State Pension Forecasting ....

C

Codogly

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Hi all,
It’s been said here many times in the past that we all anticipate that the state pension down the road is likely to look very different , either a smaller pension or changes to the qualification conditions based on the forecasted change in population profile.
My question for discussion : is there any case to be said for NOT starting an personal / occupational pension for fear that you will effectively end up disqualifying yourself from the new look state pension which might well be means tested.
 
Unless there is radical reform, the state pension will have to be reduced or means tested.

If you don't have a private pension, you will qualify for the state pension, but it might be reduced. So you are probably better off with a private pension, whatever the outcome.

Brendan
 
My best guess is that the governments of the future know fine well they have two major issues :
1. Backlash from taxpayers ( what about all the prsi I paid ?)
2. The left argue that pensioners need a minimum pension to survive.

Example of possible solution the government will use : Reduce state pension to say 5k ... this way reducing the cost to the state and at the same time not actually disqualifying anybody who has paid their full prsi contributions. But what about the fact that no pensioner could survive on 5k ? ... simply introduce a supplementary pension top-up which would of course be means tested ( top up could be as much as 7/8k ).
The big looser in this scenario - middle income taxpayers who have all cut their cloth to measure and lived within their means and provided for their future only to have their rightful entitlements stolen from them in order to funds persons who have not provided for their future ( understandable some of these are very low income persons ... this is why we need compulsory pension contributions to ensure that everybody is contributing to the solution )
 
No.

Payment rates might fall in real terms but they will almost never means test the contributory state pension.

Almost never ≠ 0% chance.

But this is the absolute bedrock of the social insurance system.
 
Codogly said:
My best guess is that the governments of the future know fine well they have two major issues :
1. Backlash from taxpayers ( what about all the prsi I paid ?)
2. The left argue that pensioners need a minimum pension to survive.

Example of possible solution the government will use : Reduce state pension to say 5k ... this way reducing the cost to the state and at the same time not actually disqualifying anybody who has paid their full prsi contributions. But what about the fact that no pensioner could survive on 5k ? ... simply introduce a supplementary pension top-up which would of course be means tested ( top up could be as much as 7/8k ).
The big looser in this scenario - middle income taxpayers who have all cut their cloth to measure and lived within their means and provided for their future only to have their rightful entitlements stolen from them in order to funds persons who have not provided for their future ( understandable some of these are very low income persons ... this is why we need compulsory pension contributions to ensure that everybody is contributing to the solution )
Click to expand...

middle ireland tax payer will be rinsed in order to placate the media , the political left ( which is now the majority from what i can see ) and the population which didnt invest in a private pension
 
Codogly said:
My best guess is that the governments of the future know fine well they have two major issues :
1. Backlash from taxpayers ( what about all the prsi I paid ?)
2. The left argue that pensioners need a minimum pension to survive.

Example of possible solution the government will use : Reduce state pension to say 5k ... this way reducing the cost to the state and at the same time not actually disqualifying anybody who has paid their full prsi contributions. But what about the fact that no pensioner could survive on 5k ? ... simply introduce a supplementary pension top-up which would of course be means tested ( top up could be as much as 7/8k ).
The big looser in this scenario - middle income taxpayers who have all cut their cloth to measure and lived within their means and provided for their future only to have their rightful entitlements stolen from them in order to funds persons who have not provided for their future ( understandable some of these are very low income persons ... this is why we need compulsory pension contributions to ensure that everybody is contributing to the solution )
Click to expand...
Arguing that pensioners need a minimum pension to survive seems pretty middle of the road to me. I’m trying to imagine how far off the political scale you have to be to consider that position an argument of ‘the political left’.
 
The question I’m posing here is should middle income Ireland consider the merits of not paying twice for only one pension
 
time to plan said:
Arguing that pensioners need a minimum pension to survive seems pretty middle of the road to me. I’m trying to imagine how far off the political scale you have to be to consider that position an argument of ‘the political left’.
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depends on what is meant by " minimum pension "

250 per week is too generous IMO , its about 50% higher than in the UK
 
I’d agree with Galway blow in ... thst would be a good starting point to reduce the state pension and start to make it affordable
 
galway_blow_in said:
depends on what is meant by " minimum pension "

250 per week is too generous IMO , its about 50% higher than in the UK
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It’s 25% higher than the UK minimum income guarantee and that differential has only really materialised due to the fall in GBP since the 2016 EU referendum. Also take into consideration that the cost of living is higher in Ireland

But how much do you think it should be?
 
Codogly said:
I’d agree with Galway blow in ... thst would be a good starting point to reduce the state pension and start to make it affordable
Click to expand...
If affordability is what you’re looking for, then you could decrease it for the middle classes, which is effectively what the UK has done by having pension credit top ups to produce a minimum income guarantee.
 
That’s exactly what I’m anticipating ...this my original question : should those of us currently paying into a private pension consider stopping , take the tax hit now and keep the net proceeds and qualify for the pension which we paid for with our prsi
 
Codogly said:
The question I’m posing here is should middle income Ireland consider the merits of not paying twice for only one pension
Click to expand...

It's one hell of a risk to take just because the State Pension might become means tested in the future.

Personally I'd say that it would be highly unlikely that they would do this in any of our lifetimes. Bear in mind that all Public Servants who joined after 1995 are expecting the State Pension and have their occupational pension designed around this expectation. Good luck to any government who tries it.

Anyway, what would be your alternative? If you save money outside of a pension your savings will still be means tested. So what do you do instead - spend it all during your working life so that you'll be sure to have €248 per week (and no more than €248 per week) to live on in retirement?
 
Codogly said:
That’s exactly what I’m anticipating ...this my original question : should those of us currently paying into a private pension consider stopping , take the tax hit now and keep the net proceeds and qualify for the pension which we paid for with our prsi
Click to expand...

You'd have to spend the net proceeds. If you keep it, i.e. save it, your savings will still work against you in a means test.
 
time to plan said:
It’s 25% higher than the UK minimum income guarantee and that differential has only really materialised due to the fall in GBP since the 2016 EU referendum. Also take into consideration that the cost of living is higher in Ireland

But how much do you think it should be?
Click to expand...

a couple here receive 500 euro per week between them , the same does not happen with a couple on the state pension in the UK ( X2 ) so the difference is more than 25% in many cases
 
Codogly said:
That’s exactly what I’m anticipating ...this my original question : should those of us currently paying into a private pension consider stopping , take the tax hit now and keep the net proceeds and qualify for the pension which we paid for with our prsi
Click to expand...
I would say not on the basis that if you have to be poor to qualify for the maximum pension, it will not be a great standard of living.
 
So what if GB pensioners earn less than Irish? If that's your methodology why aren't we comparing wages/salaries with them as well? Thankfully we have at least a free 26 counties that are free to make up their own minds.
 
While it frustrates me that I’m paying a lot of prsi for a pension I’ll probably never get I do agree with the overall sentiment above that providing for a private pension remains the better option to try and ensure a decent future.
 
Codogly said:
I’m paying a lot of prsi
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No you're not. Social insurance contributions as a share of salary in Ireland are among the lowest in the developed world.
Codogly said:
For a pension I’ll probably never get
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You will get a contributory state pension. It might not be as high in real terms as today but the thought that the state will fully default on old people, its most reliable voters, is ridiculous.
 
We are vaccinating old people who mostly stay at home, and not vaccinating young people who must go out to work in supermarkets, schools etc.

The death grip the old have on Irish society, that will not change anytime soon. The pension funding crisis will not be resolved at the expense of the old.
 
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