

If you were hit for >€2,000 then you probably got PAYE and PRSI relief on your contributions for many years which were worth a helluva lot more than that.

Edit: If you were getting relief on 40% PAYE and 5.5% PRSI (which would have been the case a few years ago), the total relief on just €4,395 of gross pension contributions would have been €2,000. Michael Noonan probably clawed back no more than one year's worth of your tax relief.

jamesthepeach

coylemj wrote: »

There is no point in putting that into legislation because a new Govt. could simply overturn it with new legislation. The only way to absolutely protect pensions would be to write a provision into the Constitution saying that they couldn't go dipping into existing funds as Michael Noonan did but it's highly unlikely that that will ever happen.

Well put it into the Constitution.
It's certainly important enough.

jamesthepeach

coylemj wrote: »

Whatever was taken from your fund was miniscule compared to the tax breaks that you got over the years which allowed you to accumulate your fund.

If you were hit for >€2,000 then you probably got PAYE and PRSI relief on your contributions for many years which were worth a helluva lot more than that.

Edit: If you were getting relief on 40% PAYE and 5.5% PRSI (which would have been the case a few years ago), the total relief on just €4,395 of gross pension contributions would have been €2,000. Michael Noonan probably clawed back no more than one year's worth of your tax relief.

Again. It's the principal. It has been demonstrated that your pension fund is not in any way safe from the govt. Precedent has been set. It has already happened. The govt can go in and take as much as they like from your pension whenever they feel like it.
The only person your pension fun is protected from is yourself.

Peregrinus

jamesthepeach wrote: »

Again. It's the principal. It has been demonstrated that your pension fund is not in any way safe from the govt. Precedent has been set. It has already happened. The govt can go in and take as much as they like from your pension whenever they feel like it.
The only person your pension fun is protected from is yourself.

Although of course that's equally true of any other other savings vehicle you might use to save for retirement; if the government can levy pension funds they they can levy other funds, bank accounts, insurance policies . . .

Risk of government levies is a political risk. You can guard against it by keeping your savings in banknotes in a shoebox under the bed. Do that if you want to, but first of all think clearly about what other risks you accept, and what advantages you sacrifice, by not keeping your money in a pension fund. The fact that someone who saved for retirement in a pension fund, and suffered the levy, is still vastly better off than someone who contributed the same amount to some other savings vehicle. You may be outraged by the pension fund levy, but that is no reason to beggar yourself in retirement.

jamesthepeach

Peregrinus wrote: »

Although of course that's equally true of any other other savings vehicle you might use to save for retirement; if the government can levy pension funds they they can levy other funds, bank accounts, insurance policies . . .

Risk of government levies is a political risk. You can guard against it by keeping your savings in banknotes in a shoebox under the bed. Do that if you want to, but first of all think clearly about what other risks you accept, and what advantages you sacrifice, by not keeping your money in a pension fund. The fact that someone who saved for retirement in a pension fund, and suffered the levy, is still vastly better off than someone who contributed the same amount to some other savings vehicle. You may be outraged by the pension fund levy, but that is no reason to beggar yourself in retirement.

It's not about amounts or risks in other asset classes etc.
It's about something that has been demonstrated, is easy to guard against for the future, but is not being guarded against.

Make sure it can't happen again and you will see floods of people starting pensions. The amount of people I have spoken to who can't have a pension and have mentioned this as the overwhelming reason is massive.
And it makes it much worse to them that the govt will not lock it down from happening again.

So people see this as. The govt opened the bank door, came in and robbed people, and they won't close the door behind them, so that they can come back for the rest at their leisure.

Peregrinus

The people you spoke to who "can't have a pension" can have a pension. They just choose not to. And if this is the reason they give for this choice, if you care about them at all you should be pointing out to them that it's a bad choice, and their reason for making it is not sufficient.

