Varadkar: "We need to cut tax but increase social insurance to get a fair society"

I agree. Someone who can fund that themselves is already part of the 10% who contribute 50% of the tax and probably 80 to 90% of the net contributions when social transfers are taken into account. Getting the tax deferred on their income for all pension contributions is the least they should get.
My problem is with people getting that sort of pension without contributing to it in any meaningful way.
 
Sarenco said:
Incidentally, the full contributory State pension has an actuarial value of around €350k - that's hardly a trivial sum by any standards.
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What payments would someone have to make over 40 years to fund that? I recon it is around €600 a month.
Given that PRSI covers disability and dole etc you'd have to be paying well over €1000 a month in PRSI (between you and your employer) to fund your State pension.
 
someone now on 55000 started paying 9% of there gross wages since 1990 would have a pension pot of around 500000 now that would buy them 20000 a year at 65 for the rest of there life same amount would buy around 18500 per year and the surviving spouse 9250 for the rest of there life.
 
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you can see how the 17% + paid by employer employee is away more than is required .Then we should have a USC type payment into which everyone paid to cover to cover universal social charges.This would mean Government giving away this money unfairly would get there wings clipped and dismissed .In some countries people who are required to retire lets saw at 60 pay more
 
That's €412 a month if it's paid on your full income. I'm getting a fund value of €362,000 using the . That gives a pension of €974 a month.

The total PRSI payable for a single person is €2,200. The total USC is €2,040. Even if all of it went towards pensions it still wouldn't cover the cost of the State pension. Given that USC doesn't go towards pensions and PSRI covers far more than pensions it's reasonable to say that a person on €55,000 doesn't even cover 25% of their pension cost through PRSI.
 
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Are you assuming this person has earned exactly the same income for the last 26 years (i.e. an annual contribution of €4,950 for each of the last 26 years)? You also seem to be assuming a compound annual growth rate (after all fees and expenses) on the contributions of around 8% per annum to get to €500k after 26 years - that's a pretty impressive performance!

Also, has this person long to go before they reach 65 and what assumptions are you making in terms of contribution and growth rates between now and then?
 
I do not know what his wages were in 1990 but I will get back when I find out .The reason I know is he took his 25% cash and put the rest into an Arf a few months ago .When he first spoke to me he thought there was around 450000 in the pot later he told me there was closer to 500000 in the pot.I know it has done well since 2004.
 
Purple If you look at what someone was paying in PRSI on lets say 55000 in 2009 as an example

They paid 4% on the first 127 each week or a total of 4% on 6604 total prsi 264 euro
They paid 8% on the balance of 48396 or a total of 3871euro
There employer paid 10.75 on 55000 or a total of 5912
Total stopped 10047 euro that is some tax/PRSI on an employer/employee
total of 10047 euro taken in total almost the same as a person would get in a pension if they were 66.. when i go back and look at my p60 total take is around the same as someone getting the old age pension in that year.anyone on around 55000 now would always have being caught for total prsi.
 
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jjm2016 said:
I do not know what his wages were in 1990 but I will get back when I find out.
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Oh, that was an anecdote! I assumed from your use of the word "someone" that it was a hypothetical.

With respect Jim, the lack of any detail whatsoever about what was actually contributed by your friend and/or his employer to the pension pot makes this story absolutely meaningless. It certainly doesn't come anywhere close to demonstrating that workers, on average, are over-paying for their contributory State pension if that's your contention.

Your repeated false assertion that employees paid a rate of PRSI in excess of 4% in 2009 is just tedious at this stage.
 
What do you come up with for someone on 55000 in 2009.total please.No one yet has shown an example .I expect i will be waiting for ever but lets see what you come up with.
 
Even if that is correct you are ignoring that PRSI is meant to fund lots of other things as well as the contributory Pension. It also funds the non-contributory pension, sick leave, Dole etc. In reality it all goes into the same pot but even if it didn't only a proportion would go towards pensions. Prior to 2009 there was a PRSI ceiling after which you stopped paying as you had contributed your fair share (a good idea).

