New Information on Public Service Pension Levy

[LDFerguson]

With thanks to Eagle Star/Zurich: -

[FONT=Arial, Helvetica, sans-serif]We (Eagle Star / Zurich) contacted the Revenue and have just received the following answers:[/FONT][FONT=Arial, Helvetica, sans-serif] [/FONT]

[FONT=Arial, Helvetica, sans-serif]Q1. Are these levies regarded as pension contributions or as a separate levy / taxation? [/FONT]
[FONT=Arial, Helvetica, sans-serif]A. The levy will be regarded as pension contributions. [/FONT]
[FONT=Arial, Helvetica, sans-serif]Q2. Do the levies form part of an employee's age related contribution limits?[/FONT]
[FONT=Arial, Helvetica, sans-serif]A. No, they do not form part of the employee's age related contribution limits. [/FONT]
[FONT=Arial, Helvetica, sans-serif]Q3. Will the levies be applied to an employee's gross salary or net salary after the deduction of any employee / AVC contributions? [/FONT]
[FONT=Arial, Helvetica, sans-serif]A. They will be deducted from the employee's gross salary, net pay arrangement to be operated. [/FONT]
[FONT=Arial, Helvetica, sans-serif]Q4. Do the levies qualify for tax relief & what happens to anyone earning over the 2009 earnings cap of €150K? [/FONT]
[FONT=Arial, Helvetica, sans-serif]A. Yes, tax relief is available, see 3 above. No restriction with reference to €150K earnings cap. [/FONT]
[FONT=Arial, Helvetica, sans-serif]Q5. Is this proposal contingent on Union agreement & what timeframe are we looking at? [/FONT]
[FONT=Arial, Helvetica, sans-serif]A. This proposal comes into effect on 1st March 2009. [/FONT]​

 

[z109]

[FONT=Arial, Helvetica, sans-serif]Q2. Do the levies form part of an employee's age related contribution limits?[/FONT]

[FONT=Arial, Helvetica, sans-serif]A. No, they do not form part of the employee's age related contribution limits. [/FONT]
​

So if you are working in a job that is eligible for the public service pension, you can also get your full age related contribution limit for an AVC?

 

[LDFerguson]

Yes. Which I believe is fair. An AVC is an entirely voluntary decision. Public Servants should not have their eligibility to contribute AVCs reduced by a levy that does not improve their pension.

 

[z109]

Yes. Which I believe is fair. An AVC is an entirely voluntary decision. Public Servants should not have their eligibility to contribute AVCs reduced by a levy that does not improve their pension.

Or maybe

I have a limit on the amount that me or my company can contribute to a pension whether it be personal/defined benefit/whatever. But public servants can contribute to two full pensions and get full tax relief on their contributions?

Already the 50% final salary pension with 1.5x final salary lump sum is quite generous. Add in another full pension built at taxpayer expense (that is, after all what the pension relief is) and it is phenomenal.

No wonder there is resistance to the idea of a universal pension...

Sorry for the rant...

 

[DerKaiser]

Or maybe

I have a limit on the amount that me or my company can contribute to a pension whether it be personal/defined benefit/whatever. But public servants can contribute to two full pensions and get full tax relief on their contributions?

Already the 50% final salary pension with 1.5x final salary lump sum is quite generous. Add in another full pension built at taxpayer expense (that is, after all what the pension relief is) and it is phenomenal.

No wonder there is resistance to the idea of a universal pension...

Sorry for the rant...

The AVC is limited by the maximum benefits allowable (taking account of both pensions) in order to qualify for tax deductable contributions.

If you started your pension at 25 and received a 5 to 10% employer contribution whilst contributing the maximum allowed by revenue for an employee you'd probably get close to the package described above

 

[Don_08]

Yes. Which I believe is fair. An AVC is an entirely voluntary decision. Public Servants should not have their eligibility to contribute AVCs reduced by a levy that does not improve their pension.

But what about those many many DB members who have had to increase their employee contributions over the past number of years? Not improving their pension, but still reducing any maximum conts they make to AVCs?

Yet another rule for one group of people over another..

 

[Conan]

I saw the Eagle Star note yesterday. I was surprised at the fact that they say the Levy does not form part of the age related limit. On the basis that the levy is tax deductible, I would have taken a different view.
I am not sure where Eagle Star came to that view, I have not seen it stated in any other communication.
I am seeking clarification.

 

[decsramble]

With thanks to Eagle Star/Zurich: -

[FONT=Arial, Helvetica, sans-serif]We (Eagle Star / Zurich) contacted the Revenue and have just received the following answers:[/FONT]

[FONT=Arial, Helvetica, sans-serif]Q1. Are these levies regarded as pension contributions or as a separate levy / taxation? [/FONT]
[FONT=Arial, Helvetica, sans-serif]A. The levy will be regarded as pension contributions. [/FONT]
[FONT=Arial, Helvetica, sans-serif][/FONT]​

It appears people with no pension are being charged this levy, but if you do not have a pension how can the levy be regarded as pension contributions? Unless by paying the pension levy the government is accepting those people without a public service pension into the public service pension scheme?

 

[LDFerguson]

Or maybe

I have a limit on the amount that me or my company can contribute to a pension whether it be personal/defined benefit/whatever. But public servants can contribute to two full pensions and get full tax relief on their contributions?

If it wants, your company can contribute sufficient to a pension scheme to provide benefits well in excess of the Public Service schemes.

The facility to pay AVCs is available to public and private sector employees - the limits for maximum benefits and maximum contribution levels are exactly the same.

So I'm not sure I understand your point about two full pensions.

 

[LDFerguson]

But what about those many many DB members who have had to increase their employee contributions over the past number of years? Not improving their pension, but still reducing any maximum conts they make to AVCs?

Yet another rule for one group of people over another..

Yes but the big difference is that in any private DB schemes, such increased contributions went straight into the pension scheme and nothing else.

This so-called pensions levy is going to be used for all sorts of Government activity. In effect it's a tax on public servants masquerading as a "pensions levy". As such, I feel it would be unfair to limit scope for AVCs because of an increase in taxes.

 

[LDFerguson]

I saw the Eagle Star note yesterday. I was surprised at the fact that they say the Levy does not form part of the age related limit. On the basis that the levy is tax deductible, I would have taken a different view.
I am not sure where Eagle Star came to that view, I have not seen it stated in any other communication.
I am seeking clarification.

The wording of the Eagle Star note suggests that they contacted Revenue and got a reply on Thursday.