You're never going to get a constitutional amendment to identify a certain savings mechanism and decree that it shall for ever be exempt from a particular kind of taxation. You know this. Not even the Americans, who fought a war of independence because they objected to stamp duty, have a constitutional ban on stamp duties. This is not a realistic solution to the problem you identify.

jamesthepeach

Peregrinus wrote: »

The people you spoke to who "can't have a pension" can have a pension. They just choose not to. And if this is the reason they give for this choice, if you care about them at all you should be pointing out to them that it's a bad choice, and their reason for making it is not sufficient.

You're never going to get a constitutional amendment to identify a certain savings mechanism and decree that it shall for ever be exempt from a particular kind of taxation. You know this. Not even the Americans, who fought a war of independence because they objected to stamp duty, have a constitutional ban on stamp duties. This is not a realistic solution to the problem you identify.

We are talking about encouraging people to start pensions right?
What's the most important thing to a person starting a pension where their money is going to be locked away for 30 or 40 years?
The gobvt can ignore the elephant in the room all they like, but if they are serious about convincing people to start pensions then they better look at the real issues.

Peregrinus

jamesthepeach wrote: »

We are talking about encouraging people to start pensions right?
What's the most important thing to a person starting a pension where their money is going to be locked away for 30 or 40 years?

Tax relief. That's why they start pension plans, as opposed to conventional savings plans or other investments which they use to save for retirement.

There's no law, after all, which says that if you're saving for retirement you have to do so using a dedicated savings mechanism. You can use any savings mechanism you like. The reason people use pension plans is because of the tax reliefs, which (even allowing for the effect of the levy) will leave them better off than any of the non-tax-favoured plans.

If the people you speak to are really that worried by the levy, then encourage them to save for retirement in other savings plans. They'll end up paying far more money to the state, but if they are that terrified by the word "levy", until they get a friend or adviser who can explain things clearly to them that might be the best option available to them.

jamesthepeach

Peregrinus wrote: »

Tax relief. That's why they start pension plans, as opposed to conventional savings plans or other investments which they use to save for retirement.

There's no law, after all, which says that if you're saving for retirement you have to do so using a dedicated savings mechanism. You can use any savings mechanism you like. The reason people use pension plans is because of the tax reliefs, which (even allowing for the effect of the levy) will leave them better off than any of the non-tax-favoured plans.

If the people you speak to are really that worried by the levy, then encourage them to save for retirement in other savings plans. They'll end up paying far more money to the state, but if they are that terrified by the word "levy", until they get a friend or adviser who can explain things clearly to them that might be the best option available to them.

Ok then.
We will tell them all that a pension is a great thing to do, but at any time the govt can raid it, but hey you would do worse in other investment vehicles.
And just because the govt robbed it and refused to do something to prevent them doing so again, they probably won't take too much.

Yep. I think they'll all be convinced.

Peregrinus

Depends on what you're trying to do here, James.

The government can raid any savings vehicle just as readily as it can raid pensions. For that matter it can raid salaries and wages, it can raid houses, it can raid land. It's the government; it can levy taxes. Deal with it.

Declining to save lest your savings be taxed more than you initially anticipate is a bit like declining to work lest your earnings be taxed more than you anticipate. In both cases, you will save tax, but you will also make yourself much poorer than you need to be.

You can encourage this kind of hysterical reaction in people, or you can encourage them to take a deep breath and think clearly about what they want and what is the best strategy for getting it.

Peregrinus

jamesthepeach wrote: »

Ok then.
We will tell them all that a pension is a great thing to do, but at any time the govt can raid it, but hey you would do worse in other investment vehicles.
And just because the govt robbed it and refused to do something to prevent them doing so again, they probably won't take too much.

Yep. I think they'll all be convinced.

Well, if you want to describe the imposition of a tax obligation as "robbery", go ahead.

But stop pretending that a constitutional amendment can fix the problem. No constitutional amendment can stop you saying what you like.

