Will the state pension (contributory) always be there? Will it become means tested?

Green Finers

I’m in my 30’s. I’m currently maxing out my pension contributions. I’m on the higher rate of income tax so pay my fair share of tax, PRSI, etc. I earn a 6 figure sum, as does my wife (significantly higher than me). We already have a 6 figure sum each in our pension funds.

We should have very good pensions (private) when I retire assuming it isn’t pillaged by the state or poor market performance.

My biggest fear is that the state pension contributory will end up being means tested and people like us won’t get a stitch at retirement, we’re entitled to draw down the PRSI pension after paying into it.

Public sector pensions are inclusive of the state pension (if I’m not mistaken). If they become means tested for private sector workers surely teachers etc. should also lose the PRSI aspect of their pension too during a means test?

xper

You're both on over 100,000 and have established large private pension funds before 40? In the unlikely event that the state pension disappears you'll still be fine. But you knew that already.

Green Finers

https://www.boards.ie/discussion/comment/118636662#Comment_118636662

That’s not the point. If I’ve paid for it, I’m entitled to it.

Allinall

https://www.boards.ie/discussion/comment/118636728#Comment_118636728

You haven’t paid for your own pension.

You’re paying for the current pensioners.

Atlantic Dawn

Nobody can tell what will happen in 30 years time, the only thing I know is the current system is unsustainable for our current economy. Too many people will be required working to support those retired.

https://www.boards.ie/discussion/comment/118636728#Comment_118636728

This is Ireland. Here you are entitled to everything especially if you have not paid anything into it

J_1980

They would need to announce a change and past contributions would still be paid out as far as I know.

the state can’t promise unconditional payments and the retrospectively change that.

Green Finers

Teachers’ PRSI contributions will be safe as houses.

What if my pension fund is raided to fund teachers’ greed?

Jim_Hodge

https://www.boards.ie/discussion/comment/118637020#Comment_118637020

Teachers' prsi contributions don't pay teachers' pensions.

TooTired123

https://www.boards.ie/discussion/comment/118636728#Comment_118636728

If your “biggest fear” right now is that yourself and your wife will only have €200,000 per year when you get to retirement age, then I would be concerned for how you are going to deal with the real problems that lie in wait for you.

Jim_Hodge

I'd take all this with a pinch of salt. A week ago he had broken English and was far from a 6 figure salary.

TooTired123

https://www.boards.ie/discussion/comment/118636728#Comment_118636728

The PRSI you’re paying now is paying my 88 year old mothers pension. By the time you get to 66 there will be too few people of working age to pay for all the pensioners that will be looking for state pension.

Theres already not enough. That’s why they tried to up the pension age to 67.

It was ok when pensioners died when they were 74 and families had 12 children all working away. Things are different now.

Green Finers

https://www.boards.ie/discussion/comment/118637065#Comment_118637065

Teachers pay PRSI the same as anyone else. The pension they receive at retirement (half their final salary) includes the state pension.

So yes, yes it does.

The J Stands for Jay

https://www.boards.ie/discussion/comment/118637065#Comment_118637065

Well, they pay retired teachers pensions

Jim2007

https://www.boards.ie/discussion/comment/118636728#Comment_118636728

Well that is where the problem is.... you have not paid for it, you've paid a contribution to the current pension cost of the state...

However I don't expect it will become means tested. It's almost certain that Ireland will follow the typical 'three pillar' system that is being implemented across the EU/EEA/CH. This means that the first pillar - the state pension will not raise in line with inflation etc.... and so will be come the lesser part of financing your retirement, the second pillar - your employment pension will become the primary means of financing retirement supplemented by the third pillar - private savings.

So if you have a 30 year horizon or more then it makes good sense to load up your second pillar to the hilt because you will definitely need it.

Jim_Hodge

https://www.boards.ie/discussion/comment/118637202#Comment_118637202

Unlike your private pension, an individual teacher's PRSI does not fund his/her pension.

What way do pensions work in Romania?

Green Finers

If state pensions will stop rising with inflation then public sector pensions need to follow the same.

Defined benefit pensions in public sector cost too much money and need to be abolished.

con747

Another great thread by the OP.

Jim_Hodge

https://www.boards.ie/discussion/comment/118637317#Comment_118637317

Defined benefit pensions in the public sector closed years ago. You also ignore that pension contributions are paid in addition to PRSI.

If you have such an income and pension fund then concentrate on maximising that rather than ranting about others.

Hard to say but I don't expect it to be functioning by time I eventually get to retirement.

Some great videos on YouTube about the issues Spain is already seeing with pension commitments, coming soon to every country.

Crocodile Booze

https://www.boards.ie/discussion/comment/118637329#Comment_118637329

His English has miraculously suddenly improved too. It was broken Romanian yesterday.

Jim_Hodge

https://www.boards.ie/discussion/comment/118637329#Comment_118637329

He obviously thinks we've no powers of recall and can wind up afresh every other day without anybody copping on.

abff

https://www.boards.ie/discussion/comment/118637345#Comment_118637345

They didn’t abolish DB pensions for public sector employees. They brought in a new scheme for people hired after a certain date. Under the new scheme, benefits are based on career average salary instead of final salary. This avoids the big hit that used to arise when public sector employees got promoted close to retirement.

Ten of Swords

Not a Current Affair

Discuss this in the Banking & Pension forum if you wish

https://www.boards.ie/categories/banking-insurance-pensions

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