Sinn Féin Budget reducing the SFT to €1.5M

[T McGibney]

So do nurses, and fire fighters, and paramedics and a host of emergency workers. Hospital Consultants are part of highly skilled, highly complex teams and, on their own, they can't do anything.

The rates for nurses, and fire fighters, and paramedics and a host of emergency workers and hospital consultants are all dictated by the respective markets for the people capable, trained and qualified to do the work in those fields.

Again, I have no objection to high salaries, for high skills, but shouldn't that be enough? They still get all the tax benefits, for pension purposes, up to the SFT. I don't see why it needs to be as high as it is.

Again, the market decides that, not you or I.

 

[clinteastwood]

Until you have no consultants left to hammer. Genius.

..off they go then, mind how you go. Has Ryan T got a job yet?

 

[clinteastwood]

Have a good weekend folks!

 

[Allpartied]

Where? Down the pub and on Askaboutmoney?

And at home, in front of the telly....

 

[Itchy]

So, let me have a go.

Consultant Pensionable Remuneration 250K ( old D Rate scheme)

40 years Service gives pension of 125K ( assuming retirement at 65)

And lump sum of 375k.

Tax on lump sum is 20% of 175k = 35000

Value of pension for the purpose of SFT is 20 x 125k = 2.5million

Current SFT = 2m

Leaving an excess of 500k and a tax bill of 200k ( minus 35k, paid as part of lump sum?) = 165k

Using the interest free loan to repay, the annual bill is 8500 Euros, or 687 per month.

New proposed SFT = 1.5m

Excess = 1m and a tax bill of 400k - 35k = 365k

Using the interest free loan to repay, the annual bill is 18250, increase of 9750 Euros per annum.

Remembering that the tax bill remains the same, whilst the pension continues to increase in line with Consultant Pay rates, that is not too bad.

In addition, the Widows and Childrens element remains, after death, without penalty, the tax liability being written off upon demise.
The application of PFT is also not included in these calculations.

Have I got that right?

Retirement in 2034, years of service: 40, Age 65

Pension: 250k * 40/80 = 125k
Accrued Pension @ 1/1/14: 250k * 20/80 = 62.5k
Capital Value @ retirement: [(62.5k *20) + (125k-62.5k)*26] = [1250k + 1625k] = 2,875k
Retirement Lump Sum: [125k *3] = 375k -> 340k net

Capital Value: 3,250k

Gross Chargeable Excess: 3250 - 2000 = 1250 * 40% = 500,000 - 35000 [175k*20%] = 465,000

Reduced SFT: 3250 - 1500 = 1750 * 40% = 700k -35 = 665k

465/20 = 23.25

Effective tax rate on 125k pension: 40%
Effective tax after chargeable excess (23.25 + 50)/125 = 58.6% but only for 20 years

 

[Dr Strangelove]

Its a retirement income, guaranteed by the state, increasing with inflation and payable for life.

Not quite. All increases are paid at the discretion of the Minister for Finance. Inflation has eroded PS pensions at times and during the recession they were reduced.

I don’t mean to undersell PS pensions (not least because part of my own pension income will be one), but there is complete inflexibility involved in them, specifically around when and how much you can draw down. The only choice you basically have is the day you retire.

For example on AAM I frequently see examples of people drawing down pension income from previous employment at age 50, while still being in other employment and not planning to retire remain so for quite some time.

 

[Itchy]

..off they go then, mind how you go. Has Ryan T got a job yet?

Almost 1,000 hospital consultant posts are not filled on a permanent basis, with some lying vacant for years, figures show.

Last month, 480 consultant posts were vacant, including 323 that are newly created and currently under recruitment, according to the Health Service Executive.

A further 356 permanent posts are filled on a temporary or locum basis, while 68 are filled by agency staff. The status of 29 posts is unknown, but are likely to be vacant.

The 933 posts not filled on a permanent basis last month – more than one-fifth of all posts – compares with 720 in September 2021.

One in five vacant posts have remained vacant for more than two years, according to the figures provided by the HSE to Sinn Féin health spokesman David Cullinane.

