Govt set to confirm new tax on private sector pensions.

ninjasurfer1 · 06-05-2011 12:07AM #1

The Government is due to announce a new tax on all pension savings of private sector workers next week.

It is understood the Government is introducing this new tax as a way to fund the new jobs initiative.

It is expected that the tax will be between 0.5-0.6%, which works out at around €500 per year per person.

http://www.breakingnews.ie/archives/2011/0505/ireland/government-set-to-confirm-new-tax-on-pensions-503910.html

Seems as if its the private sector workers turn to be hit with pension taxes!! :mad:

Looks like its only the start of taxes to come!!

landsleaving · 06-05-2011 12:08AM

Didn't you get the memo, it's cheerful threads night.

ninjasurfer1 · 06-05-2011 12:10AM

landsleaving wrote: »

Didn't you get the memo, it's cheerful threads night.

Missed that memo. My bad.
Consider the tax cancelled!!

landsleaving · 06-05-2011 12:11AM

ninjasurfer1 wrote: »

Missed that memo. My bad.
Consider the tax cancelled!!

YAYY!!

I like you, you're great!

themadchef · 06-05-2011 12:13AM

The feckers that got their huge state and private bank pensions probably sitting stroking their portfolios now....and laughing uncontrollably at the gombeens.

Wonder is the sale of stuffed white cats going up too?

amacachi · 06-05-2011 12:15AM

From those numbers the average pension is worth 100k per year? Nice.

CreepingDeath · 06-05-2011 12:21AM

So they're taxing the people who pay for their own pensions and aren't a burden on the state ??

As opposed to the public sector defined benefits pensions, which are costing us a serious amount of money ?

WHen will the govt grow a set of balls and challenge the public sector trade unions?

ninjasurfer1 · 06-05-2011 12:26AM

Does anyone know if its a legal requirement to pay into a pension if you are a PAYE employee?
i.e. can you opt out of paying into a private pension if you so wished?

dvpower · 06-05-2011 12:48AM

ninjasurfer1 wrote: »

Does anyone know if its a legal requirement to pay into a pension if you are a PAYE employee?
i.e. can you opt out of paying into a private pension if you so wished?

Yes you can opt out, unless it's a condition of your contract.

dvpower · 06-05-2011 12:51AM

amacachi wrote: »

From those numbers the average pension is worth 100k per year? Nice.

No. The tax is on your pension pot I think. Not your pension income. If the average pension pot is about 100k, divide this by about 30 to get the annual pension.

mikemac · 06-05-2011 12:53AM

So you plan ahead and pay into your pension and get taxed again

Fook that
I was only young in the 1980's but if there is ever a repeat of the Ansbacher account in the Isle of Man, I'll sign up

Sure Denis O'Brien fooked off to Portugal with his profits and gets hailed a hero for paying a salary to a manager who looks at 22 men kicking a ball around a field :rolleyes:
I would prefer if he returned to Ireland and payed his taxes and stopped holding himself up as a hero for getting involved in the Special Olympics

Odysseus · 06-05-2011 01:06AM

For all of those who will go on about the public sector we were already hit with pension levies, we will not all get these so called golden pensions, if I stay till I retire after 35yrs I will still not be entitled to a full pension, I will be 5yrs short and it will be so big I will still be entitled to the state pension.

I'm not going to get involved in a long debate here, but I glad to here that the private sector are getting their share of the hit on pensions. Some people seemed to think that until last year I had not being paying any contributions to my pension.

When I was made permanent, I had no choice but to buy into the pension scheme. People need to cop on and stop pointing fingers at those they seem to think are getting something more than them or something for nothing and start to see we are all being screwed over. If its not the public sector it those on benefits, when this country become so obsessed with what other people work for or are entitled to, and started to believe that because they pay taxes they should be in control of what other people earn or are entitled to.

I sure my post will go down a treat we those who believe I only have to turn up for work to get paid, that I earn too much, or that I will be retiring with so much money that I won't have to worry about cash for the rest of my life. The reality is that I'm lucky to have taken up a profession that will allow me to continue to work privately after I'm dumped at 65, because apart from the fact I would like to continue working, I will most likely still need to work privately. My wage is merely ok for the qualifications I have and the quality of experience I possess that allow me to provide a service to the state. Whilst I would not wish to see anybody struggle with money, especial whilst on a pension, the news that all the people who begrudge me my wage and pension are getting paying the same or similar levy/tax that I do on my pension will aid my sleep tonight, I’m sick of the resentment towards those who work in the public sector. That's my 2c over and out.

dvpower · 06-05-2011 01:17AM

The PS pension levy was an attempt to make the contribution to the pension match more closely with the cost of providing it.

