Will the government raid people's pension funds again for COVID-19 and can anything be done to stop them?

Lisboa said:
The pension levy tax was 0.75% but on the other hand tax relief on pension contributions is 20% , or 40% for high earners.
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I believe the 0.75% was in relation to the whole pension pot, the capital, and not the contributions.
Its like ignoring an 1% Annual Management Fund charge, on a very very modest 100,000Euro fund amounts to a 1000Euro per annum charge which is not insignificant.
 
Hello,

Personally, I think the financial impact of Covid-19 would have to get a hell of a lot worse, before this should even be getting a serious mention and even then, it should only be mentioned as part of a series of actions to raise funds, with the more wealthy being "taxed" notably more.

The state has aspirations of getting everyone into a private pension, over the years ahead. Just think about how much they'd undermine that aspiration, in fact that need, if the government dips into private pensions again, without it clearly being a near very least resort.
 
MrEarl said:
Hello,

Personally, I think the financial impact of Covid-19 would have to get a hell of a lot worse, before this should even be getting a serious mention and even then, it should only be mentioned as part of a series of actions to raise funds, with the more wealthy being "taxed" notably more.

The state has aspirations of getting everyone into a private pension, over the years ahead. Just think about how much they'd undermine that aspiration, in fact that need, if the government dips into private pensions again, without it clearly being a near very least resort.
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I think they did the damage by dipping into pensions the last time.
They would never ever repair that damage if they did it again. But it would not surprise me if they did.
If they do want to encourage people to put money in pensions then taking money from them every few years is certainly not going to do that.

In our case we THINK we may not be getting tax benefits from our AVCs in the long term. We were happy enough to leave it though as would pay the same tax on the way out. But the specter of our leaders going in and helping themselves to it has made us think long and hard about paring back on AVCs.

I dare say if we were only thinking about starting a pension we definitely wouldnt go ahead with it now. We would be waiting to see if the hand does go into peoples pensions in the next couple of years first.
 
fidelcastro said:
I believe the 0.75% was in relation to the whole pension pot, the capital, and not the contributions.
Its like ignoring an 1% Annual Management Fund charge, on a very very modest 100,000Euro fund amounts to a 1000Euro per annum charge which is not insignificant.
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Yes, it sickens me to see people with vested interests trying to say that that is OK because it is not much money.

They wouldnt say that about 1% extra on their mortgages.
 
JamieV said:
Yes, it sickens me to see people with vested interests trying to say that that is OK because it is not much money.

They wouldnt say that about 1% extra on their mortgages.
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You’re right. People should avoid pensions and end up with far less in retirement. That’ll teach the government for taking a small amount from people’s pension funds during the biggest financial crisis in the history of the State.
 
Lisboa said:
I doubt they actually said that word for word, more a case of they don't have time to check every applicants background to see if they have an eligible visa.

Not just illegal immigrants, but also foreign students who are only allowed to work 20 hours per week, likely on minimum wage or thereabouts, who, when working, would actually be earning less than the 350 a week which the Covid payment is now paying them.
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So it's a total non-issue, as I expected. They'd have to have a PPSN and have been working on that relevant date to have qualified for the payment. There's 20k so-called "undocumented" in Ireland. It's bizarre to think that there's a material level of them claiming the COVID payment. Nothing more than a dog whistle by the poster that originally raised it.
 
If this is a concern for anyone then they should seek out lower cost pension products, to offset the potential impact.

A lower contribution cost here, the tweaking of an AMC there etc.

Maybe even increase the contribution to age related limit to claim max tax relief.


Gerard.
 
Gordon Gekko said:
No, I’m not. The nub of my argument is that avoiding pension products because of the pension levy is the height of stupidity.
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You're still not getting the point. Going into pensions that people have saved money into as part of a retirement plan (for a second time in a few years at that) is going be a disincentive for anyone who may be considering putting money into their pension. It is going to have a negative effect on pensions in the long term. It doesnt matter how much they are told that their investment will gorw or to seek out lower fees (which they should be doing anyway).

They will see the hand come in and what people had saved for their retirement. That is all 99% of normal people will see. It is going to discourage people starting pensions.

Anyway they havent done it, YET, so may be a bit premature talking about the effects of it.
 
JamieV said:
You're still not getting the point. Going into pensions that people have saved money into as part of a retirement plan (for a second time in a few years at that) is going be a disincentive for anyone who may be considering putting money into their pension. It is going to have a negative effect on pensions in the long term.
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From a public policy perspective and given the circumstances at the time it was introduced, it was arguably quite a shrewd policy. The degree of "disincentive" was proportional to the size of ones income and the apparent negative effects were actually positive for the state in that they taxed the otherwise tax relieved income. I cant understand why people found it objectionable that they were RECEIVING tax relief of 40.25% of their income rather than 41%?

Also the widespread discouragement of people starting pensions is a total red herring. Auto-enrolment is proposed because of widespread pension apathy. The introduction of 0.75% charge is not going to exercise the apathetic. AE would outweigh the introduction of such a charge by orders of magnitude.

I think these "stealth" wealth taxes are going to be a significant feature of our lives going forward. Particularly given the desire to avoid austerity over the next decade.
 
Does it really matter whether its pension levy or property tax or DIRT or wealth tax ...?
At the end of the day " why did Robinhood steal from the rich ( well middle income Ireland ) because the poor have f%$£ all."
Your right its absolutely wrong to steal money from pension funds , but this is a fact of life ; you spend your life working hard to build up savings to provide for your housing and retirement needs and then when you finally get their you spend you time worrying how to hold on to it.
I would suggest that middle income Ireland (always the target) will start to evolve ...moving their hard earned money around into various pots to avoid government targeting ... afterall its what super wealthy Ireland does ...!
 
I understand the charge was on the whole fund. However once the money was in it couldn’t be extracted. The only recourse was to not make that years contribution thus cutting off ones nose etc.
 
With all the money printing and other goings-on lately I have been having a lot of déjà vu moments and think the government dipping into your pensions is probably the least of your worries.

The issue many people are not discussing here and elsewhere is the effect of inflation caused by reckless monetary policies and rampant money creation, here and across the water.

I am not an economist so cannot argue the theoretical issues, but I can speak with a certain amount of experience as to the negative effects of hyper-inflation having grown up, worked and lived in Zimbabwe for the bulk of my earlier life. Amongst other things I lost my pension contributions to inflation during the financial crash brought about by Mugabe's money printing press in the late 90's and naughties. My mother's pension, built up over her working life, was likewise wiped out just before retirement. Those on fixed pensions became destitute overnight.

It wasn't all doom and gloom of course as there were a small number who benefitted (*) but overall it was not a pretty picture.

Anyone claiming it will not happen here ought to at least consider how they might cope later in life without a pension and develop alternative
wealth store strategies before it is too late. Not doing so means a life without retirement. Forewarned is forearmed as the well worn saying goes.

My two cents worth.

(*) Anecdotally I learned of several people on fixed rate mortgages who benefitted as their debts were essentially written off after a couple of years of rampant inflation.
 
Itchy said:
I understand the charge was on the whole fund. However once the money was in it couldn’t be extracted. The only recourse was to not make that years contribution thus cutting off ones nose etc.
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I'm sorry. Stopping one's AVC for those particular years didn't stop a O.75% charge to the capital already invested viz the complete pension pot built up.
The effect of the levy was not a reduction of relief from 41% to 40.25% as expressed in your earlier post.
There was no relationship to ones income. If I earned zero income for those years, my pension was deducted 0.75% of the total sum.
 
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