Hopefully FG won't spend the proposed " Rainy Day Fund "
Yeah I know. One thing though, the idea of a Basic Income has been knocked around for years now, but we essentially have this via the OAPOh you mean like the contributory & non contributory State pensions payable to all citizens on attaining the appropriate age ?
I agree, and for those on very low incomes it's not worth much, but for anyone earning over 60k there is a big difference, which would cost a lot of money to fund privately.Of course in the case of public sector workers such state pension is integrated whereas a large number of private sector workers will receive the state pension in addition to their occupational pension.
cremeegg if a mid ranking financial services retiree had the same DB pension as a TD they would be treated exactly the same.
The example is for the totally unreal situation of a DC punter who had accumulated enough to buy an annuity at today's ludicrous pricing
I have done the sums. Overfunding is effectively incurring 50% tax on total fund (40% relief in and 70% deduction out). We can compare this with investing in an 8 yearly roll up fund subject to 41% exit tax. The break even point is 47 years.I'm not convinced that overfunding is pointless. The big advantage of pensions is the gross roll up. Penalty tax is arguably a fair price to pay for having a large sum of money compounding tax-free for a very long time
Are you sure that you're calculations are correct?
Say I'm 35;
I'm going to overshoot €2.15m. I can invest €100 in my pension now or invest €60 in a fund. The €100 compounds tax-free for 30 years. The €60 does not (I lose 41% on income and every eight years I lose 41% on gains). Then I get hit with penalty chargeable excess tax at 65. But say I have €1m of excess monies and pay €400k of penalty tax. The €600k is still in a tax-free environment (the ARF) and can compound for thelonger of my life or my wife's life (hopefully 35 years).
Are you sure your model is right? It's only 70% tax if you exhaust your ARF.
Are you sure that you're calculations are correct?
Say I'm 35;
I'm going to overshoot €2.15m. I can invest €100 in my pension now or invest €60 in a fund. The €100 compounds tax-free for 30 years. The €60 does not (I lose 41% on income and every eight years I lose 41% on gains). Then I get hit with penalty chargeable excess tax at 65. But say I have €1m of excess monies and pay €400k of penalty tax. The €600k is still in a tax-free environment (the ARF) and can compound for thelonger of my life or my wife's life (hopefully 35 years).
Are you sure your model is right? It's only 70% tax if you exhaust your ARF.
GG well you are introducing a further dimension viz. the favourable estate planning of an ARF.
Exit Tax funds compound gross over 8 year periods - both income and gains.
I assumed a gross return of 40% per octannum in doing my sums. jjm asserts that my models are always correct.
But an Exit Tax fund is a very poor comparator. Best would be a direct fund oriented towards long term capital gains.
GG well you are introducing a further dimension viz. the favourable estate planning of an ARF.
Exit Tax funds compound gross over 8 year periods - both income and gains.
I assumed a gross return of 40% per octannum in doing my sums. jjm asserts that my models are always correct.
But an Exit Tax fund is a very poor comparator. Best would be a direct fund oriented towards long term capital gains.
We use cookies and similar technologies for the following purposes:
Do you accept cookies and these technologies?
We use cookies and similar technologies for the following purposes:
Do you accept cookies and these technologies?