My private DC pension is a private arrangement between me and my pension provider. The govt should have no business dipping into it.

starbelgrade · 06-05-2011 01:36AM

This all seems a bit bizarre. For years, the government were pushing private sector workers to start pension funds. It was made an obligation on employers to inform their workers about the availabilty of pension funds.

Many took up the offer.

And now that people have a few quid put away for the future, the government are saying, "thanks for that" & dipping their hands into people's pockets.

I said just after the elections that Kenny's government would be just as useless as the last & was shot down for it. I was right though. This money they are nicking is for "job creation". Now, what ever jobs has any government ever created that didn't cost us money?

Governments should be in the business of creating wealth - and you can't do that by fiddling people's savings in order to provide some makey-uppy positions just to reduce the numbers on the live register.

Kenny can go and suck my ass. He's about as useful as a fork when you're eating soup.

g_moriarty · 06-05-2011 02:42AM

They need to target the single mothers, they get way too much. Around €35,000/year net with 2 children for doing nothing. Are they being hit? hahahaha no. Let's target the honest hard-working middle class taxpayers again.

dvpower · 06-05-2011 09:49AM

g_moriarty wrote: »

They need to target the single mothers, they get way too much. Around €35,000/year net with 2 children for doing nothing. Are they being hit? hahahaha no. Let's target the honest hard-working middle class taxpayers again.

Just single mothers, not single fathers?

bluelegend · 06-05-2011 02:04PM

Odysseus wrote: »

For all of those who will go on about the public sector we were already hit with pension levies, we will not all get these so called golden pensions, if I stay till I retire after 35yrs I will still not be entitled to a full pension, I will be 5yrs short and it will be so big I will still be entitled to the state pension.

I'm not going to get involved in a long debate here, but I glad to here that the private sector are getting their share of the hit on pensions. Some people seemed to think that until last year I had not being paying any contributions to my pension.

When I was made permanent, I had no choice but to buy into the pension scheme. People need to cop on and stop pointing fingers at those they seem to think are getting something more than them or something for nothing and start to see we are all being screwed over. If its not the public sector it those on benefits, when this country become so obsessed with what other people work for or are entitled to, and started to believe that because they pay taxes they should be in control of what other people earn or are entitled to.

I sure my post will go down a treat we those who believe I only have to turn up for work to get paid, that I earn too much, or that I will be retiring with so much money that I won't have to worry about cash for the rest of my life. The reality is that I'm lucky to have taken up a profession that will allow me to continue to work privately after I'm dumped at 65, because apart from the fact I would like to continue working, I will most likely still need to work privately. My wage is merely ok for the qualifications I have and the quality of experience I possess that allow me to provide a service to the state. Whilst I would not wish to see anybody struggle with money, especial whilst on a pension, the news that all the people who begrudge me my wage and pension are getting paying the same or similar levy/tax that I do on my pension will aid my sleep tonight, I’m sick of the resentment towards those who work in the public sector. That's my 2c over and out.

Assuming one is 65 years old retiring in the Public Service. In your instance with a shortage of years - 35 and presuming you were on a salary of €40,000 when you retired, you would be entitled to a pension of c €23,333 pa. Also that would escalate at CPI but in this instance will presume 3%. You will aslo be entitled to a spouses pension on your death of 50%. The fund that would be required in the Private Sector to provide that on a DC basis...............€620,000. Trust me.....that takes a bigger commitment than your current contribution level would accumulate. Fact is Public Service Pensions are a burden on the state. Any economist on the street will tell you that. Level the playing field and have Public and Private contribute privately towards their retirements ... see how that works.

And btw reliefs have already been cut for those that have to privately fund their pensions this year....

Consider yourself very lucky to have a pension like you will have provided for you before pouring scorn on the Private Sector and an issue you know nothing about.

astrofool · 09-05-2011 12:23PM

Odysseus wrote: »

For all of those who will go on about the public sector we were already hit with pension levies, we will not all get these so called golden pensions, if I stay till I retire after 35yrs I will still not be entitled to a full pension, I will be 5yrs short and it will be so big I will still be entitled to the state pension.

