Steven Barrett
Registered User
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Interestingly, the lump sum payment isn't being increased. This is fine, the threshold was the area that needed to be addressed.
I presume that’s 254 people with private pensions who paid Chargeable Excess Tax. Not surprising. The amount of people who haven’t yet triggered the tax or who are stuck at €2m would be much larger.According to Pearse Doherty 254 pensions were above 2m last year, assume he meant private pensions. https://www.irishtimes.com/politics...plated-pensions-of-elite-says-pearse-doherty/
Obviously there are some people ensuring their pensions stays under the limit and the majority of pensions are not close to being drawn down.
However at a guess there are 500,000+ private pensions, clearly for the vast majority the SFT is not an immediate problem.
In my view hitting a simple inflation adjusted 2m let alone 2.8m with average to twice average income requires consistent high personal contributions over 40+ years, a chunk of luck in fund selection, very low fees (only recently becoming available) and generous employer contributions. Most won't get anywhere close.
Someone on €130,000,
Average full-time earnings economy-wide are about €55k.I don't think they would be consider high earners.
Donal de Buitléar is a very smart guy.Why do you think the SFT should be inflation-adjusted but the lump sum shouldn't? Isn't inflation universal?
i imagine the tfls was envisaged to allow retirees to pay off outstanding debts eg mortgage. I dont see why those debts wouldnt increase generally along with inflation.Donal de Buitléar is a very smart guy.
The SFT means some of a pension pot is taxed punitively. The TFLS means that another part is not taxed at all. This is hardly efficient and probably not equitable.
In de Buitléar’s report the SFT would be indexed to inflation. Meanwhile he is quietly suggesting that the TFLS be eroded by inflation over time.
Over time this would mean the whole pension pot being taxed at closer to the same rate.
In the past and when it was designed in I suspect that this wasn't so much of an issue - even if it may be more relevant today? Does anybody know the origin story for the TFLS? I always thought it was an odd thing. In the past many people probably wouldn't have had a pressing need for a retirement tax free windfall. Whatever about a want. And when the fundamental idea of a pension is to provide an ongoing income in later life, to erode the pot by taking a quarter of it as a tax free lump sum seems a little counterintuitive. Was it designed in to encourage people to save through their pension in the first place?i imagine the tfls was envisaged to allow retirees to pay off outstanding debts eg mortgage. I dont see why those debts wouldnt increase generally along with inflation.
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