Pensions ARE taxed

VinLieger

Squall Leonhart wrote: »

This is my biggest fear regarding pensions. I'll have made the effort for years, made sacrifices each month make sure I've had money put aside for old age, and when I get there that I'll be penalised for my diligence, and Johnny NeverPaidAPension will still be handed state money where I won't.

The state pension will eventually have to be put down even though no politician will admit to it yet. It is completely unfundable in the long term in its current state, mainly thanks to the grey votes constant intransigence to even let the issue be discussed.

Franz Von Peppercorn

VinLieger wrote: »

The state pension will eventually have to be put down even though no politician will admit to it yet. It is completely unfundable in the long term in its current state, mainly thanks to the grey votes constant intransigence to even let the issue be discussed.

Starving pensioners isn’t a good look.

Squall Leonhart

I think one of the most unjust things at present regarding pensions is the difference between contributory and non-contributory.

Be unemployed your entire life, never pay any PRSI, get €232.00 a week of a state pension.

Work for your entire life and average out 48 weekly PRSI contributions per year and get €243.30 a week state pension.

40 years of working and paying taxes will get you an extra €11.30 a week.
It's pathetic.

Franz Von Peppercorn

Squall Leonhart wrote: »

I think one of the most unjust things at present regarding pensions is the difference between contributory and non-contributory.

Be unemployed your entire life, never pay any PRSI, get €232.00 a week of a state pension.

Work for your entire life and average out 48 weekly PRSI contributions per year and get €243.30 a week state pension.

40 years of working and paying taxes will get you an extra €11.30 a week.
It's pathetic.

You only get that if you work 40 years of 50 weeks as far as I know. Any gaps and you get less if the gaps were, say, in another country with no reciprocal pension agreement.

Spook_ie

animaal wrote: »

The biggest risk I see with pensions is government policy.

We've already had one raid on pension funds.

As the number of pensioners grows, we're likely to see more cost-saving measures. Perhaps:

- more raids on pension funds
- reduction/elimination of tax free lump sums
- Means test the contributory pension. I.e. those who put money aside for a pension lose out. Because "fairness".
- Further reductions in tax relief (e.g. I already pay USC/PRSI on employee contributions to my own pension. And USC/PRSI again later when I draw down)


Alternative measures to reduce the annual cost of pensions would hit everybody including those who have made no provision for themselves, and we couldn't be having that!

It would take a fund of approx. 300k to replace the contributory pension. I'm not confident that I'll much better off in later life, having scraped for years to put money into a pension.

If you were scraping for years to put money into a pension other than state pension then you weren't paying tax etc. on contributions unless your pension advisor really ****ed up.

Spook_ie

Squall Leonhart wrote: »

This is my biggest fear regarding pensions. I'll have made the effort for years, made sacrifices each month make sure I've had money put aside for old age, and when I get there that I'll be penalised for my diligence, and Johnny NeverPaidAPension will still be handed state money where I won't.

If you paid enough contributions via PRSI you will get a state pension plus your private pension, do well enough and you'll be in the 40% tax bracket

valoren

valoren wrote: »

ARF only invest in funds afaik and after you retire?
The ISA would be before retirement, at any age, but have the same accessibility and the options to invest in securities (stocks, funds, bonds, commodities etc)

ahh right i am with you now

i think it's important to make sure the pension stays locked in to retirement. the investment options im happy with the current range

Squall Leonhart

Not quite, 48 contributions will do you, no need for the full 50, they're not monsters you know

Squall Leonhart

Spook_ie wrote: »

If you paid enough contributions via PRSI you will get a state pension plus your private pension, do well enough and you'll be in the 40% tax bracket

As it stands at present, correct.

What I was saying was I am fearful of making all the efforts and sacrifices of paying into a pension at the moment, only for government policy to change due to an aged population, where they decide that they'll remove the automatic entitlement to state pension once at set retirement age.

megaten

Squall Leonhart wrote: »

As it stands at present, correct.

What I was saying was I am fearful of making all the efforts and sacrifices of paying into a pension at the moment, only for government policy to change due to an aged population, where they decide that they'll remove the automatic entitlement to state pension once at set retirement age.

Worry about yourself not others.

Spook_ie

Squall Leonhart wrote: »

As it stands at present, correct.

What I was saying was I am fearful of making all the efforts and sacrifices of paying into a pension at the moment, only for government policy to change due to an aged population, where they decide that they'll remove the automatic entitlement to state pension once at set retirement age.

In which case you will be glad that you scraped up a private pension to supplement the missing state pension.

The whole problem is we have too many benefiting from state pensions and not enough people contributing back into it, aka a pension hole, add into that a welfare state that pays more than other countries to people on the dole, add the increasing medical costs keeping people alive longer and the whole thing is a ticking bomb.

Squall Leonhart

megaten wrote: »

Worry about yourself not others.

Spook_ie wrote: »

In which case you will be glad that you scraped up a private pension to supplement the missing state pension.

