Is it worth contributing to a pension, as the state pension wll probably be means tested?

Discussion in 'Pensions' started by smithers, Mar 6, 2017.

  1. Gerry Canning

    Gerry Canning Frequent Poster

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    Merowig , I hear you .

    But don,t let your mistrust cloud the reality of tax free pension growth + tax advantages today.
    Even if your private pension was hit for 20% in thirty years, you would still be {grumpingly } ahead .
    Also any savings you manage to squirrel away today have to beat the tax advantages of pension inputs ,

    This all presumes the Bleak Future !
     
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  2. Merowig

    Merowig Frequent Poster

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    Last edited: Mar 8, 2017
    I completely agree with that - I am already maximising my employer contributions but the same time I also try to diversify my investments/ savings.
    Even with the pension levy, saving for a pension was still very advantageous.
     
    Last edited: Mar 8, 2017
  3. Gerry Canning

    Gerry Canning Frequent Poster

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    Merowig ,
    I am in the happy position , or is it unhappy ? of being old nuff , not to worry about 30 years hence !!!
    That Pension Levy was so , so wrong and counter productive . It really stalled younger people from taking pensions and they the very ones who need pension cover.
     
  4. smithers

    smithers Registered User

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    Thank you all for your advice on this, having thought about it I think it will be worth putting something into a pension to maximize tax relief and make sure to minimize chance of poverty in old age. Will have to wait and see what brave government will means test the contributory state pension after people paying PRSI for years.....in the meantime i can only plan on how things currently stand.
     
  5. Protocol

    Protocol Frequent Poster

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    Yes.

    You can't means-test the CSP, as we already have a means-tested NCSP.
     
  6. Brendan Burgess

    Brendan Burgess Founder

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    When the state runs out of credit, they will have to allocate scarce resources to the people of greatest need.

    People who would have qualify for the Contributory State Pension are likely to have other means.
    Those who don't qualify are likely to have no means, and will get priority in the queue.

    Unless some version of my proposal for individualised PRSI accounts is adopted.

    Brendan
     
  7. cremeegg

    cremeegg Frequent Poster

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    By this I suppose you mean when the ratio of retired people to working people exceeds anything that can be supported by the working people, which is inevitable. Rather than due to mismanagement of the economy, which is not.

    This does not solve the problem. Your asset is somebody else's liability. If there aren't enough somebody elses to provide a return on your asset, its worthless.

    If there are not enough workers to run the factory it doesn't matter who owns it.
     
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  8. jjm2016

    jjm2016 Frequent Poster

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    Last edited: Mar 9, 2017
    Brendan I don't think you understand how Ireland works.When the state runs out of credit to pay pensions the will give whatever the have to the people who have it in writing not to the most in need.You would be more likely to get results by highlighting how unfair the system is at present.To give you an example take 2 people on the same wages paying the same prsi and expecting to get the same retirement pension from the state

    (1) private sector earning say the same wages as a Grade 3 public servant lets say 37000 Euro paying PRSI A contribution just say the are the same age lets say they retire in the morning at 66 having 40 years service they will get around 12376 Euro per year there is nothing to stop the state from lowering the amount paid.If the government lowers there pension by 10000 euro that is all they will getting 2376 euro from the state

    (2) public servant earning say the same wages as a private sector worker lets say 37000 Euro paying PRSI A contribution just say they are the same age lets say they retire in the morning at 66 having 40 years service they will get 12376 Euro state pension they will also get another 6124 Euro pension which they have paid for so they will end up with half of there 37000 wages 18500 euro.the state will still be on the hook to pay the 12376 to make up there pension to 18500.this is not an over sight this is how Ireland works.

    I don't want this to be taken or turned into public Servent bashing far from it in fact present public Servents paying the PRSI A Stamp along with paying to bring there pension up to 50% of final salary also paying a Pension levy along with there own pension Contributions to support people who paid 5% less PRSI than them they will never ever get any credit for this levy again this is how Ireland Works and is not fair ,
     
    Last edited: Mar 9, 2017
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  9. Protocol

    Protocol Frequent Poster

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    Brendan,

    are I right in thinking you are calling for a closer link between SI conts and SI benefits?

    Well, in terms of the CSP, that is planned.

    The plan is to move from a CSP based on average conts to one based on total conts.

    So then those who have paid more conts will get a bigger pension.
     