Almost 1,000 hospital consultant posts not filled, with some vacant for years, figures show

Over one-fifth of all posts had no permanent incumbent last month, a significant increase on 2021

www.irishtimes.com

 

[Fortune]

But the PFT of 2.3m would apply up to 2014? and 5.4m up to 2008. Which would make up over half the capitalised value?
So, tax liability would , probably, be substantially lower than my example.

My main point is that very high earners get well paid throughout their career, and pretty well paid in retirement.
These reductions are designed to make best use of public money. Whilst a modicum of assistance to pension fund accumulation is good practice, there needs to be a limit.
Very well paid people have huge potential for investments, savings and other acquuisitions, with their post tax salary. They really don't need excessive help from the ordinary tax payer to inflate their pensions.

They would have had to (and be able to) apply for a PFT in 2008 or 2014. It's possible that they didn't/couldn't.

 

[Gordon Gekko]

I’m not being naive about it, but the average salary figures for Ireland always seem much lower than you’d expect.

Is there something in them that makes them nonsensical? e.g. part-time workers or students or stay-at-home parents or retirees bringing the number down artificially?

Or that company owners or the self-employed such as Partners in professional firms don’t count?

The numbers just don’t feel right. If someone gave them to me to review before publishing them I’d feel that there’s something missing.

 

[Allpartied]

I’m not being naive about it, but the average salary figures for Ireland always seem much lower than you’d expect.

Is there something in them that makes them nonsensical? e.g. part-time workers or students or stay-at-home parents or retirees bringing the number down artificially?

Or that company owners or the self-employed such as Partners in professional firms don’t count?

The numbers just don’t feel right. If someone gave them to me to review before publishing them I’d feel that there’s something missing.

Retail, care, tourism, food, catering, factories, cleaning services, labourers. These are the biggest employment sectors in Ireland. They pay minimum wage, or just above to most...

 

[nest egg]

We're far from outliers though

List of European countries by average wage - Wikipedia

en.wikipedia.org

 

[Bluefin]

I love how this has degenerated into having a go at medical consultants and surgeons, and their levels of pay.

They’re literally surgeons.

Years of study, smart to begin with, crazy training, crazy working hours.

I can’t wait to see this socialist utopia where intelligent high achievers who work extraordinarily hard and earn lots of money get shafted because the lazy or the stupid think that nobody should be paid that much.

As I’m still on planet earth due to one of those overpaid surgeons ,my only observation is that they are seriously overworked- the amount of unseen hours they do in emergencies and weekends, they are not paid half enough.

 

[Sunnygirl69]

This has gone serious off topic....
Yes clinicians should be paid a really good salary.
No clinician should be earning almost a million euro from public work as recently reported in IT.
There is such a split in Irish society, many workers with nothing left after all their bills are paid.
Many well educated young people desperate to get on the property ladder.
If this is reduced to €1.5 million it won't bother them!

 

[Marsupial]

There is such a split in Irish society, many workers with nothing left after all their bills are paid.
Many well educated young people desperate to get on the property ladder.
If this is reduced to €1.5 million it won't bother them!

And in what magical way will reducing the SFT to €1.5m improve the lot of those many well-educated young people?

 

[T McGibney]

No clinician should be earning almost a million euro from public work as recently reported in IT.

If someone's work is saving a lot of lives, why shouldn't they be paid the going rate?

 

[Itchy]

If this is reduced to €1.5 million it won't bother them!

Please explain the financial advice you would give to a highly paid public servant who has many years until retirement, has reached the SFT of retirement benefits and has the opportunity to match or exceed their current remuneration in the private sector with the associated flexibility to favourably structure their affairs?

 

[Sunnygirl69]

And in what magical way will reducing the SFT to €1.5m improve the lot of those many well-educated young people?

Didn't say it would improve their lot. Merely making a comment on the post.

 

[Sunnygirl69]

If someone's work is saving a lot of lives, why shouldn't they be paid the going rate

 

[Sunnygirl69]

It's nothing to do with not being paid the 'going rate'. They should be paid a capped very good salary for X amount of hours.

 

[Sunnygirl69]

Please explain the financial advice you would give to a highly paid public servant who has many years until retirement, has reached the SFT of retirement benefits and has the opportunity to match or exceed their current remuneration in the private sector with the associated flexibility to favourably structure their affairs?

Why would I give a highly paid public servant financial advice.