Brendan Burgess
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factor of 20 limit reduced or increased
Pension fund limit reduced from €2.3m to €2m
- Thread starter Brendan Burgess
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Am I correct in saying that there is still no mechanism to help people whose pension fund will exceed the €2m limit despite them applying for the PFT?
ie in cases where the employer continues to make pension contributions on behalf of the employee, pushing the fund over the limit.
My understanding is that punitive rates of tax will be applied to the excess funds, and will have to be paid upon retirement. This problem was highlighted 2 years ago and is now a reality for some workers nearing retirement. Any info appreciated.
ie in cases where the employer continues to make pension contributions on behalf of the employee, pushing the fund over the limit.
My understanding is that punitive rates of tax will be applied to the excess funds, and will have to be paid upon retirement. This problem was highlighted 2 years ago and is now a reality for some workers nearing retirement. Any info appreciated.
JoeRoberts
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Pretty sure it applies to all pensions.
In his speech the Minister spoke about increasing the multiplier for DB schemes so as to introduce some fairness in comparison to DC. And introducing age related multipliers seemed like the way to go.
But deciding that the higher (more reasonable) multipliers would only apply to accrued benefits after Jan 2014 was odd. This in effect means that it will take years for the impact of the higher multipliers to impact the DB notional value for the €2m cap.
But yet the new €2m cap applies to all DC benefits immediately, whether accrued before of after 2014. So in the Minister's words its "equity" but just not yet. And who benefits most from this? It's senior Civil Servants. Such individuals will continue to benefit from the 20:1 multiplier on the majority of the pension.
So whilst DC members are limited to €60,000 as a pension (at most) immediately, DB members retiring in say the next few years could benefit from a pension of circa €90,000 - 90,000 x 20 + 2000,000 = €2m.
So yet again, the senior Civil Servants escape "equity".
But deciding that the higher (more reasonable) multipliers would only apply to accrued benefits after Jan 2014 was odd. This in effect means that it will take years for the impact of the higher multipliers to impact the DB notional value for the €2m cap.
But yet the new €2m cap applies to all DC benefits immediately, whether accrued before of after 2014. So in the Minister's words its "equity" but just not yet. And who benefits most from this? It's senior Civil Servants. Such individuals will continue to benefit from the 20:1 multiplier on the majority of the pension.
So whilst DC members are limited to €60,000 as a pension (at most) immediately, DB members retiring in say the next few years could benefit from a pension of circa €90,000 - 90,000 x 20 + 2000,000 = €2m.
So yet again, the senior Civil Servants escape "equity".
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