  10. jjm2016

    jjm2016 Frequent Poster

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    Protocol. What the government are saying and actually doing are not the same or fair.Take my own case I having worked full time and paid a stamp which was 33% of my wage in 1970 I have worked full time for over 45 years .In 1985 I was on lay off and worked 41 weeks .in 1986 worked I worked 45 weeks and in 1987 I worked 46 weeks since then I have never being out of work since.My employment contract says Date of retirement is when I reach my 65 birthday,The change the government made in 2014 for someone like myself who have paid in for over 45 years was to take away the transition pension which was paid to people like myself who had more than an average of 48 stamps over there life time working. This used to be paid from age 65 to age 66.Before it was taken away Government were aware that the change would affect about 83.9% of people.The company I work for are allowing people to work until they are 66 provided they have no health issues that is affecting there work.I think if you have another look you will see the so called closer link between S1 conts and S1 benefit is a lot lower than the average of 48 which was needed to get the max transition pension.I suppose they can say what Transition pension there is no such thing
     
  11. Gordon Gekko

    Gordon Gekko Frequent Poster

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    Hi Brendan,

    In Switzerland they operate a similar system with regard to unemployment benefit. If you lose your job, the payments equate to 80% of your income for a two year period.

    The flipside is the fact that fines for things like speeding are not flat-rate; they're also a function of one's income.

    Gordon
     
  12. Aurelia

    Aurelia Registered User

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    Last edited: Apr 19, 2017 at 6:12 PM
    With regard to paying voluntary prsi contributions for pension purposes, has anyone else working abroad and paying voluntary prsi contributions been asked to declare their worldwide income this year as their yearly contribution cost is going to be 6.6percent of all their income instead of the usual flat rate of about 500. So say you earned 50000 abroad you would have to pay about thre or four thousand pounds instead of the usual flat rate. This is the first year i have been asked to pay this and when i rang the office they say the 6.6percent Fee on all income has always been in place. On the website it clearly says 6.6 percentof all reckonable income, reckonable meaning taxable irish income which is different from all worldwide income. Is this a change?
    In the uk if one is living abroad one pays 2.85 a week pension contribution which works out far less than the flat rate of about 500euro the irish used have to pay but we are used to being ripped off. But this takes the biscuit 6.6percent on all worldwide income which could work out at thousands of pounds yearly contribution for a pension which probably wont exist! Do the lawmakers have no shame.
     
    Last edited: Apr 19, 2017 at 6:12 PM
  13. Gordon Gekko

    Gordon Gekko Frequent Poster

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    I pay 4% and my employer pays 10.75%, so circa 15% in total.

    Why should someone living overseas object to paying 6.6%?
     
  14. Aurelia

    Aurelia Registered User

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    Because you get full prsi benefits and social welfare benefits and are resident in ireland. I am non resident and the contribuions entitle me only to a possible pension.
     
  15. torblednam

    torblednam Frequent Poster

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    Are you not talking about a voluntary payment though? In which case........
     
  16. SBarrett

    SBarrett Frequent Poster

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    The UK pension is about half the Irish one. And that may not be paid either...
     
  17. Gerry Canning

    Gerry Canning Frequent Poster

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    Merowig ,

    Not wishing to depress you but our Government has already (stolen) from private pensions.

    You have no choice but to trust the government that on retirement you can expect some fairness in how your savings/pension will be treated .

    Things change and in 2 decades we have gone up and down and sideways and its hard to long-view things.
    My opinion ,for what it is worth, is that everyone should save something in some way so as to not be 100% reliant on the State.
     
  18. Gerry Canning

    Gerry Canning Frequent Poster

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    UK pension for those with full contributory is £ 155 . ie less than ROI .
    The Conservatives made a big play of linking it to inflation etc ,ie ensuring its real value over time , the voters bought into that promise.
    It now looks that with Brexit/Austerity/demographics that that voter friendly promise will be revisited by Mrs May.

    torblednam.
    the £2.85 you mention was on old UK pension system , I think its nearer £560 perannum now + severe changes to spouses pensions from 2016 .
    It is quite complicated.
    I also believe the 6.6% depending on your income could be a good investment , depending on your income and your age etc,.eg If you are close to pension and can get the full 230 per week for life it would make great sense to pay {thousands}
    It is quite complicated.

    The Pension very , very probably will exist .
    There are changes afoot in UK and Ireland.