I get what you're both saying.... but at the risk of sounding petulant, it would be unfair to be penalised for saving hard for your life to the point that the state decides they'll withhold paying you a pension, but will then turn around and provide pension money to somebody who hasn't all their life. Sure, there are people who cannot afford to pay single penny into a pension, but the vast majority who don't can afford, but choose to live for the moment instead. Why should these be rewarded for their spendthriftness.

valoren

Wouldn't something like these be nice?

https://www.moneysavingexpert.com/savings/stocks-shares-isas/
https://www.moneysavingexpert.com/savings/lifetime-isas/

s7ryf3925pivug

So I suppose you put money in that would be taxed at the higher tax rate, up to the cutoff for the lower tax rate in your expected pension.

megaten

Squall Leonhart wrote: »

I get what you're both saying.... but at the risk of sounding petulant, it would be unfair to be penalised for saving hard for your life to the point that the state decides they'll withhold paying you a pension, but will then turn around and provide pension money to somebody who hasn't all their life. Sure, there are people who cannot afford to pay single penny into a pension, but the vast majority who don't can afford, but choose to live for the moment instead. Why should these be rewarded for their spendthriftness.

Well, its the same as the dole threads, if you genuinely think someone else is going to be better off you can do the same. Most things in life are about improving your odds, not a guarantee.

Squall Leonhart

Can't argue with that Megaten.

Franz Von Peppercorn

megaten wrote: »

Worry about yourself not others.

? He is

Ray Palmer

Squall Leonhart wrote: »

I get what you're both saying.... but at the risk of sounding petulant, it would be unfair to be penalised for saving hard for your life to the point that the state decides they'll withhold paying you a pension, but will then turn around and provide pension money to somebody who hasn't all their life. Sure, there are people who cannot afford to pay single penny into a pension, but the vast majority who don't can afford, but choose to live for the moment instead. Why should these be rewarded for their spendthriftness.

You are completely right on your points. If you save additional money for a pension you should also get the state pension as you are also paying into it via PRSI. The belief that you pay for your parents pension and need your children to pay for yours is the problem. That is not the agreement nor how pensions work. You pay into a fund for yourself not your parents. It is not means tested it is based on contributions.

Luckily there are laws in both Ireland and the EU that will not allow the state pension to be removed.

In saying all that there are ways and means to bring in changes. They are reviewing pension and contributions and everyone will be forced to contribute to a private pension is likely. The state pension will be reduced directly or by inflation by the time many retire.

There simply won't be a large enough pension pot for the rates now paid.

There are many cases where people who do save have to pay more than somebody who never saved. Nursing home care being the most obvious. If you own a home a third of its value will go to the state for the care but free if you never owned or family are still living there. Medical cards are similar.

I can see the logic of the have nots getting free stuff as they may not have ever had any saving due to a poor paying job. However I know people from school who have never worked a day in their lives who have council housing while I bought my home and other property. We are from the same economic and social backgrounds. Some are just lazy and others not very bright. Can't really expect a guy who isn't able to do much other than semi-skilled jobs under direction to make a good living.

VinLieger

Franz Von Peppercorn wrote: »

Starving pensioners isn’t a good look.

Not what was suggested at all by my post but keep strawmanning, one day you'll hopefully learn how to properly address factual arguments.


By 2040 there will by 2:1 workers vs pensioners compared to the 5:1 ratio we have now, so regardless if we kill it now or later the state pension is not fundable in the long term so we should kill it now so people in their 40's and 50's now with no savings or pension and counting on it can get the wake up call they need and stop ignorantly counting on the government to see them through their dotage.

Ray Palmer

VinLieger wrote: »

Not what was suggested at all by my post but keep strawmanning, one day you'll hopefully learn how to properly address factual arguments.


By 2040 there will by 2:1 workers vs pensioners compared to the 5:1 ratio we have now, so regardless if we kill it now or later the state pension is not fundable in the long term so we should kill it now so people in their 40's and 50's now with no savings or pension and counting on it can get the wake up call they need and stop ignorantly counting on the government to see them through their dotage.

That isn't how pension funds work. There is a fund that you contribute to. The current workers do not pay for those retired. The pension fund they contributed to pays their pension. The government borrowed from this fund and are paying it back.

Yes the pension fund has been badly managed but it isn't reliant on the ratios you suggest.

I contributed more to this pension fund then I will ever receive back but also have a private pension. I should not be denied my pension because I have a private fund as I made my contributions to the state. The fact it is counted by years and not contributions is unfair but to make it so I don't get anything would be criminal. The EU courts already made the government give pensions to the self employed as the state tried to deny them pension rights.

Ray Palmer

VinLieger wrote: »

Not what was suggested at all by my post but keep strawmanning, one day you'll hopefully learn how to properly address factual arguments.


By 2040 there will by 2:1 workers vs pensioners compared to the 5:1 ratio we have now, so regardless if we kill it now or later the state pension is not fundable in the long term so we should kill it now so people in their 40's and 50's now with no savings or pension and counting on it can get the wake up call they need and stop ignorantly counting on the government to see them through their dotage.

That isn't how pension funds work. There is a fund that you contribute to. The current workers do not pay for those retired. The pension fund they contributed to pays their pension. The government borrowed from this fund and are paying it back.

Yes the pension fund has been badly managed but it isn't reliant on the ratios you suggest.

I contributed more to this pension fund then I will ever receive back but also have a private pension. I should not be denied my pension because I have a private fund as I made my contributions to the state. The fact it is counted by years and not contributions is unfair but to make it so I don't get anything would be criminal. The EU courts already made the government give pensions to the self employed as the state tried to deny them pension rights.