And stop pretending that this is the government's fault. When people get substantial tax reliefs some of which are later clawed back in a time of economic crisis and you describe this as "robbery", that's something you do, not something the government does.

If you go around whipping up panic about the levy without setting the detriment of the levy against the benefits of the tax reliefs, stop pretending that you are trying to help people or that you care about their welfare, because that's plainly not the case.

beauf

Peregrinus wrote: »

...think clearly about what they want and what is the best strategy for getting it....

What is your suggestion to protect an income for retirement?

jamesthepeach

beauf wrote: »

What is your suggestion to protect an income for retirement?

That is the nub of it.
Long term savings have been exposed as being unsafe.
To plan for your future you need to be sure that won't happen again.
I don't think either the govt or a lot of people get this.
It's their view that people should just suck it up and move on. Well people's minds.dont work like that. So they will remember clearly that they put money on where they thought it was safe, but the very people who were supposed to make it safe went in and took it.

Peregrinus

beauf wrote: »

What is your suggestion to protect an income for retirement?

The levy notwithstanding, pension plans will still have performed better than alternative savings vehicles.

If you're concerned about political risk, then the standard advice is to diversify. Put part of your savings in to a pension plan, and part into some other savings vehicle. You'll obviously forgo the tax relief on the part you don't put into your pension plan, but you'll ensure that if there is a further levy on pension plans, some at least of your savings will avoid it. (Plus, you'll ensure that if, instead of levying pension plans, the government levies the other savings vehicle, the part of your savings that's in the pension plan will avoid it.)

The truth is that you can't eliminate political risk; what you can do is try and assess it, and put it in perspective. In general the government has a strong interest in not disincentivising retirement savings (since, if they do, retirees become dependent on the state) which is why most governments offer tax breaks of one kind or another for retirement savings. The same factors which encourage governments to do that discourage them from clawing it all back through levies and the like, so you might reckon that the political risk of future levies being so great as to negate the tax advantages of pension plans is very small.

beauf

I expect a pension crisis much like the housing crisis is now. We will snooze all the way till mid disaster. Then people will say no one could predict it, and people should look after themselves.

Thus far, we want to demolish inheritance (unless your a farmer), raid pensions of public and private, and leave the health service in heap, and make pensioners Landlords. (while discourage current Landlords) I'm not entirely sure what people should diversify into. YouTube for Seniors maybe.

So no suggestions then...

Lickin2me

.

jamesthepeach

beauf wrote: »

I expect a pension crisis much like the housing crisis is now. We will snooze all the way till mid disaster. Then people will say no one could predict it, and people should look after themselves.

Thus far, we want to demolish inheritance (unless your a farmer), raid pensions of public and private, and leave the health service in heap, and make pensioners Landlords. (while discourage current Landlords) I'm not entirely sure what people should diversify into. YouTube for Seniors maybe.

So no suggestions then...

Not to mention slowly raise the retirement age to 125.

Nermal

Peregrinus wrote: »

You're never going to get a constitutional amendment to identify a certain savings mechanism and decree that it shall for ever be exempt from a particular kind of taxation.

Why can't we?

Peregrinus

Nermal wrote: »

Why can't we?

Because it would be pointless and easily evaded by the creation of a different kind of of savings vehicle for retirement savings.

For example, the Personal Retirment Savings Account was created by statute about fifteen or twenty years ago. If there were a constitutional amendment to provide that PRSAs were to be forever free of tax, or of a certain kind of tax, a government wishing to tax retirement savings could close PRSAs and legislate for a new vehicle called, say, an Individual Pension Savings Plan, and tax that. Or, if the Constitution forbad levies on PRSAs, they could impose some other tax on them that wasn't a levy. Or, instead of taxing funds held in PRSAs they could impose a new tax on funds contributed to a PRSAs, or on benefits paid out of PRSAs.

Basically, the Constitution is not a good place for micromanaging tax policy. That's not what it's for. Any attempts to use it for that purpose will end in tears.

