I looked at my pension recently and happily discovered that it is projected to exceed €2.5m fund value on retirement. That's with standard(?) estimates of 2.5% contribution growth etc.,
I believe that any Irish pensions funds that exceed €2m will be immediately taxed at 40% of the excess on retirement.
Does this mean I should reduce my contributions / AVCs to target a final value below €2m?
It seems that anything more than that will get hit by USC twice! Once when saved and again when drawn down in retirement. In addition to full marginal tax rate on retirement + again when drawn down.
That could be worse than just taking the income now, paying standard income tax and keeping it under a mattress, so to speak!
I have been putting 7% + 7% employer contributed + additional AVCs up until now. I'm 35 so retirement is still a way off yet.
I believe that any Irish pensions funds that exceed €2m will be immediately taxed at 40% of the excess on retirement.
Does this mean I should reduce my contributions / AVCs to target a final value below €2m?
It seems that anything more than that will get hit by USC twice! Once when saved and again when drawn down in retirement. In addition to full marginal tax rate on retirement + again when drawn down.
That could be worse than just taking the income now, paying standard income tax and keeping it under a mattress, so to speak!
I have been putting 7% + 7% employer contributed + additional AVCs up until now. I'm 35 so retirement is still a way off yet.