Are they taxing lump sum amount?

guitarchris

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Hi, has anyone heard any facts or details relating to the rumour circulating that lump sums (public sector) will be taxed and this change is being brought in this year?
 
No facts or details but heard it from a guy very very high up in a prominent union and also heard it from someone in a senior admin/magagement position. Looks like it's gonna happen.
 
Hi Derek/Lou heard another bit today. Two options tax those retiring after June (June and September mentioned) or just half lump sum amounts. Seems to be related to green paper on pensions and forum on taxation but neither websites feature any details. Are the unions hearing things from negotations with the social partners?
 
Hi Derek/Lou heard another bit today. Two options tax those retiring after June (June and September mentioned) or just half lump sum amounts. Seems to be related to green paper on pensions and forum on taxation but neither websites feature any details. Are the unions hearing things from negotations with the social partners?
big exodus from all gov departments including assist secretaries .. all leaving sinking ship .. definitely expecting something big to be announced.. i believe the leakage from the dept of finance
 
The rumour is a c.20% (or couple of % lower) tax rate on the lump sum and contributions only to be relievable at the basic rate.

Will they have the courage to do it? Regardless of whether it's the correct thing to do (and it's not) it will lose FF the generation of middle class voters they spent the boom cultivating.

If it's true it will kill the AVC/PRSA industry stone dead. If there's a silver lining it is that the tax on the lump sum would amount to the payment of more income tax at one go than some big earners will have paid in total in the last decade....
 
Yes, I also heard that the lumb sum will be taxed from June onwards but anyone that applies to leave before that will not be effected. The idea is that lots of people will leave cutting back on public sector numbers.. a lot of people with a few years left have already put in for it...
 
I have to say that if anything like whats described above happens, you can be sure the Public Service unoins will come under a lot of pressure from members to resist in the strongest fashion. Is there not a case to be made that if you have a reasonable and legal expectation to get what you have contributed for under the contribution conditions at the inception of the contribution? Can anyone confirm if there is a legal precedent for this.
 
17.5%....testing the water by leaking the rumour?
How will they fund the huge amounts to be paid in
lump sums before the end of June if the rumour is
correct?Take it out of the 1.6bn reserved for the
pension levy before Parlon Country gets his hands
on it?
 
big exodus from all gov departments including assist secretaries .. all leaving sinking ship .. definitely expecting something big to be announced.. i believe the leakage from the dept of finance

Yes, many with 40 years+ have retired in past two weeks so something is up. Heard rumours of 17% and 20% from Jan next. However, if they leave it to January then many will retire up to December and the 'take' will be less. And why is there so many going in such a rush? (the words sinking, rats and ship come to mind:D)

I have to say that if anything like whats described above happens, you can be sure the Public Service unoins will come under a lot of pressure from members to resist in the strongest fashion.

The problem is that those with less than 35 years service will not be affected and might take the attitude that it will be different by the time they are retiring. To me, it's a cute move that will bring in a few bob with little pain. After all, a PO paying 30k out of a lump sum of 160k can't complain too much and will get little public sympathy.
 
My boyfriend is a Guard and he says that a lot of the older Guards are retiring now, earlier than they might have done, as they believe the gratuity (lump sum) will be taxed.
 
Pretty amazing this. In my organisation quite a lot have bailed out in the last 2 weeks.

They are fleeing!! and of course they are all the higher up grades who are politically connected. Pretty disgusting really that they know before everybody else.

I must agree though it a cunning move rather than an expensive VER.

Personally, i could never understand this VER racket anyway.
 
Are people retiring a few months early or a year or two early?

17.5% of a lump sum representing 150% Salary only amounts to about 3 months wages, maybe 5 or 6 if you allow for the fact that the salary is taxed.

I know it's an incentive to retire earlier than you might have but retiring a couple of years early to avoid this tax seems extreme
 
They are fleeing!! and of course they are all the higher up grades who are politically connected. Pretty disgusting really that they know before everybody else.
I'm afraid that that's a conspiracy theory too far, very few people know what's in the budget regarding the lump sum and they're not telling, I'm fairly sure it will prove to be unconstitutional to bring this in. I think leaving the rumour out there does encourage those with their full 40 years to leave now and combined with the embargo on recruitment will have the happy consequence of a reduced pay bill.
 
Are people retiring a few months early or a year or two early?

17.5% of a lump sum representing 150% Salary only amounts to about 3 months wages, maybe 5 or 6 if you allow for the fact that the salary is taxed.

I know it's an incentive to retire earlier than you might have but retiring a couple of years early to avoid this tax seems extreme

they are people with 1-2 years to go mostly...i agree its a bit drastic particulalry if one hadnt even begun to contemplate retirement.
 
they are people with 1-2 years to go mostly...i agree its a bit drastic particulalry if one hadnt even begun to contemplate retirement.
When you couple it with the pension levy, the increased income levy and whatever other tax increases are going to come in however, I do think that in a lot of cases it makes financial sense to go early, if you do you sums you should be able to come to a "break even" amount of months where it would make sense to go early.

Whether this lump sum taxing can legally happen seems to be an unknown, does anyone have any idea on this?

The rumour itself is definitely making the older people think and a lot of them are opting for retirement. It will reduce numbers in the sector without causing too much/any pain for those that leave.

Kippy
 
Have it from a horses mouth...............Lump Sums will not be taxed in this budget.
And her ass is a horses..........
 
This is direct from the Minister's speech yesterday. Make of it what you will - note especially the last paragraph in terms of the possibility of a lump sum tax.

"Today, I am announcing a scheme whereby, in those areas of the public service where permanent reductions need to be brought about, staff aged 50 or over may retire from the public service without actuarial reduction of pension entitlements they have accrued to date. Ten per cent of the relevant lump sum will be payable immediately with the balance paid later at the normal retirement age of 60 or 65 without actuarial reduction and subject to current tax law provisions.
This scheme will be open to applications from the 1st May and will be subject to local management arrangements to ensure that the scheme operates in an orderly manner. Those leaving under the scheme will not be replaced except in specific cases or circumstances sanctioned by my Department. The continued availability of the scheme will be reviewed in the Budget for next year. The Government sees no scope for introducing other, more generous Early Retirement schemes in present budgetary circumstances.

The Commission on Taxation is examining various aspects of pension tax treatment including the treatment of lump sums and I expect to be dealing with their recommendations in the 2010 Budget next December."
 
That says it all, really. Wonder if you apply in May, how long of notice will you get away with giving. Can you drag it out to the end of the year?
 
Teasing you so that it will be introduced in the December budget,
if the country is still solvent of course.
 
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