BillyNoMates
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If people are not putting their money into a pension with this level of charges and with all of the tax/[i said:PRSI [/i]relief available then it's hard to see what else will incentivise them.
It is arguably meaningless to compare SSIA and pension schemes since the former are totally liquid while the latter are locked away for decades in most cases. It looks like people are maybe going to need more stick (e.g. mandatory pension contributions) than carrot (e.g. low charges, generous tax breaks/deferrals) to prepare adequately for their retirement. On the other hand individuals need to take some responsibility for their own welfare and can't expect the state to handhold them all the way through life. Anyway, the tax breaks on pensions are much more attractive than on the SSIA especially for high rate taxpayers especially when the 25% tax free lump sum and no tax on growth are taken into consideration. On the other hand people may well face income tax on their pension income when they retire. I agree that a once off (?) tax exemption on rolling the SSIA over to a pension might be something that the Government should consider to kill a few birds (e.g. mitigate inflationary effects of maturing SSIAs, encourage people to top up their pensions etc.) with one stone. Of course, as mentioned above, many people - in particular the better off who could afford to maximise their SSIA contributions - have already obtained healthy benefits from the scheme so why should they get more? In the meantime perhaps certain agencies (e.g. MABS, the Consumer Association, AAMCarpenter said:This is the challenge! The government lamented the poor level of personal savings before introducing SSIAs. If the pension industry were to devise a product where the government would make a similar "top-up" as happens with the SSIA, would this be the way to go? I understand the tax relief already available should be incentive enough but clearly this isn't the case. The dividend for the exchequer in years to come, in terms of an older population who are better equipped to fund their retirement etc is surely worth an extension of the SSIA top up idea?
ClubMan said:It is arguably meaningless to compare SSIA and pension schemes since the former are totally liquid while the latter are locked away for decades in most cases. It looks like people are maybe going to need more stick (e.g. mandatory pension contributions) than carrot (e.g. low charges, generous tax breaks/deferrals) to prepare adequately for their retirement. On the other hand individuals need to take some responsibility for their own welfare and can't expect the state to handhold them all the way through life. Anyway, the tax breaks on pensions are much more attractive than on the SSIA especially for high rate taxpayers especially when the 25% tax free lump sum and no tax on growth are taken into consideration. On the other hand people may well face income tax on their pension income when they retire. I agree that a once off (?) tax exemption on rolling the SSIA over to a pension might be something that the Government should consider to kill a few birds (e.g. mitigate inflationary effects of maturing SSIAs, encourage people to top up their pensions etc.) with one stone. Of course, as mentioned above, many people - in particular the better off who could afford to maximise their SSIA contributions - have already obtained healthy benefits from the scheme so why should they get more? In the meantime perhaps certain agencies (e.g. MABS, the Consumer Association, AAMetc.) should consider raising awareness among SSIA savers that once the scheme ends they might be well served redirecting their erstwhile SSIA contributions to other savings and/or reducing outstanding debts?
Culchie said:I liked Dempsey's idea of a type of bond that would be used for Capital Investment in Schools and Infrastructure.
I wouldn't mind putting my SSIA money into a project that we all benefit from as an economy .... roads being an obvious one.
maevis1 said:Evening all,
Just a thought regarding the possible creation of a successor to the SSIA but designed to increase an individuals pension cover.
A similar scheme is set up whereby an individual can save/contribute (up to a fixed upper threshold) and the government contribute a percentage based top up, (not necessarily 25% but say 10/15%). The money saved is put into a suitable pension scheme/fund as normal. The difference being that instead of the money being locked away till retirement an option is available to cash in or redeem the governments contribution say every five years. It would be a form of rebate system.
Contributions to pension would increase and people would receive say a cheque for the governments contributed portion every five years.
Taking a simplistic view and using the current SSIA rates and thresholds a person saving the maximum amount would receive €3810 after five years and would have contributed €15240 to their pension.
Just a thought?
Regards
Have to agree with dam099 - as I've said before above there are arguably more than enough tax breaks, especially for the higher paid, to encourage them to contribute to pension savings. If this is not incentive enough (and the relative failure of PRSAs to significantly extend pension coverage seems to bear this out) then I suspect that we will eventually see some form of mandatory requirement to make pension contributions (most likely falling on both employers and employees). I certainly don't think that any sort of extension of the SSIA scheme should be considered even if the aim is to promote pension savings. Perhaps some incentive to roll maturing SSIA funds (in part or full) into pensions should be considered though. I also don't think that being able to liquidate pension savings before retirement is a good idea since the temptation will simply be too great for many people thus defeating the purpose. At the very least if early encashments of pension savings are allowed then they should be subject to significant tax clawbacks to discourage them.maevis1 said:A similar scheme is set up whereby an individual can save/contribute (up to a fixed upper threshold) and the government contribute a percentage based top up, (not necessarily 25% but say 10/15%). The money saved is put into a suitable pension scheme/fund as normal. The difference being that instead of the money being locked away till retirement an option is available to cash in or redeem the governments contribution say every five years. It would be a form of rebate system.
BillyNoMates said:AIB have recently raised the rate they offer on their online savings scheme to 3%-4.5% .
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