I'm not going to get involved in a long debate here, but I glad to here that the private sector are getting their share of the hit on pensions. Some people seemed to think that until last year I had not being paying any contributions to my pension.

When I was made permanent, I had no choice but to buy into the pension scheme. People need to cop on and stop pointing fingers at those they seem to think are getting something more than them or something for nothing and start to see we are all being screwed over. If its not the public sector it those on benefits, when this country become so obsessed with what other people work for or are entitled to, and started to believe that because they pay taxes they should be in control of what other people earn or are entitled to.

I sure my post will go down a treat we those who believe I only have to turn up for work to get paid, that I earn too much, or that I will be retiring with so much money that I won't have to worry about cash for the rest of my life. The reality is that I'm lucky to have taken up a profession that will allow me to continue to work privately after I'm dumped at 65, because apart from the fact I would like to continue working, I will most likely still need to work privately. My wage is merely ok for the qualifications I have and the quality of experience I possess that allow me to provide a service to the state. Whilst I would not wish to see anybody struggle with money, especial whilst on a pension, the news that all the people who begrudge me my wage and pension are getting paying the same or similar levy/tax that I do on my pension will aid my sleep tonight, I’m sick of the resentment towards those who work in the public sector. That's my 2c over and out.

If you don't want your pension, then challenge your union to allow it to be optional.

Your pension did not get hit. The amount you pay into it got adjusted slightly more towards what someone on a private pension might pay.

Pensions will be the next crisis after the banks, and you're right, your pension won't be much because the country pension system will be flat broke long before it has to pay you, because it's completely unsustainable.

sollar · 09-05-2011 12:58PM

Seeing as you all love to lump yourselves in together with your private sector bretheren as if you are all related.

Then i see no problem with this levy as it will go some way towards paying the pensions of private sector workers who never bothered to pay into a pension.

Mad Benny · 09-05-2011 01:00PM

CreepingDeath wrote: »

WHen will the govt grow a set of balls and challenge the public sector trade unions?

Probably because the government TDs are getting them too

themadchef · 09-05-2011 01:09PM

Thick time...

Why are the state involved in pensions in the first place? Why dont they just say, pay your own pensions, like the rest of us do \ dont, depending on our own choice?

I know it sounds simplistic and is probably one of the most stupid questions ever BUT cant they back track? Give them, say 5 years to get their stuff together and go private or not at all?

Just seems a bit mad to me. We should all be in the same boat.

phasers · 09-05-2011 01:21PM

I don't know much about all this stuff, does it come straight out of people's wages? If it does can workers set up their own pension funds privately and avoid this tax?

dvpower · 09-05-2011 01:30PM

sollar wrote: »

Then i see no problem with this levy as it will go some way towards paying the pensions of private sector workers who never bothered to pay into a pension.

It doesn't go any way towards paying the pensions of any workers. Its being used to fund tomorrows jobs budget/initiative

Quite apart from that, why should my private savings be used to fund someone else's pension?

dvpower · 09-05-2011 01:33PM

phasers wrote: »

I don't know much about all this stuff, does it come straight out of people's wages? If it does can workers set up their own pension funds privately and avoid this tax?

It will come directly out of the pension payments that (private) pensioners get.
It will also come out of the funds that people pay into private pension plans.

They reckon about €500 per person per annum.

invinciblePRSTV · 09-05-2011 02:28PM

dvpower wrote: »

Quite apart from that, why should my private savings be used to fund someone else's pension?

It's not, it's going to pay for banking debts and to keep the country afloat.

If you supported FF/FG/PD's any time over the past 15 years then it's your fault we're in this mess, so quit your whinging and pay up.

Zzippy · 09-05-2011 02:46PM

bluelegend wrote: »

Assuming one is 65 years old retiring in the Public Service. In your instance with a shortage of years - 35 and presuming you were on a salary of €40,000 when you retired, you would be entitled to a pension of c €23,333 pa. Also that would escalate at CPI but in this instance will presume 3%. You will aslo be entitled to a spouses pension on your death of 50%. The fund that would be required in the Private Sector to provide that on a DC basis...............€620,000. Trust me.....that takes a bigger commitment than your current contribution level would accumulate. Fact is Public Service Pensions are a burden on the state. Any economist on the street will tell you that. Level the playing field and have Public and Private contribute privately towards their retirements ... see how that works.

