Pension levy on DC schemes to fund deficits in DB schemes

[orka]

In other words, the increased taxes on deposit interest of late have effectively knocked 25% off my ultimate proceeds, this is far worse than even a 0.6% levy over the same period.

Yes, but at least you have the choice to move your savings elsewhere if you don't like the deposit interest/DIRT structure. You could pay down your mortgage (effectively earning 4-5% gross if you're on a variable rate), buy and hold shares (concentrating on ones which favour capital growth over dividends), you could invest in property, anything you like really - knowing that if the tax structure changes, you can make a new choice. But once your money is locked away in a pension, you are 100% at the mercy of whatever tax changes the government wants to make - increased levy, exit taxes, reduced or removed tax free amounts, reduced contributory pension because you were kind enough to provide for yourself...

So you can't make a fully informed choice today - the current tax implications might make the pension look better today but by the time you can access your money, tax changes along the way may have made your choice a very poor one.

 

[Sunny]

Say I have €100 to put away for 40 years and can get a long term rate of 3% on deposit savings gross of tax.

If PRSI didn't apply and DIRT was 20% (as it was a few years ago), I'd have €258 after 40 years.

Applying a total of 45% PRSI and DIRT (current situation), I'd have €192 after 40 years.

In other words, the increased taxes on deposit interest of late have effectively knocked 25% off my ultimate proceeds, this is far worse than even a 0.6% levy over the same period.

Is that not apples or oranges. I pay dirt on the interest I receive. I will pay the levy even if my pension fund loses 90% of its value. It's like the Government deciding to tax negative interest accounts.