How am I being silly? You said that "Nobody, but nobody is refusing their 5% income" - I was just stating that this is not the case.
Disagree with the new pension levy
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Duke of Marmalade
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The issue is whether ARFs deserve to be exempted because they are inherently higher taxed in the first place. Whether or not some ARFers choose not to withdraw the 5% is irrelevant.
Actual contribution's are 1.5% of gross salary, 3.5% of net pensionable income for employees hired after April 95, however their salaries are increases by 20/19 to compensate them because employees hired pre 95 there is no explicit contributions except for 1.5% of salary for spouses and childrens scheme. So we were both wrong
Be careful.
For many public servants, they have always paid 6.5% of wages, and still pay 6.5% plus new levy.
CIVIL SERVANTS only - they paid just the 1.5%.
Post-95 civil servants now pay full-rate PRSI, and pay the full 6.5%, but got the salary uplift to compensate.
Bear in mind that there are approx 30-35,000 civil servants, but 250,000+ public servants.
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z107
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I keep reading that this new pension tax is temporary.
http://www.breakingnews.ie/ireland/pension-levy-modest-says-tanaiste-505110.html
Does that mean people get their money back after four years?
http://www.breakingnews.ie/ireland/pension-levy-modest-says-tanaiste-505110.html
Does that mean people get their money back after four years?
Ive been talking to several people over the weekend in good jobs, where they should be secure or at least if they did need to could get another job very easily.
What did they have in common. They have pension funds and healthy savings. They were talking about emigrating, not to find a job, but to protect their savings from future seizure by Noonan and co. Also they are looking into moving their pension funds abroad. It might be too late for the 0.6% levy, but at least they can protect against future swoops. At this stage they are even willing to leave their pensions here if they have to, but to get out anyway to protect future savings.
I think Noonan has just started the run to end all runs. Watch this develop over the next few months.
What did they have in common. They have pension funds and healthy savings. They were talking about emigrating, not to find a job, but to protect their savings from future seizure by Noonan and co. Also they are looking into moving their pension funds abroad. It might be too late for the 0.6% levy, but at least they can protect against future swoops. At this stage they are even willing to leave their pensions here if they have to, but to get out anyway to protect future savings.
I think Noonan has just started the run to end all runs. Watch this develop over the next few months.
Complainer
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Not quite true - the Govt certainly has its own assets (land, buildings) and some of these generate their own Revenue. But regardless, the Govt is legally entitled to levy tax. That is a fundamental tenet of our system of Govt and every civilisation for hundreds of years.
When the Govt gives a tax break to those who pay into their pension, it is helping those people who can afford to pay into their pension.
Indeed, it is a ludicrous suggestion, and it is not near my suggestion at all. In pension terms, it is 99.4% away from my suggestion, to be precise.
Strange how you forget to mention Govt-provided healthcare, Govt-provided education, Govt-provided legal infrastructure, Govt-provided transport infrastructure etc etc as important reasons why the western world managed to get itself out of the constraints of serfdom and mercantilism and prosper in the way that it did- could there possibly be a bit of blinkered view going on here?
My suggestion makes as much sense as your suggestion that pension tax relief is a 'deferral'.
WOuld you like to rerun the numbers to show the benefit of the substantial tax relief provided when contributing to the pension, just for context?
You want people to make pension contributions and then have the government take 100% of the assets leaving the person with zero? I thought you just wanted to do away with tax relief? Which I would agree with; but I don't think you'll find much support for 'here - have some tax relief on your contributions to incentivise you to invest and then we'll swipe the lot'...
Duke of Marmalade
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Just listened to the Week in Politics on RTE. Richard Bruton stated that ARFs have already had their levy increased from 1.2% to 2%. What he means is that people have been forced to increase their pension from their ARFs from 3% to 5% and so, if they are paying tax at 41%, that is an increase in tax from 1.2% to 2%. But DB pensioners pay this exact same tax. I really cannot believe that after several days Richard Bruton is persisting with this utter nonsense. Okay Fine Gael are the Fat Cats' party so maybe that's the reason but Labour have bought into this as well.