BarryD2

Re OP, I'm self employed and opened a standard PRSA maybe about 10 years ago. I've no employer paying in matching amounts. I get tax relief on contributions, though IIRC additional taxes like USC and PRSI are calculated including the contribution. I too was very unimpressed when Noonan raided pension savings and keep this in mind for future canvassers at election times.

Last time I looked the notional value of my policy is about 40% greater than my sum of contributions. I don't expect that it will make a massive contribution after I retire but I'm happy as things stand that it will more than meet what I've put in. If I die in the interim, my understanding is that the value of it will pass to my spouse.

Look at it another way, it's better value than private health insurance. There you pay on an annual basis, building up your years till when you may need it. But if you can't afford your health policy for a year or so, then 'poof' - all the value of it vanishes into thin air. At least a pension scheme stays put if you can't afford to contribute each year.

coylemj

Nermal wrote: »

Why can't we?

Because it would only apply to a subset of the population - people with private pensions which is an ever dwindling number. So you'd never get near to a critical mass lobbying for a referendum to happen.

Even the right to own private property is qualified in the Constitution (to enable compulsory purchase orders for essential public projects) so an attempt to insert a provision to armour-plate private pensions is doomed to fail.

And even if a referendum did happen, people in the public service would see it as exposing them to having their pensions unilaterally reduced in a future crisis with no option for a corresponding raid on private pensions so if they knew what was good for them, they would vote against it.

Henry Ford III

BarryD2 wrote: »

Re OP, I'm self employed and opened a standard PRSA maybe about 10 years ago. I've no employer paying in matching amounts. I get tax relief on contributions, though IIRC additional taxes like USC and PRSI are calculated including the contribution. I too was very unimpressed when Noonan raided pension savings and keep this in mind for future canvassers at election times.

Last time I looked the notional value of my policy is about 40% greater than my sum of contributions. I don't expect that it will make a massive contribution after I retire but I'm happy as things stand that it will more than meet what I've put in. If I die in the interim, my understanding is that the value of it will pass to my spouse.

Look at it another way, it's better value than private health insurance. There you pay on an annual basis, building up your years till when you may need it. But if you can't afford your health policy for a year or so, then 'poof' - all the value of it vanishes into thin air. At least a pension scheme stays put if you can't afford to contribute each year.

Factor in the tax relief on the contributions and it becomes better again.

"Noonan's grab" was horrible, cynical and only levied on pensions because he wouldn't have gotten away with a levy on deposits and also pensions are longer term and some/most would have had a chance to recover before drawdown.

I wouldn't equate a pension to heath insurance. The former is an effective cash accumulator which can do good things for you at retirement. The other is insurance plain and simple.

Nermal

Peregrinus wrote: »

If there were a constitutional amendment to provide that PRSAs were to be forever free of tax, or of a certain kind of tax, a government wishing to tax retirement savings could close PRSAs and legislate for a new vehicle called, say, an Individual Pension Savings Plan, and tax that. Or, if the Constitution forbad levies on PRSAs, they could impose some other tax on them that wasn't a levy. Or, instead of taxing funds held in PRSAs they could impose a new tax on funds contributed to a PRSAs, or on benefits paid out of PRSAs.

I don't know... this type of jesuitical chicanery is looked at dimly by judges. I am not convinced it's impossible to frame something that would work. Obviously, it might not pass.

It's just terribly obvious that we will have a pension crisis, and that private pension funds will be raided again to fix it.

Tigerandahalf

I don't see why pension funds shouldn't be open to taxation. As pointed out many wealthy people are not paying their share of tax by allowing them to avoid it by investing in pension funds.

This money is being lost from public spending. Many ordinary workers do not have an employer who contributes to a pension for them.

I also wonder how employers are funding these contributions. Are they claiming tax relief on it?
Just like they can claim against redundancy payments.

