Disagree with the new pension levy

northsideboy said:
In addition the contributary OAP which other workers receive is not given to Public Sector Workers most of whom (post 95 entry) pay the ame level of PRSI as everyone else.
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This statement is muddled up.

Post '95 public servants (and many thousands of workers in the commercial semi state public sector ) pay the same level of Prsi as anyone else and as such they are entitled to the COAP.
 
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The following groups remain unscathed:

Public sector pensioners
Old age pensioners
Semis state workers and pensioners

Wrong, Old age pensions are paying USC on their private pension
 
Does anyone think based on what Eddie Hobbs is saying, that now is the time to withdraw any cash we have in the bank,(ie our last fiver..) and moving it to another currency?
Hobbs is calling it theft Tuesday, and if that is the case nothing remains sacred.

Just as a matter of interest,will those of you who are PS workers be still OK with it,when/if it is extended to the PS in some other similar form ..(I understand there is no fund) but in some other form?
 
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I agree with the thread title that it is a total disgrace to be taxing private pension funds. Of course it is an easy target as people cannot move their funds out. Sunny makes a very good point about this setting an extremely dangerous precedent, and in my opinion this is going to be just the start of things to come.

I believe I read somewhere that Noonan said that there would be a time limit built into the legislation (4 years?), obviously to make this more sellable to the public. Anyone taking bets that in 4 years time this "temporary" tax will just be extended indefinitely?

What disgusts me most about this tax is the point already made, that it simply is clawing back some of the tax relief enjoyed by those paying in, when in fact people are simply deferring the tax payment until the time when they retire and withdraw funds.
It also didn't take long for comments to arise about those that can best afford to pay should pay. What this tax is doing is punishing those with the foresight and frugality to set money aside for the future. It is nothing more than the theft of private property!

This latest tax is taking me one step closer to packing up and leaving this country, and there are not many steps left before I do.
 
DerKaiser said:
Probably not - could the DB Pensioners get a transfer value and purchase an annuity from a 3rd party to avoid this tax?
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Not sure that option is generally available, and if it were I guess the annuity would be way less than the foregone pension (a) coz insured annuity rates are puny and (b) coz the fund is probably in deficit.

Eddie was on Joe Duffy today, not by invite, he phoned in. He was apoplectic (Joe's words, actually Joe's stand in). Eddie refuses to call this a tax/levy/stamp duty, to him it is a confiscation. He was 'opping mad. Thin edge of the wedge etc. First time ever. Once we accept confiscation where will it all end, deposits next? PO savings?

I was fairly relaxed about this 0.6% until then but Eddie was so incandescent he finished up convincing me he had a point.

To think that the insurance industry lobbied for this "confiscation" just so there would be minimal damage to new business.
 
Duke of Marmalade said:
To think that the insurance industry lobbied for this "confiscation" just so there would be minimal damage to new business.
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You seem to have an ongoing beef with this.

The levy will reduce the attractiveness of pensions but the tax regime will still provide an incentive in many situations to save for retirement.

There were two straight options from what I understand:
1) Significantly reduce the relief on new money
2) tax existing money

From what I can see option 1) would leave the beneficiaries of the generous tax regime from the past untouched whilst closing the door on those looking to start putting more money away from now.

As regards the pensions industry, the life insurance companies naturally want to maintain some sort of incentive for people to save, so they favoured what they saw as the lesser of two evils.

I believe the DB schemes were more in favour of defending the position of the already underfunded position of existing members. Probably because they don't care so much about future pension provision as most of the schemes are closed to new members.

There is absolutely nothing to stop governments taxing wealth in whatever way they want. As I've said before, even a person earning 3% interest in the bank is having 0.8% of their savings "confiscated" each year. And we'll have a similar story when property tax is introduced. Eddie's apoplexy is a bit melodramatic in this context!!
 
DerKaiser said:
As I've said before, even a person earning 3% interest in the bank is having 0.8% of their savings "confiscated" each year.
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There's no confiscation of capital though - if there's no growth, there's no tax. To add insult to injury, my pension fund value has gone down in value since January so the actual amount taken from today's fund (or whenever they actually take the money) will be more than 0.6% of the fund - not massively but the principle annoys me.
At least removing tax relief at entry would have given people a choice whether to invest or not - this is a smash and grab on funds which cannot be diverted at all - we're sitting ducks.

It's also doubly penalising those close to retirement - they will have the biggest funds so will pay the most and they will also be (hopefully) in low-risk, low return funds - so hitting them for 0.6% pa will put quite a dent in their annual return - younger pension holders will probably in funds offering (ho ho ho) higher returns so 0.6% should be recovered in time.
 

Lately I have been concerned about having all my €ggs in one basket and had been reading up on opening a euro denominated deposit account in UK/IOM/NI.

This will definitely become a priority issue now that the government have crossed the line of seizing assets.

Regardless of what they call it this is not a levy or a tax is it a fundamental shift in policy.

I have a small IL concensus fund (bond) and it is already down over 20% since 2007. In all likelihood the net annual returns after management fees and charges over the last 10 years has probably run at less than 2%. To SEIZE an additional 0.6% per annum over the next four years is beyond belief.

Wish someone like Eddie would take up the mantle and counter Theft Tuesday eg spearhead a visible response to demonstrate objection to the principle of seizing capital and target a given date before the end of June as the day that anyone thinking of moving deposits to another non irish bank should execute their transfers. The June date facilitates ensuring adequate time to open accounts.

The sooner the govt remove their defined benefit snouts from the tax payer funded trough the better.
 