Complainer
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I've no idea where you got that from what I posted. Just in the interests of clarity, I do NOT want people to make pension contributions and then have the government take 100% of the assets leaving the person with zero. My point was that Chris's strawman arguement (100% tax) is 99.4% away from the current measure (0.6%) tax. So he is 99.4% wrong.
If he wants to make this an arguement about the principal of taxation, then why doesn't he talk about Govt taking 100% of income or taking 100% of a property or taking 100% of a unit linked fund. The only principal here is that Govt can tax pension assets. It already taxes other assets, such as the NPPPR tax on 2nd properties.
I can't find the Examiner article from last year where they showed a breakdown of state income. If I am not mistaken over 90% of state income came from taxation, which means that the actual income producing assets are quite minuscule, but I take your point.
And you are right that taxation is part of government, my disagreement is in the ridiculous levels of taxation that a lot of the western world now has.
I agree, but that makes it an incentive not a subsidy.
Just to clarify, I was referring to your statement that "Tax relief is tax foregone. Tax is legally the property of the Govt." This says to me that any amount of an income or asset that is not taxed away is essentially "given" to the owner of the income or asset, or in other words government has "property rights" over all income, but allows people to keep some.
Health care, education and transport were all taken on by government a very long time after serfdom and mercantilism. The industrial revolution, starting around 1775, marked the beginning of western prosperity; the services you mention were not monopolised by governments until 150 years later, and had nothing to do with western prosperity.
Actually it doesn't. You are arguing that because the government will take 0.6% now I will pay less in tax when I retire because the total capital is lower. But I am still worse off. If however, I was given a reduction in tax upon exit, then it would balance out.
The number would be substantially larger, but I don't see the point of your argument. People are using their private property to invest in their future financial needs through capital appreciation.
pconsidine
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I will address each of your four points:
1. Sure, deposit a/cs are eroded by inflation. The value of all pension funds is similarly eroded. However, the "managed" funds are also eroded by fees, charges, and the bad decisions of our brilliant fund-managers. The only justification of the managed funds is that their performance not only pays for the extra costs, but also pays a sufficient premium to compensate for their disadvantages in the form of risk and uncertainty. For most of the medium and recent past they haven't even come near. Moreover, there is no reason whatsoever to believe that the paradigm that "in the long term equities will always come out ahead" will ever be re-established.
2. This is self-serving nonsense. The evidence is that the pensions industry neither competes nor is competitive. Like sheep, they all followed the same disasterous investment strategies. Their high charges (levied even if they lose their client's money) smacks more of rent than reward for achievment.
3. With respect, more self-serving, evidence-lite, nonsense. Losing 30% of their client's funds isn't my idea of "safe". The only "safe" and dependable things in the pensions industry are the fees and charges. My IPBS deposit a/c was guarranrteed and safe. A huge chunk of my Irish Life pension was lost by the fund-managers. There was no guarrantee for the latter.
4. Seriously! The primary purpose of pensions is to provide support and security for the owner of the pension. It is NOT to make a "tidy profit" for the industry, or tax for the State. In any case, the sum recovered by the taxpayer through the sale of Irish Life will only be a small part of the tax forgone by the State in creating whatever wealth resides in Irish Life. If this is your best argument to justify this failed industry, it is time we stopped subsidizing its bad-value, obsolete products and started to look elsewhere towards simpler, transparent products which will not be eroded by unjustifiable fees and charges - levied as rent by advisors who cannot either beat the market, nor the returns on simple deposits. Give us the deposit-account option I posited, and lets see how middle-income people "vote" with their money.
1. Sure, deposit a/cs are eroded by inflation. The value of all pension funds is similarly eroded. However, the "managed" funds are also eroded by fees, charges, and the bad decisions of our brilliant fund-managers. The only justification of the managed funds is that their performance not only pays for the extra costs, but also pays a sufficient premium to compensate for their disadvantages in the form of risk and uncertainty. For most of the medium and recent past they haven't even come near. Moreover, there is no reason whatsoever to believe that the paradigm that "in the long term equities will always come out ahead" will ever be re-established.
2. This is self-serving nonsense. The evidence is that the pensions industry neither competes nor is competitive. Like sheep, they all followed the same disasterous investment strategies. Their high charges (levied even if they lose their client's money) smacks more of rent than reward for achievment.