Peregrinus

Tigerandahalf wrote: »

I also wonder how employers are funding these contributions. Are they claiming tax relief on it?
Just like they can claim against redundancy payments.

From an employer's point of view, wages, pension contributions and redundancy payments are all just different forms of remuneration paid to workers, and they are all deductible as an expense in computing the profits of the business.

Nermal wrote: »

I don't know... this type of jesuitical chicanery is looked at dimly by judges. I am not convinced it's impossible to frame something that would work. Obviously, it might not pass.

It's just terribly obvious that we will have a pension crisis, and that private pension funds will be raided again to fix it.

I think the key problem is this; in times of economic crisis, or crisis in the public finances, it's inevitable that taxes will be raised somewhere. And there's a certain political/moral case for raising them in the area where, up to now, tax reliefs/deductions have been most generous. And that's pensions.

So, while it's painful to have your pension fund levied, it's not suprising in the circumstances. And there's a certain crude justice in it; the levy bears most on people with the most in their pension funds, and they are the people who have benefited the most in the past from the tax reliefs associated with pension funds.

If you want to reduce the political risk of future taxation on pension funds, I don't think a constitutional referendum is the way to go. I think a better strategy would be to limit/refocus the tax reliefs associated with pension funds, so that they mainly go to the lower paid, to those with modest pension savings, etc, etc. Then the incentives to look to pension funds first of all when taxes need to be raised would be much less.

737max

I'm going to take what steps are necessary to protect myself in my old age.
If someone like you has the choice then I will direct my excess cash to buying good durable products like a roof over my head, a solid car and sturdy shoes because I must assume that you or someone like you will be lining up to steal my pension fund from me and having the bare faced cheek to say that it is only fair because shur didn't we do them the service of not taxing them earlier and that acting retrospectively is fair game. It is sharp practice to mislead people in to thinking they were saving to guard their independence in old age when Government never has an intention of allowing them to retain their pension fund.
people approaching retirement age at the time of Noonans decision who were already suffering the worst effects of the Irish depression would then have the double whammy of having their pension fund garnished with no opportunity to make up the shortfall.

That over 2k taken from me could have been worth over 5k or more by the time I retire.

Henry Ford III

A solid car or sturdy shoes won't be worth much for sure. Yes the "Noonan Grab" was terrible but it doesn't render the entire notion of pension investment unattractive.

Squatter

737max wrote: »

That over 2k taken from me could have been worth over 5k or more by the time I retire.

Or, if you had invested some or all of it in the Irish banks, it could have been worth SFA! That said, perhaps Noonan should have been more selective and only raided the pension funds of people who were at least (say) 10 years from retirement age.

For me, reading claims that people are unwilling to start a pension fund due to their fears about the possibility of a future levy (one that is unlikely to recur in my humble opinion) is a perfect example of flawed logic. Ultimately, the only person that they're hurting by taking such a 'principled' decision is themselves!

Haz619

Haz619 wrote: »

................... I would have to live till about 105 to only see the money that has gone in. Anyone else found this?

Thanks

You should be able to take all but €63500 of the fund quite soon after retirement if that rocks your boat.

737max

Squatter wrote: »

Or, if you had invested some or all of it in the Irish banks, it could have been worth SFA! That said, perhaps Noonan should have been more selective and only raided the pension funds of people who were at least (say) 10 years from retirement age.

For me, reading claims that people are unwilling to start a pension fund due to their fears about the possibility of a future levy (one that is unlikely to recur in my humble opinion) is a perfect example of flawed logic. Ultimately, the only person that they're hurting by taking such a 'principled' decision is themselves!

I am in a pension scheme...just not an Irish one any more. Irish Government simply can't be trusted.
I had to give out to my pension Trustees because my Irish "Global" pension fund was over 20% invested in Ireland just before the bubble popped so yes it was invested in Irish banks and developers. The Investments, Finance and Pension areas in Ireland seem to be very incestuous and they were looking after each other than the best interests of the members of the schemes they operated.