Yes, both were announced by Noonan in the same budget.
Given Noonan's raid on pension funds, can the government be trusted?
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Very true the future is uncertain, without hindsight I can't say for sure what the best approach is. But that's always been the case.
All I can do now is base by decisions for retirement on what I know today. In that regard the 'favourite' in that race - right now - would seem to be a pension.
Could future governments undermine this? Yes, but that would be a huge political risk for whatever party was in power. Somewhere along the lines the electorate would have a say on this.
Once(?) In a 100 years of the State pensions got taxed. Might it happen again? Maybe but right now is there a better bet for me future than a pension? I don't think so.
Call for return of €2.4bn taken in crisis-era pension levy
Pension industry experts say refunding money taken from private pensions makes sense as most public sector cuts have been restored
Probably not.
Share profits are subject to Capital gains tax. Profits on dividends are subject to Income tax, USC and PRSI.
When sold there is no double USC and PRSI imposed on the total value of the share sale.
Pensions are deferred taxation.
Income tax relief on contributions. But no relief from USC or PRSI.
Profits not taxed while in the pension fund.
At retirement there is a tax free lump sum.
All drawdowns are then subject to income tax and USC for a second time. If the pension is taken as an ARF the drawdowns are then also subject to PRSI for a second time until age 66.
The pension funds are also easy pickings for our untrustworthy Irish governments.
No PRSI from age 66.
Key Post - PRSI in the year you hit 66
I thought I had got the definitive answer to this from Revenue but an accountant has told me that he got a different answer, or, probably , a more specific answer. This is my summary, but it's based on what I have been told. I can't find a Revenue or Social Welfare link to confirm it. When...
www.askaboutmoney.com
Yes I stated that fact, but you chose to not quote that part of my post.
Gordon Gekko
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It’s very naive to think that the pension levy money was used to support the hospitality industry. It’s an overly siloed and simplistic way to think about things.
Flybytheseat
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What gall's me about the Pension Levy was how Noonan and the state media tried to portray it as a tax on the pensions industry / companies and their enormous profits when it was blatently clear to everyone at the time that he was targetting the average punter's private money in their pension funds. The state (propeganda ?) media (e.g. RTE) didn't pull him up on this blatent lie. It was state theft of privately held assets.
but he took it at the worst possible time for pension savers because the pension fund had already fallen considerably due to the financial crash and then the government swoops in to reduce it more and wipe out the possibility of recovery in that part of the fund. It showed who the government would target in a crises.
The biggest risk in my opinion is that when they bring in auto enrolement will they try to then restrict or reduce the entitlement of pension savers to the contributory state pension?
It was % charge. It didn’t matter when taken.
The government can tax anything. You can argue as Brendan others did at the time that it would negatively impact the amount of people who would save for retirement but it was not theft.
Gordon Gekko
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I still don’t understand the mindset.
“During a crisis they took a 0.6% charge so I’m gonna avoid the best investment vehicle of all forever.”
It’s mindless.
“During a crisis they took a 0.6% charge so I’m gonna avoid the best investment vehicle of all forever.”
It’s mindless.
losttheplot
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After September 11, Americans turned away from air travel and took to the roadsz even though flying was still safer. Road deaths increased. I think it's the same kind of thinking.
Gordon Gekko
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I was saving for retirement at the time. I think AJ Chopra and the IMF continuing to control our economic fate, plus the country remaining effectively bankrupt, would have had a bigger impact on my retirement plans than an immaterial 0.6% levy on my fund for a few years to help rescue the country.
Dr Strangelove
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Everyone forgets that this was part of an abandonment of a commitment to the troika six months previously to standard-rate all pension reliefs.
I think a four-year 0.6% levy (at a time of continually increasing market values) was a far better deal for most pension savers!
Pretty sure I remember AAM at the time when this levy was introduced and we all said what a bad idea it was for this very reason among others. It creates precedent and it creates a narrative that they do it once, they will do it again.
Not saying its right but that was the risk.
Would be interesting to root out the threads from that time.....
You need a more open mindset Gordon.
You're missing out on the opportunity of lumping all your capital into a single asset class, and dealing with the stress of being a landlord. Cause there's never been government interference in the rental market that affects your profit or capital....
That problem was dealt with when they invented the USC.
Not relieved on contributions and then double charged on drawdowns.
Dr Strangelove
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The USC was announced in December 2010 two weeks after the bailout agreement.
The levy on pension assets was announced subsequently, in May 2011 and the prior commitment to introduce standard rating on all contributions was abandoned.
Gordon Gekko
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Irrelevant over the longer term though.
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