3. With respect, more self-serving, evidence-lite, nonsense. Losing 30% of their client's funds isn't my idea of "safe". The only "safe" and dependable things in the pensions industry are the fees and charges. My IPBS deposit a/c was guarranrteed and safe. A huge chunk of my Irish Life pension was lost by the fund-managers. There was no guarrantee for the latter.
4. Seriously! The primary purpose of pensions is to provide support and security for the owner of the pension. It is NOT to make a "tidy profit" for the industry, or tax for the State. In any case, the sum recovered by the taxpayer through the sale of Irish Life will only be a small part of the tax forgone by the State in creating whatever wealth resides in Irish Life. If this is your best argument to justify this failed industry, it is time we stopped subsidizing its bad-value, obsolete products and started to look elsewhere towards simpler, transparent products which will not be eroded by unjustifiable fees and charges - levied as rent by advisors who cannot either beat the market, nor the returns on simple deposits. Give us the deposit-account option I posited, and lets see how middle-income people "vote" with their money.
Complainer
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Indeed, you are still worse off after the levy. Just as you are still way better off from the tax relief that you got on the way in, but somehow seems to have been magically forgotten.
Are there any articles or reports that would support this? I'm not close to the market offerings these days, so it would be helpful to see some verification of this.
For clarity, the above appears to be a response to 22 posts ago
You're right, there is no guarantee as to which asset class will do better over the longer term. It's just that equities are more likely to vary in line with the cost of living over longer terms making them more appropriate for long term investment.
You're right in one respect, charges are levied on funds under management rather than on investment gains.
There is a reward for achievement/penalty for failure though. If I have €1bn of funds under management and charge 1% that's €10m in revenues. Say costs are €8m, profit will be €2m. If fund returns are -25%, revenues drop to €7.5m so a loss would be made on the same costs.
As for following the same strategies, there are significant differences in 10 and 20 year returns across the industry. Besides, you don't have to opt for a managed fund from Irish fund managers - there's a whole spectrum of fund choices if you fancy a cash fund, a gold fund, a managed fund from international fund managers, etc.
Presume this was 2008? Funds are up about 35% since then, making up pretty much all of that loss.
Anyway, if you are invested in equities you take the short term volatility. No one will cover the losses you make on your equity investment. It's not a one way bet where you pat yourself on the back when the returns are good are seek to have someone else to blame and cover your losses when returns are bad.
The point I made about the regulations making the pension industry safe was that the proceeds of your investment (whatever they turn out to be) are ringfenced unlike deposits in our banks.
You seem to be confused as to what goes on.
You take out a pension to provide security for retirement.
The state provides you (not the pension provider) with the tax subsidy to encourage sensible retirement provision.
You choose a pension provider and an investment choice.
The pension provider provides a range of services in exchange for fees.
You are responsible for the type of investment choice you make and you are responsible for choosing the most competitive pension provider in terms of fees.
This reminds me of an old thread:
http://www.askaboutmoney.com/showthread.php?t=109889
[broken link removed]
You can see that Aviva's margin on 2010 new business is £1m in 2010 down from £12m in 2009 and £15m in 2008.
This a pitiful return on the capital invested - They'd be multiples better off putting their capital on deposit!
This is the best sign of the competitiveness/lack of profitability in the industry at the moment.
Complainer
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Any chance of a more specific link, or telling me which page/category/line you are referring to? All I can see is "Improved life new business IRR to 12.5% and payback to 8 years (FY 2009: 10.0% and 14 years) "
If you go into the MCEV supplement you'll see Aviva Ireland's new business result in the regional splits
It generally helps if you quote the post you are referring to. Anyway, I think DerKaiser has already answered most of your points, but I do want to make one more.
Don't you think that if so many people wanted a low risk investment for their retirement funds they would be flocking into cash funds? People are already voting that they overwhelmingly do not want to be in cash for their retirement savings.
Don't you think that if so many people wanted a low risk investment for their retirement funds they would be flocking into cash funds? People are already voting that they overwhelmingly do not want to be in cash for their retirement savings.
Complainer
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What business does this refer to? Pensions? Investments? Motor? Home?
Life and pensions - pensions by far the bigger driver