'JUST 1.5M'........if this equates to an OAP on E62,000 , this person is by any stretch of ones imagination, very well off - not rich, but very very comfortable..Today's alternative budget from our potential next governing party strongly advocates for a reduction in the Standard Fund Threshold for pensions from the current €2M (effective €2.15M) to just €1.5M.
Should anyone close to the €1.5M threshold stop all pension contributions now ? Seems prudent as government meddling is probably the biggest unquantifiable risk to medium and long term pension savings.
So we should all be equal and divide all the wealth in the country. I think there is a term for that?'JUST 1.5M'........if this equates to an OAP on E62,000 , this person is by any stretch of ones imagination, very well off - not rich, but very very comfortable..
Average wage is c.40k
c.50% of the population have no pension provision.
Context people.
Mean earnings are more like 50k, not 40k.
Mean earnings in 2020 were 50,076, and so are higher by now.
Mean earnings for FT workers are obviously above the average, so are maybe 55k now.
Thanks, I see that now. Must have been explained at the press conference.The €1.5m is in the Irish Times story today as well.
am I correct in saying this has no impact on public sector workers who have in effect achieved same through DB scheme?
One rule for private sector and another public.
100%. To get a PFT, your pension must be over the new lower threshold when it comes in, not the projected value. This especially applies to those in DB pensions.Thanks, I see that now. Must have been explained at the press conference.
So, what to do?
Nothing would be my suggestion. If I had a pension fund in excess of €1.5m, I would just keep contributing up to the current SFT.
SF’s proposal may never come to pass. And even if it does, it is highly likely that folks will be able to apply for personal fund thresholds.
Hospital consultants are already getting hammered with a pension threshold of €2m, with all of them breaking it. A drop of €500,000 in pension threshold will cost them €200,000 in tax and the remaining €300,000 will be taxed under PAYE. They will get €156,000 out of that €500,000. An effective tax rate of 68.8%Incidentally, if SF’s proposals were adopted it would cause absolute havoc.
For starters, hundreds of very experienced hospital consultants would retire early. That’s the main reason the Tories dropped the lifetime allowance in the UK.
'JUST 1.5M'........if this equates to an OAP on E62,000 , this person is by any stretch of ones imagination, very well off - not rich, but very very comfortable..
Average wage is c.40k
c.50% of the population have no pension provision.
Context people.
Probably. To fund a Garda's pension is about 2 million at this stage.
Most of these hospital consultants are in the public sector superannuation scheme. Many of them will get a final salary pension of 50% of their, quite large salaries, ( average 200k plus) and a tax free lump sum of 200k ?Hospital consultants are already getting hammered with a pension threshold of €2m, with all of them breaking it. A drop of €500,000 in pension threshold will cost them €200,000 in tax and the remaining €300,000 will be taxed under PAYE. They will get €156,000 out of that €500,000. An effective tax rate of 68.8%
Nobody said we should be equal and divide all the wealth in the country.So we should all be equal and divide all the wealth in the country. I think there is a term for that?
Most of these hospital consultants are in the public sector superannuation scheme. Many of them will get a final salary pension of 50% of their, quite large salaries, ( average 200k plus) and a tax free lump sum of 200k ?
If thats the case the additional pension benefits are from savings or monies that they contribute to investment based pension instruments.
So wouldn't they just be better off paying their taxes and then, if they have excess income, saving it or investing it, then using that money to supplement their enormous pension.
Forgive me for playing the tiniest violin, in sympathy for these guys, but come on!!
But contributions to the Superannuation scheme are fixed and compulsory. The pension is taxed as income, same as any other income, though not subject to PRSI. There is no diminuition in that pension benefit, it only seems to apply to additional pension contributions used to supplement the employee superannuation scheme.Isn't the point though, that there is diminishing returns beyond a certain point. Pension is accrued with service but beyond a certain point, as pension benefit increases, the tax rate increases beyond the marginal rate on earnings. Thus, its beneficial to only have earnings at the marginal rate and therefore, its necessary to leave the public sector as the pension/earnings split is fixed.
No, of course not. Don't exaggerate. But many many working people either have no pension provision or own their own homes.So we should all be equal and divide all the wealth in the country. I think there is a term for that?
Lots of working people don’t need any pension provision because the State Pension will be more than enough for them.No, of course not. Don't exaggerate. But many many working people either have no pension provision or own their own homes.
1.5milllion pots is beyond most people's dreams. You don't need to be subsidies any more.
The value of a hospital consultant's public service pension is over €2m without AVC's or personal pensions. In other words they are in a compulsory scheme that will give them a massive tax bill at retirement, which will reduce the pension that they are entitled to.Most of these hospital consultants are in the public sector superannuation scheme. Many of them will get a final salary pension of 50% of their, quite large salaries, ( average 200k plus) and a tax free lump sum of 200k ?
If thats the case the additional pension benefits are from savings or monies that they contribute to investment based pension instruments.
So wouldn't they just be better off paying their taxes and then, if they have excess income, saving it or investing it, then using that money to supplement their enormous pension.
Forgive me for playing the tiniest violin, in sympathy for these guys, but come on!!
Context: 1.8m taxpayers (63%) earn less than 40k out of 2.9m taxpayers. They earn 26.5% of the income and they pay 8% of the tax burden. 35% of those taxpayers are entirely exempt.
They are incentivised not to make pension provision and live effectively tax fee.
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Indeed, but tell me if any of those who don't take the state pension despite having large pension provision..Lots of working people don’t need any pension provision because the State Pension will be more than enough for them.
€1.5m isn’t that much if it has to sustain two people for the duration of their lives.
As for ‘subsidies’, I remember looking at the calculation and the State will defer getting about €600k from a decent earner and then get millions in tax down the line, having assumed none of the risk. Pensions for high earners are great for the State!
Everybody pays tax. Ever heard of VAT?Context: 1.8m taxpayers (63%) earn less than 40k out of 2.9m taxpayers. They earn 26.5% of the income and they pay 8% of the tax burden. 35% of those taxpayers are entirely exempt.
They are incentivised not to make pension provision and live effectively tax fee.
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