Tax on pensions/pensioners

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presidenttttt

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I feel like I don't know much, but that I know a lot more than many of my peers in late twenties and early thirties with regards to money and future planning. I had not appreciated that social insurance falls away and that the level one starts paying tax increases around 65/66. And as such the value of shoving money into a pension is even bigger than I had appreciated.

I found a very interesting blog article, and would appreciate any further additional related information or caveats.

€550,000 – €1,000,000​

  • €550,000 fund = €137,500 lump sum + €3,375 p/m (Income tax rate 4.44%)
  • €600,000 fund = €150,000 lump sum + €3,500 p/m (Income tax rate 5.71%)
  • €650,000 fund = €162,500 lump sum + €3,625 p/m (Income tax rate 6.90%)
  • €700,000 fund = €175,000 lump sum + €3,750 p/m (Income tax rate 8.01%)
  • €750,000 fund = €182,500 lump sum + €3,875 p/m (Income tax rate 9.03%)
  • €800,000 fund = €200,000 lump sum + €4,000 p/m (Income tax rate 10.00%)
  • €850,000 fund = €210,000 lump sum + €4,125 p/m (Income tax rate 10.91%)
  • €900,000 fund = €220,000 lump sum + €4,250 p/m (Income tax rate 11.76%)
  • €950,000 fund = €230,000 lump sum + €4,375 p/m (Income tax rate 12.57%)
  • €1,000,000 fund = €240,000 lump sum + €4,500 p/m (Income tax rate 13.33%)
Click to expand...

Reference: thepensionstore.ie/but-pensions-get-heavily-taxed-in-retirement-right-wrong/
 
You're absolutely correct

PRSI drops away at 66
Annual income tax exemption €18,000pa per spouse
USC reduced for medical card holders
Still get a PAYE deduction for income from an ARF

Pensions are a great way to save

Key Post - My pension pot has reached €800k - should I stop contributing ?

I am starting a new role in a company that does not have a pension scheme. They will offer a PRSA as they are legally obliged to do but they is no offer of contribution. I am aged 51 and I have other pensions that mean that all my future income will be at the higher rate of tax. Am I correct in...
www.askaboutmoney.com

Marc Westlake
Chartered Certified and European Financial Planner
www.globalwealth.ie
 
Pensions make so much sense in Ireland because most full-time workers will get relief at 41% on contributions, but face a much lower rate on drawdowns.
 
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