Sinn Féin Budget reducing the SFT to €1.5M

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Flybytheseat said:
Today's alternative budget from our potential next governing party strongly advocates for a reduction in the Standard Fund Threshold for pensions from the current €2M (effective €2.15M) to just €1.5M.

Should anyone close to the €1.5M threshold stop all pension contributions now ? Seems prudent as government meddling is probably the biggest unquantifiable risk to medium and long term pension savings.
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'JUST 1.5M'........if this equates to an OAP on E62,000 , this person is by any stretch of ones imagination, very well off - not rich, but very very comfortable..

Average wage is c.40k
c.50% of the population have no pension provision.

Context people.
 
clinteastwood said:
'JUST 1.5M'........if this equates to an OAP on E62,000 , this person is by any stretch of ones imagination, very well off - not rich, but very very comfortable..

Average wage is c.40k
c.50% of the population have no pension provision.

Context people.
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So we should all be equal and divide all the wealth in the country. I think there is a term for that?
 
Protocol said:
Mean earnings are more like 50k, not 40k.

Mean earnings in 2020 were 50,076, and so are higher by now.

Annual Earnings - CSO - Central Statistics Office

www.cso.ie www.cso.ie

Mean earnings for FT workers are obviously above the average, so are maybe 55k now.
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The mean fallacy.
Lets take a workplace with 6 workers.
5 earn 25k
The boss earns 200k.
The mean is 45k
But most people are way below the mean.

The median salary in Ireland is more accurate for assessing access to pensions. The median salary is about 40k, which means that half the population earn below that figure.
 
Dr Strangelove said:
The €1.5m is in the Irish Times story today as well.
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Thanks, I see that now. Must have been explained at the press conference.

So, what to do?

Nothing would be my suggestion. If I had a pension fund in excess of €1.5m, I would just keep contributing up to the current SFT.

SF’s proposal may never come to pass. And even if it does, it is highly likely that folks will be able to apply for personal fund thresholds.
 
Incidentally, if SF’s proposals were adopted it would cause absolute havoc.

For starters, hundreds of very experienced hospital consultants would retire early. That’s the main reason the Tories dropped the lifetime allowance in the UK.
 
Sarenco said:
Thanks, I see that now. Must have been explained at the press conference.

So, what to do?

Nothing would be my suggestion. If I had a pension fund in excess of €1.5m, I would just keep contributing up to the current SFT.

SF’s proposal may never come to pass. And even if it does, it is highly likely that folks will be able to apply for personal fund thresholds.
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100%. To get a PFT, your pension must be over the new lower threshold when it comes in, not the projected value. This especially applies to those in DB pensions.

Sarenco said:
Incidentally, if SF’s proposals were adopted it would cause absolute havoc.

For starters, hundreds of very experienced hospital consultants would retire early. That’s the main reason the Tories dropped the lifetime allowance in the UK.
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Hospital consultants are already getting hammered with a pension threshold of €2m, with all of them breaking it. A drop of €500,000 in pension threshold will cost them €200,000 in tax and the remaining €300,000 will be taxed under PAYE. They will get €156,000 out of that €500,000. An effective tax rate of 68.8%


*assuming no personal fund threshold.

Steven
http://www.bluewaterfp.ei (www.bluewaterfp.ei)
 
clinteastwood said:
'JUST 1.5M'........if this equates to an OAP on E62,000 , this person is by any stretch of ones imagination, very well off - not rich, but very very comfortable..

Average wage is c.40k
c.50% of the population have no pension provision.

Context people.
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Context: 1.8m taxpayers (63%) earn less than 40k out of 2.9m taxpayers. They earn 26.5% of the income and they pay 8% of the tax burden. 35% of those taxpayers are entirely exempt.

They are incentivised not to make pension provision and live effectively tax fee.

Income Tax breakdown by Gross Income

www.revenue.ie www.revenue.ie

 
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Towger said:
Probably. To fund a Garda's pension is about 2 million at this stage.
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Well if the State are going to mandatorily retire them early, its going to be an expensive pension.

In any case, the single pension scheme has this problem "solved". More than 50% of the Defence Forces have less than 5 years service, retirements in the Gardaí are increasing rapidly and they are heading for a retention crisis also, fire service the same.
 
Steven Barrett said:
Hospital consultants are already getting hammered with a pension threshold of €2m, with all of them breaking it. A drop of €500,000 in pension threshold will cost them €200,000 in tax and the remaining €300,000 will be taxed under PAYE. They will get €156,000 out of that €500,000. An effective tax rate of 68.8%
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Most of these hospital consultants are in the public sector superannuation scheme. Many of them will get a final salary pension of 50% of their, quite large salaries, ( average 200k plus) and a tax free lump sum of 200k ?

If thats the case the additional pension benefits are from savings or monies that they contribute to investment based pension instruments.

So wouldn't they just be better off paying their taxes and then, if they have excess income, saving it or investing it, then using that money to supplement their enormous pension.

