Counteract looming pension crisis NOW

[Fanny]

Hi,
I will probably not qualify for a full state pension and have started a private pension now. I am female, single, was at university until 27 yrs, age now 36yrs and in part-time employment at the moment, that's why I cannot contribute alot into my PRSA which is with Irish life (just 200EUR/month), I also have a frozen company scheme pension worth 5000 EUR which was stopped when I changed company and Irish Life told me it was best to leave it seperate. Ideally, I would like to bump up my pension pot with the returns from my SSIA when it becomes available, but I don't think there is an incentive for it to put it in tax-free. There was talk of helping low earners with pensions through SSIAs before Christmas which would be a good idea. Most people who are going to be poor and depending in old age will be women, especially if they have not been in full employment. Ireland could really act now and put an example to Europe how to counteract a looming pensions crisis! This would be a great opportunity. Instead everyone is set to wait for Eddie Hobbes new book for advice. We also need a truely European savings plan into which we can pay from other European countries, and which is more flexible than a pension but more longterm than an SSIA.
I would like to hear what others think, and if you can give me some hints.
Fanny

 

[Marie]

Specifically womens' pension situation is a very important topic which is rarely addressed as there is so little information around especially on pension income of single, separated or divorced women. I'll hunt up a couple of articles from the archives of The Guardian when I get a chance.

 

[Furze]

Hi,
There was talk of helping low earners with pensions through SSIAs before Christmas which would be a good idea.
Fanny

Doubt very much if there are many true low earners with SSIAs

 

[CCOVICH]

Ideally, I would like to bump up my pension pot with the returns from my SSIA when it becomes available, but I don't think there is an incentive for it to put it in tax-free.

You are free to make lump sum contributions (AVCs) to your pension fund/PRSA from the proceeds of the SSIA, which will allow you to avail of tax relief at your marginal rate, subject to the usual limits for your age bracket. There is no compulsion to make AVCs now (if your earnings are low), continue to save the money until such time as your earnings are such that you can maximise your tax releif.

The State has given you a return of 25% (tax free) on your contributions, you will have also earned interest/benefitted from an increase in fund values, less DIRT at 20%/enchashment tax at 23%, so there is still scope to bump up your pension pot through your SSIA, and personally, I don't think the Government needs to make it any easier by waving the DIRT/encashment tax, having already given 25% incentive to take out the SSIA in the first place.

Something else that you might want to think about is what you intend to do with the monies that had been going to your SSIA when it matures? Do you have a mortgage? Can you increase the monthly repayments to repay earlier and make life more comfortable for yourself later on? Or start contributing to a unit-linked find? Not the same tax benefits as a pension, but still a good way to provide for your future.

 

[Fanny]

Thanks for your replies.
Unfortunately, my tax benefits for PRSA are max'd out at the moment and I don't think AVCs would make alot of sense at the moment unless there was an incentive, so I might consider to contribute more at a later stage.
I am convinced that there are quite a few women out there who are not working full time either (e.g. 1/2 or 3/4 job) be it for familiy or health reasons, yet got an SSIA, there is no contradiction. Yet you cannot really save without earning tax and we will lose out like that. Most of us do not lash out but want to save up for their own and their family's future and wonder how to get a solid foundation as we have missed many years due to lost pension years in 3rd level education (which did not pay out as many female part timers seem to be stuck with 8 EUR/h jobs eventually) or looking after our old folks and children. Women have to pay more money to buy an annuity from their pension later (due to a statistically "higher" life expectancy) yet few qualify for a full state pension and many haven't got any occupational or personal pension due to the nature of their jobs. Here are some stats from GB

Two Million Women Head for Poverty [FONT=arial,helvetica][ November 2, 2005 ][/FONT]
[FONT=arial,helvetica][broken link removed]

• 2.2 million women are failing to build up entitlement to the full basic State Pension through a combination of low earning or not being in the workplace;
• Just 30% of women reaching State Pension age today are entitled to the full amount;
• Of the 3.3 million people currently claiming the means-tested Pension Credit, 2.2 million are women.

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I live close to the city in rented accomodation. I believe that Irish house prices are highly overvalued, you get much better quality in continental Europe and I don't want to become a slave of the mortgage and loan industry. You will say I need to pay rent, however, my rent is lower than what many have to pay in gas bills for their houses.
Fanny