This is the Welfare Guide on PRSI from 2009. The low rate, in the first 127 each week was 2%. Income after that, up to €1925 per week, was 6%.
From the link;

 
Purple I always thought your training would lead you to check your facts.When you get a chance check again and give an example for someone on 55000 euro and show me where I am going wrong please .take 2009/2010.I expect the Government will once again put stealth tax back on top of the working people paying PRSI A1.This will mean that doing away with the USC will not apply to workers.There are lots of posters back around 2009 pointing out that total take on PRSI A1 earners was around 50% 4% prsi and the top rate of tax would not come near 50% so were the posters incorrect then .Purple if you Google PRSI claas A1 2009 or any other year for that matter you will find correct rate.(PRSI A1 is for people earning over 26000 per year or 500 per week it will bring you straight to the USERS GUIDE which payroll use.. Its looks like you have being looking at the rate for someone on over 500 per week on a medical card
 
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Read the link I posted!
Purple said:
This is the Welfare Guide on PRSI from 2009. The low rate, in the first 127 each week was 2%. Income after that, up to €1925 per week, was 6%.
From the link;
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For income over €1925 a week (€100,100 a year) it was 6.5%
 
Purple in 2010 the took it up to 8% in 2011 the took it back to 4% and brought in the USC. Varadker is talking about putting the USC and PRSI back the way it was. meaning the only people who will still be paying it will be the people on PRSI Class A1.If you look at the Users guide for 2010 PRSI went to 8% ,If you look at the users guide for 2011 PRSIA1 is 4% this showes PRSI Class A! Were the only people paying a USC all along and it is heading back the same way again
 
I agree with your sentiment that low and middle earners are grossly under taxed and that the income tax burden in particular, and the tax burden in general, falls on far to narrow a band of people. We punish work and reward idleness. We are well on our way to a socialist "utopia".
 
Purple We are not on our way to a Socialist '' utopia. The people Who are twisting the facts are getting help from the Socialist which is a different thing.If you google Advance notice of PRSI changes for computer users 2017 .The thing that jumps out at you is the right hand figure total paid by Employee and employer .There are groups getting away at paying very little PRSI (CLASS A1).In the Uk self employed pay 11.5% in PRSI I will admit I do not know what the get in return I am sure posters will let me know .
 
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Purple I hope you don't mind me correcting you.I have always referred to(PRSI CLASS A1 As the group where Employer and employees get singled out for extra taxes.What I am pointing out before it happens.If you are looking for proof look no further than all the people on hear trying to muddy the water .At present high earners are being screwed on PRSI A1.When the USC came in they changed the PRSI fron 8% to 4% now high earners have to pay PRSI on all of there wages.I don't hear anyone saying we need put the ceiling back to where it was before we cut USC for PRSI A1 taxpayers on high income.PRSI A1 are the group I always referred to some posters leave the Class A1 out to muddy the waters .A1 is for people over 26000 at present Seeing the always paid away more there Pension should reflect this Leo can start giving them back the 42 euro a week he took off them between 65 and 66 who have to retire because of there contract of enployment .IF they have to go at 65 they now have to go on job seekers 193 Euro before they got the transition pension 233 euro between 65 and 66.The saving was 2184 euro I don't need to be reminded which Minister brought this cut in no wonder they are at 4% LIKE PRSI HOPEFULLY THE WILL NEVER GO AS HIGH AS 14.75% like PRSI A1 TAXPAYERS PAY IN TOTAL.
 
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Back on topic (kind of);
Do people agree with Leo that we should be prioritising those who "get up early in the morning"?
 
Personally I feel that was too loaded a statement and no advice was given/taken before its utterance. I know he tried to explain the meaning later on, but its implication had been registered in peoples brains. I would expect a lot more gaffes from Leo down the line.
 
Why was it a gaff?
The State should be giving most support those who contribute to the collective good, be that through wealth generating work or those providing public services. I don't see anything wrong with that.
 
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