Why is it strange. There were bumper tax receipts for the Celtic tiger years before the pension raids.It seems strange that at a time when there are bumper tax receipts people are worried about their pensions being raided.
Have you ever tried using clingfilm rather than tinfoil when you’re making your hats?Why is it strange. There were bumper tax receipts for the Celtic tiger years before the pension raids.
There are also bumper tax receipts now and they are largely due to once offs in corporation tax.
Wyeth are leaving, tech companies are reducing their presence in Ireland. Government borrowing rates have increased. Government spending has escalated enormously. All the factors for another meltdown are already in place.
The Lizard cracks a joke and the Tasmanian Devil joins in for the laugh.Have you ever tried using clingfilm rather than tinfoil when you’re making your hats?
Better in the rain and less risk of electric shock.
100%.
People seem to have forgotten that Irish tax receipts fell by 30% between 2007 and 2010.
There really was no alternative to broad-based increases in tax and reductions in expenditure.
An economics textbook will tell you that lump sum taxes like the levy on pension assets are the least economically harmful because they don’t impact decisions to work or consume.
You can quibble with the policy mix of course add decades later, but to ignore the economic context of the time is crazy.
As of 2023 the economic climate couldn’t be more different and the department of finance is desperately squirrelling money down the back of the sofa to stop it all being spent on the health service and the risk of new taxes, like the USC or the levy on pension assets is remote.
It was narrow based. A wide based levy would have included bank deposits and share accounts. The government chose to raid pension funds as they are at arms length and the pension holders could not easily determine what was taken from them. If bank and share accounts were included there would have been a major kickback against the government. Pensions were chosen as a sneaky stealth tax.It was effectively a broad based wealth tax.
It was narrow based. A wide based levy would have included bank deposits and share accounts.
The government chose to raid pension funds as they are at arms length and the pension holders could not easily determine what was taken from them. If bank and share accounts were included there would have been a major kickback against the government.
Fantastical.Pensions were chosen as a sneaky stealth tax.
Pensions were chosen as a sneaky stealth tax.
Ah yeah, that was what was needed in the financial crisis, a bank run
I'm with @S class on this one. A levy on bank accounts would have been easier for the vast majority of the population to see and understand than pension funds.
So the Government knew that a levy on bank accounts might cause a bank run, as people rejected it in their droves?
So they chose the easier target - pension funds - where many people had their money locked up and inaccessible with no possibility of taking any action.
Whether or not anybody continued to make contributions during the raid years is of no consequence. The locked in investments continued to be levied.Did you or S class continue to make pension contributions during the time the levy was in force?
FOR countries contemplating future bailouts, Ireland may offer a quieter way to raid savings than Cyprus by going after pensions rather than deposits.
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Greece and Portugal, which also sought international bailouts, have cut pension entitlements, though haven’t taken money directly from retirement pools. Greek funds, though, took losses in the country’s debt restructuring.
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While the levy drew criticism from the pension industry, public reaction was muted.
Monies flowing into pension funds received State support in the form of tax relief and tax exemption.
It’s entirely appropriate to target them, versus, say, a deposit account which received no such support.
Weren't public sector pensions also subject to a levy?It was effectively a broad based wealth tax. Though some fell through the cracks, notably public sector pensions
The levy was imposed after the financial crash as an emergency measure and has had public sector workers pay around 5 per cent of salary since 2009.
How do you think a fund gets created in the first place? It’s through tax relieved contributions. And then there’s no tax on returns in the fund.1. The levy was on the accumulated fund value and not on the funds flowing into it. People put the money in, sometimes many years ago, in the understanding that the state would not be making a grab and run on their funds.
2. Pension fund tax relief is actually a deferral of tax on the principal sums as tax is taxen when the pension is drawn down on 75% of its value. Also the principal sum is subject to USC and PRSI on the way in and USC and potentially PRSI on the way out (double taxation !). Investment growth is also subject to income tax/USC and potentially PRSI on withdrawl.
I can't believe how many posters are trying to justify the unjustifiable - stealing money from future old age pensioners. It was a morally corrupt levy.
Get your facts right Gordon.How do you think a fund gets created in the first place? It’s through tax relieved contributions. And then there’s no tax on returns in the fund.
But can we please put a stop to the “it’s just tax deferral” nonsense. It reflects a complete lack of understanding of the subject.
I put €100 in. I fund €60 and the State funds the €40.
It’s invested for a long time and grow tax-free.
I then draw 25% of it down, most or all tax-free.
I then pay income tax and USC on income, with no PRSI from age 66.
It’s clearly not “just tax deferral”.
This makes no sense. If you invest €100 into a pension , it costs you a net €60 (assuming 40% tax relief), it grows within the fund tax free, you can take 25% of the accumulated fund as a tax-free lump sum on retirement and any income drawdown derived from the remaining 75% is taxed like any other income in retirement (in many cases it might be below the tax threshold or only some of the income might be taxed at 20%).Get your facts right Gordon.
I put €100 in. The state immediately takes 12% USC and PRSI combined leaving me with €88. It’s invested for a long time and grows tax-free. The state then takes income tax (potentially 40%), USC and potentially PRSI when I withdraw. From my initial €100 I've potentially paid 40% income tax, 2xUSC + 2xPRSI (24%) so 64% (or €64) tax. Not to mention 3 or 4% in the pensions levy that's gone too so I'm left with €33 from my initial €100.
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