Forgive me for playing the tiniest violin, in sympathy for these guys, but come on!!
 
Allpartied said:
Most of these hospital consultants are in the public sector superannuation scheme. Many of them will get a final salary pension of 50% of their, quite large salaries, ( average 200k plus) and a tax free lump sum of 200k ?

If thats the case the additional pension benefits are from savings or monies that they contribute to investment based pension instruments.

So wouldn't they just be better off paying their taxes and then, if they have excess income, saving it or investing it, then using that money to supplement their enormous pension.

Forgive me for playing the tiniest violin, in sympathy for these guys, but come on!!
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Isn't the point though, that there is diminishing returns beyond a certain point. Pension is accrued with service but beyond a certain point, as pension benefit increases, the tax rate increases beyond the marginal rate on earnings. Thus, its beneficial to only have earnings at the marginal rate and therefore, its necessary to leave the public sector as the pension/earnings split is fixed.
 
Itchy said:
Isn't the point though, that there is diminishing returns beyond a certain point. Pension is accrued with service but beyond a certain point, as pension benefit increases, the tax rate increases beyond the marginal rate on earnings. Thus, its beneficial to only have earnings at the marginal rate and therefore, its necessary to leave the public sector as the pension/earnings split is fixed.
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But contributions to the Superannuation scheme are fixed and compulsory. The pension is taxed as income, same as any other income, though not subject to PRSI. There is no diminuition in that pension benefit, it only seems to apply to additional pension contributions used to supplement the employee superannuation scheme.
I'm not sure what the argument here is , other than these very well paid workers, are getting an equally generous pension. Then, they are complaining that they are no longer going to get a tax rebate to help them get even wealthier.
 
MTB_FS said:
So we should all be equal and divide all the wealth in the country. I think there is a term for that?
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No, of course not. Don't exaggerate. But many many working people either have no pension provision or own their own homes.
1.5milllion pots is beyond most people's dreams. You don't need to be subsidies any more.
 
clinteastwood said:
No, of course not. Don't exaggerate. But many many working people either have no pension provision or own their own homes.
1.5milllion pots is beyond most people's dreams. You don't need to be subsidies any more.
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Lots of working people don’t need any pension provision because the State Pension will be more than enough for them.

€1.5m isn’t that much if it has to sustain two people for the duration of their lives.

As for ‘subsidies’, I remember looking at the calculation and the State will defer getting about €600k from a decent earner and then get millions in tax down the line, having assumed none of the risk. Pensions for high earners are great for the State!
 
Allpartied said:
Most of these hospital consultants are in the public sector superannuation scheme. Many of them will get a final salary pension of 50% of their, quite large salaries, ( average 200k plus) and a tax free lump sum of 200k ?

If thats the case the additional pension benefits are from savings or monies that they contribute to investment based pension instruments.

So wouldn't they just be better off paying their taxes and then, if they have excess income, saving it or investing it, then using that money to supplement their enormous pension.

Forgive me for playing the tiniest violin, in sympathy for these guys, but come on!!
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The value of a hospital consultant's public service pension is over €2m without AVC's or personal pensions. In other words they are in a compulsory scheme that will give them a massive tax bill at retirement, which will reduce the pension that they are entitled to.

As for sympathy, recently qualified doctors are very badly paid and work long hours. They tend to be sent to different hospitals around the country. Most have to go abroad to complete their training. They usually get consultant status in their mid to late 30's. And then they have to deal with the HSE and hospital administrators for their working careers. Given the importance of the job they do and the amount of training they have completed, they deserve their money.
 
Itchy said:
Context: 1.8m taxpayers (63%) earn less than 40k out of 2.9m taxpayers. They earn 26.5% of the income and they pay 8% of the tax burden. 35% of those taxpayers are entirely exempt.

They are incentivised not to make pension provision and live effectively tax fee.

Income Tax breakdown by Gross Income

www.revenue.ie www.revenue.ie

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Gordon Gekko said:
Lots of working people don’t need any pension provision because the State Pension will be more than enough for them.

€1.5m isn’t that much if it has to sustain two people for the duration of their lives.

As for ‘subsidies’, I remember looking at the calculation and the State will defer getting about €600k from a decent earner and then get millions in tax down the line, having assumed none of the risk. Pensions for high earners are great for the State!
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Indeed, but tell me if any of those who don't take the state pension despite having large pension provision..

And 12000E a year is enough 'for them' but 62000E isn't enough for others.
Lovely
 
Itchy said:
Context: 1.8m taxpayers (63%) earn less than 40k out of 2.9m taxpayers. They earn 26.5% of the income and they pay 8% of the tax burden. 35% of those taxpayers are entirely exempt.

They are incentivised not to make pension provision and live effectively tax fee.

Income Tax breakdown by Gross Income

www.revenue.ie www.revenue.ie

Click to expand...
Everybody pays tax. Ever heard of VAT?

The stats help my argument, thanks
 
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