My two cents:

The logic of the government that this is bringing funds back in to the country is flawed. The majority of this money would be coming back anyway when people retire and spend it in Ireland.

A retrospective tax which is a very concerning precedence. Later this year could the government change the income tax rates for 2011 and back date it?

It takes no consideration of the financial state of the fund, many funds may be unable to meet the demands on them. You might as well put a retrospective asset tax on property developers ignoring the fact that many are insolvent.

Many pension funds were significantly invested in irish companies and have not been immune to the collapse of the economy, they are not a magical pot at the end of a rainbow.

It takes no account of the difference between people on huge incomes with huge pensions and those on modest incomes/ pensions who are making provisions that reduce their future dependency on the state.

It takes far more from those close to retirement than younger people. Certainly older people have benefited from the tax breaks on pension contributions but they are also dealing with retiring as the fund has collapsed.

It is not an equitable levy as it targets the private sector and before anyone says anything about the pension contribution that public sector workers have had to make, this is a levy, that is a contribution. As a private sector worker I would be delighted to give the state 7-10% of my salary for the equivalent pension benefit.

There is a whole array of PRSAs, defined benefit schemes etc, the different pension providers will decide how to apply the levy with some being inevitably disadvantaged.

If this was genuinely an investment in job, the government could mandate that pension funds invest a portion of the fund in a low return state bond. There would no capital loss for the pension fund and the state would get the capital it needs.
 
I ,up to now, would have been happy enough with the government guarantee but now, I'm just not so sure..so Im actively looking at somewhere ,maybe Rabbo..to move my account to..Its all about trust and Im losing it.

As other posters and Eddie Hobbs has said if the government can take from a private pension fund,its the thin end of the wedge.

Either way, we lose the 0.6% on the pension for the next four years,there is ,as I mentioned earlier very few employers who will pick up the tab ..and in fact Irish Life today announced it would pass it on to the holders..if this means 4/500e a year ,thats a lot ,especially for todays pensioners..
 
thedaras said:
Either way, we lose the 0.6% on the pension for the next four years...
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You actually lose over 2.5% over your fund forever. Compounding this year on year over say 20-30 years that is a pretty significant total you are losing forever.


With regard to opening Rabo or other non Irish bank operating here they will still be required to comply with any legislation introduced by the government. That was why I was more inclined to look to UK/IOM/NI:

firstly to guard against any potential exposure to a two tier euro,

secondly against the unlikely event of leaving the euro; and

thirdly but now somewhat more importantly against the government effectively nationalising part of your life savings

The decision to raid already depleted private pension funds in conjunction with other recent and controversial changes to abolish relief in areas such as S248 interest relief and to some extent S23 has created a degree of uncertainty that now has the real potential to undermine any credibility as to the long term security of future investment decisions in Ireland.
 
Here is a very good post from Conan on pensions that is well worth reading.
 
"Jerry Moriarty, IAPF director of policy, confirmed legal advice had been sought on the basis the levy could be an interference with property rights. There is also a question of discrimination given that only private sector pensions would be affected"

this guy sounded very good over the last few days on the TV/Radio.
 
DerKaiser said:
There were two straight options from what I understand:
1) Significantly reduce the relief on new money
2) tax existing money
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There is a third option of leaving things as they are and not taxing pension contributions and funds.


The main difference is that I can put my savings into an account bearing no interest and thereby avoiding any confiscation. Or I could put the funds into some other non-income producing investment.
This is not possible with pensions; there will be no way to avoid this tax.

Sunny said:
It is in no way a tax on wealth.
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Would you mind explaining how you got to that conclusion? The government is introducing a tax on the value of an asset, not on the gain or income the asset provides. In my book that is is a tax on wealth or more accurately confiscation.
 
Chris said:
Would you mind explaining how you got to that conclusion? The government is introducing a tax on the value of an asset, not on the gain or income the asset provides. In my book that is is a tax on wealth or more accurately confiscation.
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Yeah sorry Chris. I just meant that this levy in no way targets the most wealthy despite what the politicians say. If I have a multi million euro pension pot, I will simply move it abroad becaause I can afford it. It also leaves out some of the people with the largest pension pots i.e. politicians and senior civil/public servants. This will mostly target ordinary workers with modest pension provisions. It's a not a tax in my eyes. As you say, it is simply a confiscation of private assets. In principle, it is no different to suddenly deciding they want 0.6% every year of what it is in my savings account. I heard Noonon go on yesterday that they wouldn't target saving accounts because we already pay DIRT. They have obviously missed the point that DIRT is a tax on interest not on my actual savings.
 

OK, I see what you mean. And I agree it is not a tax on the wealthy but just a tax on/confiscation of assets. It certainly is a step too far.
 

I'll avoid getting into an argument about making back the money on equity investment.

Assuming this is a permanent levy on funds.

Those close to retirement have paid no levy for most of the term of their pension, got relief on contributions of the higher rate plus PRSI, etc and stand a good chance of making it through to retirement whilst the tax free lump sum still exists.

Those starting out a pension will probably face this levy over the entire lifetime of their pension, will consider themselves lucky to get contribution relief at the higher rate for the entire term and haven't a snowballs chance in hell of there being a large tax free lump sum by the time they retire.

I cannot accept that the gilded generation of nearly retireds (who in the case of DB schemes stand the most chance of not being impacted by the underfunding position on most schemes) are at more of a disadvantage having to endure less generous tax treatment of their pension for a few years than someone starting out who'll face these less generous terms for the duration of their pension.
 
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