Pension at 70 instead of 66

greyday

You would get circa 57K from your pension between ages of 66 and 70, what is the incentive of working to 70 to get 2600 per year extra in your pension which would take over 20 years to retrieve the 57K you did without at the start?

Its hard to believe this was being pushed as an incentive to people to retire later, putting that 57K in an ETF would probably get you similar return to what Government say they will give you and you should still have 57K to leave to family at the end if all goes well with investments.

Jim2007

From a practical point of view not everyone can afford to retire when they hit 65 or 66 particularly if they have hit hard times in the past such as the last couple of recessions resulting in them have additional debt to pay down and so on. And indeed there are some people who although they are financial secure, want to continue working for a few more years. I understand these provisions are targette at them, in that it allows them to continue on making contributions for a coupe of more years and rewarding it with additional benefits. I have not seen it presented as a general solution to the pensions problem.

As for your maths, if you retire at 65/66 you are giving up several more year of a salary which probably at it's highest point, so you need to factor that into the equation and if you were to take the 57K and invest it, then you also have to find some way of finance your lifestyle over that period as well which would reduce your total wealth. And when it comes to return it is a very short period and you are not comparing similar risk profiles. You'd need a substantially higher rate of return on the ETF to account for the extra risk and even then, you could still get wiped out.

I would say it is just a set of provisions that put a certain group of workers in a fairer situation.

The J Stands for Jay

The government are just doing what they can to mitigate the pension timebomb without actually doing anything which would harm their popularity.

greyday

Fair enough Jim and J , I would hope someone in government has the cop on to realise that this is not the right incentive at all, maybe a package of incentives might work better as personally I can only see a very small amount of people opting for this, in fact I would say most people would like to retire early rather than late if the circumstances allowed.

Jim2007

I don't see this as an incentive at all, but rather recognising that people who have chosen to work longer have not had a great deal up to now because of the 65/66 cut off in term benefits.

The entire EU knows that the solution to the pension problem is the three pillar system of which the first step in Ireland is the auto enrollment. The problem is that every country is dragging it's heels. I don't want to step on the turf of other forums here by going too far down the road in discussions on public policy as that is not what we are about.

FledNanders

https://www.boards.ie/discussion/comment/122188976#Comment_122188976

But can't someone continue working to 70 anyway, and also draw the state pension from 66?

In which case you're not foregoing lost salary, and the foregone 57k in lieu of 2600 per year seems incredibly bad value

greyday

https://www.boards.ie/discussion/comment/122189974#Comment_122189974

The government seem to be selling this as an incentive, I get your point about giving people more time to increase their pension pots but I am not sure if 4 years is going to cut it TBH, the compounding works over a very long timeframe as you know, to me it seems like increasing the retirement age by the backdoor while actually penalising those that take it up by retaining the 57K they would have received over the 4 year period.

StormForce13

https://www.boards.ie/discussion/comment/122190600#Comment_122190600

Correct and right. It's only likely to appeal to a small number of people.

One being my partner (already a PS pensioner) who will continue to work until she's 67 in order to reach the magical total of 520 paid reckonable contributions.

Jim2007

https://www.boards.ie/discussion/comment/122190600#Comment_122190600

Yes, of course you can and longer if you like, but you don't necessarily get the same benefits out of doing so as person under retirement age. That is why I'm saying it is more like fixing an age discrimination thing rather than be a great incentive to work longer. I only have a passing interest in this as I live in Switzerland, but that is my understanding and I'm open to correction.

BhoyRayzor

There's the tax element as well. If you want to still work a few years more and claim the State pension for those years you would probably be losing 40% in tax, whereas if you claim it when you actually retire from employment you might be below the 40% threshold of the future if your only income is the State pension and possibly a private one.

Highlighter75

His is a wonderful idea. Health permitting I'll definitely take them up on the offer.

dublin49

worst deal of all time,so you risk missing up to 4 years of 14K pa and dying before you get a penny ,but there should be a premium for taking that risk ,not the insult of receiving a small fraction of 14k pa for taking what is a genuine risk at that age.

Jim2007

https://www.boards.ie/discussion/comment/122248605#Comment_122248605

If you take the time to read back over the debate, you'd note that this has limited appeal and probably is a good deal for people who have not got sufficient contributions to qualify for a full pension or in the case of people who can afford to retire yet a further opportunity to earn additional pension benefits. Giving up 14K is only valid if you have sufficient contributions to qualify for a full pension and you can finance your retirement without the extra for years of full income.

coylemj

If you're working beyond 66 and take the state pension, you will probably be liable for 40% PAYE on the full pension. Because your employment income may consume all of your standard rate (20%) band. Whereas you may end up paying very little if any PAYE at 40% when you stop working. And if you have no private pension and the state pension is your only income, you will probably end up not paying any PAYE because the current income exemption limit (18K/36K single/married) for PAYE is lower than the state pension.

That needs to be taken into account when calculating if this is a good deal or not. Because if you're going to claim the pension at 66 but work to age 70, the numbers will be different and the age at which you break even will be different for you compared to a person who stops working at 66.

SOPHIE THE DOG

If you defer the pension do you still get free travel pass at 66?

coylemj

https://www.boards.ie/discussion/comment/122262226#Comment_122262226

You don't have to be getting the pension to qualify for free travel. So the answer is yes.

The Free Travel Scheme, sometimes referred to as Free Travel Pass, is available to:

everyone who is 66 or over and legally living permanently in the State

certain people who are under 66 and legally living permanently in the State. If you are under 66, you must meet certain conditions to qualify

https://www.gov.ie/freetravel/