# OECD Report - means testing of State Pension



## Daddy (22 Apr 2013)

Not able to post the report but it does'nt make for pretty reading.   Someone might post it in from the Independent today.    Why would anyone continue to contribute AVC's if this is going to be implemented when as I would imagine any pension one would build up through AVC's might be taken into account in that means test.   Should I seriously consider stopping all AVC's in light of this report and it's implications.


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## dereko1969 (22 Apr 2013)

Daddy said:


> Not able to post the report but it does'nt make for pretty reading. Someone might post it in from the Independent today. Why would anyone continue to contribute AVC's if this is going to be implemented when as I would imagine any pension one would build up through AVC's might be taken into account in that means test. Should I seriously consider stopping all AVC's in light of this report and it's implications.


 
It's a report, that's all, why would anyone make any decision based on a report that hasn't even been brought to cabinet yet, is not government policy and may well just end up on a pile in the corner with all the other unimplemented reports?


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## SPC100 (22 Apr 2013)

I haven't read the report. But If they implemented a means test, I imagine the means testing would cover all assets you hold (bar maybe the family home).

So if you invest your money in a pension, or out of a pension, I think you would have the same result.


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## Daddy (22 Apr 2013)

SPC 100

Ya but if I had a good time on the money between now and retirement I would'nt have to be worried about a means test.  Would get the full entitlement to the state pension then.    We're encouraged to save for our retirement but if this is implemented then it would make one think.

Dereko 1969

Our Govt requested the report.   Parts of this will be implemented for sure.  Will not end up in a pile in the corner.


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## dereko1969 (23 Apr 2013)

Daddy said:


> SPC 100
> 
> Ya but if I had a good time on the money between now and retirement I would'nt have to be worried about a means test. Would get the full entitlement to the state pension then. We're encouraged to save for our retirement but if this is implemented then it would make one think.
> 
> ...


 
Yes of course you're right there's never ever been a report commissioned by Government that hasn't been implemented 

Here's the report that includes numerous recommendations and options.

http://www.welfare.ie/en/downloads/OECD-Review-of-the-Irish-Pensions-System.pdf


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## DerKaiser (23 Apr 2013)

The non-contributory pension in €220pw and the contributory one is €230pw. Am I missing something, or is this basically a universal pension??

It's like the report is saying that the €10 difference is a seriously big deal, but whether it's universal or means-tested is irrelevant.


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## Protocol (23 Apr 2013)

Non-con is 219, yes.  Of course, it's means-tested.

http://www.welfare.ie/en/Pages/248_State-Pension-Non-Contributory.aspx#l62fd2


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## Protocol (23 Apr 2013)

Some lobby groups want the non-con pension increased from 219 to be the same as the CSP at 230.30pw.

*My reply is: I work for 40 years, and I end up with the same pension as somebody who never worked??*

The worker should always do better than the non-worker, there must be a reward to work.


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## DerKaiser (23 Apr 2013)

Here's a few other points.

The report makes a very petty and naive recommendation that the pension be linked to life expectancy and inflation in some explicit way. This really is one for the academics rather than the realists. Where budget allows, inflationary increases are granted anyway and we are already increasing the retirement age in line with life expectancy (in a more simplistic and effective way).

I also think that they've missed the less than subtle fact that the higher rate of tax already kicks in for lower than average income earners. This means that someone on the average industrial wage can put away 10% of their income per annum and get 41% tax relief on all of it. I'm sure this is not the case in other countries and makes bogus of the argument that only high earners can benefit.


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## orka (23 Apr 2013)

DerKaiser said:


> The non-contributory pension in €220pw and the contributory one is €230pw. Am I missing something, or is this basically a universal pension??
> 
> It's like the report is saying that the €10 difference is a seriously big deal, but whether it's universal or means-tested is irrelevant.


I'm pretty sure the report is actually suggesting quite a drastic change - that (in this option) essentially there would be no contributory pension - just a means-tested one so if your other income was too high you would get no public pension. In fairness, this is under the heading of 'structural reform' so (hopefully), it would be something that was phased in rather than just saying 'thanks for your 40 years PRSI contributions but you fail the mean-test so get no pension'...

From page 109 of the report (my emphasis) and the executive summary suggests option 1 or 2:
"If Ireland were to consider a structural reform of the State pension scheme, *which **today consists of a contributory and a non-contributory* pension, there would be essentially three different options to choose from:
1. A universal basic pension scheme for the entire population; .... There are various ways in which such a basic pension could be financed: by taxes, by contributions or by a combination of the two.
2. A single means-tested pension which is financed out of taxes. 
3. A basic earnings-related pension scheme with redistributive features, such as the Swiss public pension scheme."​

So it reads as if they are suggesting replacing the contributory and non-contributory pensions with a single pension type - and if it's option 2, then higher alternative income would exclude many from a means-tested pension. ​


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## Jim2007 (23 Apr 2013)

orka said:


> 3. A basic earnings-related pension scheme with redistributive features, such as the Swiss public pension scheme.



Well I have no idea what that is supposed to mean, because the Swiss state pension operates very similar to the contributory pensions operated in other countries.  And having just review the rules in the past couple of weeks, I do not recall any redistribution features!


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## DerKaiser (23 Apr 2013)

orka said:


> So it reads as if they are suggesting replacing the contributory and non-contributory pensions with a single pension type - and if it's option 2, then higher alternative income would exclude many from a means-tested pension.


 
That's what it looks like to me. 

At the moment we are very close to Option 1. From a casual reading, the report is suggesting that Option 2 would be closer to Option 1 than where we are now. I believe this is incorrect as option 2 would be moving us further away from Option 1.


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## mtk (23 Apr 2013)

_2. A single means-tested pension which is financed out of taxes. _

Absolute disgrace - another attack on the middle classes no need to work or save the state will take care of the lazy but penalise workers and savers.


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## Mrmr (23 Apr 2013)

mtk said:


> another attack on the middle classes no need to work or save the state will take care of the lazy but penalise workers and savers.



Absolutely. And how on earth does this fit with the 15% wage grab for pensions? We already pay PRSI and USC, for pretty much nothing now.

Some of us age 30-45 paying taxes all our lives, being pinned to the wall every which way and now looking at a future of zip as well. It is hilarious if they think this will fly.


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