Should people be allowed draw down their pension at 50?
As your concern is only those who get tax relief on contributions, retire early AND continue working, you will be comforted to know that he probably didn’t get much in the way of tax relief as he wouldn’t have paid much in the way of contributions over his career – certainly nothing approaching the 2M-2.5M value of his pension package. I doubt his total career contributions came close to even covering the lumpsum amounts.
But just taking this as an example of where your logic falls down:
- He retired early with a lump sum of 270K and a pension of 63K – and you are totally okay with this because it is just early retirement which you don’t have a problem with. He will pay income tax on his 63K which will bring him into the higher tax bracket so every marginal euro earned will be at 52% tax.
- Irish Water needed a senior manager, let’s say on 100K. If the person appointed had no other income (so just a regular non-retired person), they would pay tax of c. 37.5K. But because the appointee is a retiree with other income already putting him in the highest tax bracket, he will pay 52K tax on the 100K salary. So the government gains 14.5K tax.
Your whole argument seems to be a bit dog in the manger: you’re okay with the concept of taxfree lump sums and you’re okay with the concept of early retirement but you just don’t seem to want people working while ‘retired’ – even though it should actually increase overall revenue tax take.
I could understand more that you didn’t like taxfree lump sums or even that you didn’t like early retirement because it spreads the pension fund as a smaller amount over a longer time period – so average tax rates on it will be lower. But given that you are okay with both these things and ‘working in retirement’ actually increases tax compared to the status quo, I am struggling to understand your argument – maybe you could give us a simple example of where you see a problem.
Great news for all of those in favour of early retirement while continuing to work;
http://www.irishexaminer.com/irelan...ed-with-334k-256103.html#.UuA5OUHvqP0.twitter
I detect a hint of sarcasm in your post. Obviously, this news story doesn't prove your point that early retirement whilst continuing to work should be forbidden. One example of a person who has benefited excessively doesn't mean that the entire system should be changed.
Look at it another way, this person is likely to be using up their entire lower rate tax band allowance in their new employment and paying tax/USC at the top rate on their entire pension income.
This article would make me question a couple of things: -
- Mr O'Dwyer's pension package from the County Council seems very generous. But I don't know the man or his work so I'm in no position to comment on whether or not he deserved such a generous package when he retired. That would be a matter for whoever decides on what the public service pensions should be.
- It's also notable in the article that Irish Water seem to be recruiting a lot of retired County Council employees. I would question whether or not such people are the most suitable for the positions and if an open enough search was done to fill these positions. Again I don't know the people involved so I'm not in a position to comment on whether or not they were the most suitable.
But I can't see how this has anything to do with the thread here?