The thread title is a bit misleading -
The figures in that study are very stark. They make a very good case to move to standardisation based on this. I never really understood why the State subsidised pension savings beyond a safety net requirement. There is nothing to stop people saving for their retirement without tax subsidies - the so called Third Pillar.I think The Sunday Times had some more detail.
The example option the government used was something along the lines of you'd put in 6% the government would put in 2%, equivalent to a 33% tax break.
Considering how easy it was to reduce the relief by excluding relief on PRSI and USC, I'd not bet against future reductions.
As for government employees, they could be insulated from the impact of the change by reducing their contribution level/PRD.
I think this study has been quoted in recent news articles on why tax relief should be reduced.
http://www.pensionscouncil.ie/en/Me...-in-Ireland-Shane-Whelan-and-Maeve-Hally-.pdf
They've made the discovery that most pensioners won't have enough annual income from a pension to remain in the tax net at retirement. (An obvious point made repeatedly on this website.)
The "solution" is to reduce tax relief, making it even harder to save enough to get a pension large enough to be taxable.
Hi GordonThe tax take from pensions should be offset against the tax cost of the relief whenever the latter figure is quoted.
Hi Gordon
Could you elaborate on that point? I'm not sure I understand what you mean by the tax take from pensions.
Thanks.
The Whelan-Halley paper did allow for netting off but it found that under the assumptions not much tax was payable even for higher earners. It ignored inheritance tax but this actually favors ARFs over other assets.No problem.
It’s often said that tax relief on pension contributions represents a tax cost or tax subsidy of €Xbn per year.
In my view, the tax paid on pensions and ARFs in the drawdown phase and inheritance tax on ARFs should be netted off against that figure to provide a truer picture.
Gordon
People on the lower tax rate think the are getting a bad deal from listening to pension advisers negetive advice which may need to be countered by standardizing the tax break,
I strongly agree with that conclusion.Focusing on standardizing the tax relief may well discourage middle to higher earners from maximizing contributions but will unlikely do anything to encourage lower earners to contribute
I would be very interested to hear the views of @Colm Fagan on this subject.
Before the pension levy on funds came in the Government first proposal was to put a levy in the profits in the pension Industry they lobbied to get it put on the funds instead ,The idea that "negative advice" from pension industry salespeople is somehow stopping a lot of people from investing in pensions is kinda funny.
We use cookies and similar technologies for the following purposes:
Do you accept cookies and these technologies?
We use cookies and similar technologies for the following purposes:
Do you accept cookies and these technologies?