Pension update from Leo Vardaker?

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Does anyone know what Leo has in mind regarding revised voluntary pension contributions as mentioned on the Sean O Rourke show this morning.
 
"At the moment, if you pay into the PRSI system for long enough, you become entitled to certain benefits without having to pass a means-test. These include the State Pension (Contributory)..."

The Minister's use of language (emphasis added by me) would concern me...
 
I wonder now if they would introduce means-test on the State Pension (Contributory).. If so this could discourage poeple from saving for a private pension
 
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Hi Merowig,

I'm convinced that means-testing is coming down the tracks. It would have to be done with some kind of reasonable cut-off / lead-in time. For example, announce today that with effect from 1 January 2050, the Contributory State Pension will be means-tested. 35 year olds and below get nailed, but they've enough time to do something about it. Grossly unfair to people paying huge amounts of PRSI and bothering to provide for themselves, but such is life in this wonderful country.

Gordon
 
Means testing effectively means abolishing the contributory State pension (as we would then be left with the means-tested non-contributory State pension). Can't see that happening when you consider that the folks that write the rules now qualify for contributory State pensions.

I do, however, think it is inevitable that the State pension will be reduced in line with the State pension in the UK at some point.

I also think it is likely that the SFT for private pensions will be further reduced at some point - it was reduced to £1m in the UK some time ago (although the consequences of breaching this ceiling are not as punitive in the UK ).
 
Hi Sarenco,

It's a tricky one. People who rely on the State Pension are vocal and they vote. I can't see it being cut but I can see inflation being allowed to cut it a different way.

I just think that if it's unsustainable, the lowest hanging fruit would involve means-testing.

With regard to the SFT, I'd be surprised to see it cut further. Yes, it's £1m in the UK, but they have ISAs which enable people to put additional meaningful amounts away in a tax-efficient manner. And also, importantly, the 30 multiple that attaches to public sector DB schemes starts to drag more decision makers into Chargeable Excess Tax territory the lower the SFT becomes. Turkeys have a tendency not to vote for Christmas and all that.
 
What's the situation with people who worked for themselves but due to the "injured" Tiger, etc, were forced to leave and work abroad? Can these people start paying voluntary contributions from abroad and eventually avail of a pension, even though they're not here and won't be?
 
Gordon Gekko said:
With regard to the SFT, I'd be surprised to see it cut further. Yes, it's £1m in the UK, but they have ISAs which enable people to put additional meaningful amounts away in a tax-efficient manner. And also, importantly, the 30 multiple that attaches to public sector DB schemes starts to drag more decision makers into Chargeable Excess Tax territory the lower the SFT becomes. Turkeys have a tendency not to vote for Christmas and all that.
Click to expand...

Hi Gordon

Yes, that's certainly a fair point about PS pensions indirectly getting caught by any further lowering of the SFT and therefore making such a move unattractive to the powers that be. I also take the point that we have no equivalent to an ISA/Roth IRA for after-tax savings.

However, I still think it's likely that a future government would move to make relatively large pensions (including PS pensions) less attractive from a tax perspective before they would move to abolish the contributory State pension. I think we have already started to move in that direction in recent years.

I wouldn't underestimate the challenge or unpopularity of trying to means-test (what by that stage will be) such a large chunk of the population. Far easier to go after the "fat cats" with big "supplementary" pensions!
 
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