And btw reliefs have already been cut for those that have to privately fund their pensions this year....

Consider yourself very lucky to have a pension like you will have provided for you before pouring scorn on the Private Sector and an issue you know nothing about.

Are you forgetting that €12,000 of that €23,333 is comprised of the State Contributory Pension, for which Odysseus will have paid the same rate of PRSI/USC as any of your private sector heroes, in addition to his/her pension contributions? But those private sector heroes will receive the State pension in addition to their private pension, whereas Odysseus does not, his/her PS pension includes it.

So his pension is actually €11,333, not €23,333. Big difference. But that wouldn't suit your argument, would it? Using the ratio you've used to go from €23,333 to €620,000, Odysseus would require a pension pot of €300,000 to fund an annual pension of €11,333.
Granted, he will probably not contribute that much during 40 years of service, but if his pension contributions were invested in a private fund over those 40 years, I'd be very surprised if his contributions didn't grow to that value very easily. I'm sure most private sector workers who pay for a pension similarly expect their fund to be substantially more than what they've contributed by the time they retire.

dvpower · 09-05-2011 02:54PM

invinciblePRSTV wrote: »

It's not, it's going to pay for banking debts and to keep the country afloat.

That's what I said

(it was in the part of my post you didn't quote)

invinciblePRSTV wrote: »

If you supported FF/FG/PD's any time over the past 15 years then it's your fault we're in this mess, so quit your whinging and pay up.

And if I didn't? Can I continue my whinging?

galwayrush · 09-05-2011 02:59PM

Won't bother me , after basic survival, i don't have anything left to pay into a pension.

Biggins · 09-05-2011 03:03PM

They moan that people are not creating their own pensions so they tell us to do so.
They they come along and tax it (penalise it) for existing in the second place!

They are taking the piss out of us and whats worse, the public is overall letting them get away with it!

dvpower · 09-05-2011 03:13PM

Zzippy wrote: »

Are you forgetting that €12,000 of that €23,333 is comprised of the State Contributory Pension, for which Odysseus will have paid the same rate of PRSI/USC as any of your private sector heroes, in addition to his/her pension contributions? But those private sector heroes will receive the State pension in addition to their private pension, whereas Odysseus does not, his/her PS pension includes it.

So his pension is actually €11,333, not €23,333. Big difference. But that wouldn't suit your argument, would it? Using the ratio you've used to go from €23,333 to €620,000, Odysseus would require a pension pot of €300,000 to fund an annual pension of €11,333.
Granted, he will probably not contribute that much during 40 years of service, but if his pension contributions were invested in a private fund over those 40 years, I'd be very surprised if his contributions didn't grow to that value very easily. I'm sure most private sector workers who pay for a pension similarly expect their fund to be substantially more than what they've contributed by the time they retire.

https://www.pensionplanetinteractive.ie
The €300,000 is around about right (its a bit more probably because you omitted the 1.5 times final salary tax free lump sum).

This calculator has someone starting work today on €40,000 aged 25 and working 40 years to 65 making a contribution of 20% of salary to get a pension of €12k (it assumes fund growth of 4% and inflation at 3%)

This makes the PS pension still a very good deal (even for the lower paid public servants). And remember that the PS pension is a defined benefit scheme, not subject to stock market risks.

Zzippy · 09-05-2011 03:58PM

dvpower wrote: »

https://www.pensionplanetinteractive.ie
The €300,000 is around about right (its a bit more probably because you omitted the 1.5 times final salary tax free lump sum).

This calculator has someone starting work today on €40,000 aged 25 and working 40 years to 65 making a contribution of 20% of salary to get a pension of €12k (it assumes fund growth of 4% and inflation at 3%)

This makes the PS pension still a very good deal (even for the lower paid public servants). And remember that the PS pension is a defined benefit scheme, not subject to stock market risks.

Thanks for pointing that out, I had omitted the lump sum alright. The total pension pot required is still a lot lower than the €620,000 figure the other poster came up with, I just hate seeing vastly inflated figures posted as the truth, conveniently ignoring such "minor details" as the State pension difference.
You're right, its still a good deal for PS workers, just not as good a deal as some would like to make out. 20% calculated required contributions vs 15% current actual contributions. Plus I'm very confident the lump sum will be taxed heavily by the time most current PS workers retire.

Govt set to confirm new tax on private sector pensions.

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