I don't doubt you but they are actually taxing a loss. Any chance you could explain that by numbers.
Pension levy on DC schemes to fund deficits in DB schemes
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I don't doubt you but they are actually taxing a loss. Any chance you could explain that by numbers.
Didn't we fund the AIB bank in order that their staff would receive more than statutory redudancy recently.
Bronte, if I have paid in €17,000 and the value of the pension fund is now €16,000, that, to me, is a loss.
If we were talking Capital Gains or losses on an investment, no-one would dispute that there was no gain to be taxed.
It adds insult to injury to have to pay this levy when the pension is worth less than my original investment.
If we were talking Capital Gains or losses on an investment, no-one would dispute that there was no gain to be taxed.
It adds insult to injury to have to pay this levy when the pension is worth less than my original investment.
JoeRoberts
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While I don't agree with the levy, in reality it pales into insignificance compared to the impact of decisions regarding fund choice and charges. For example, the difference between charges for a managed fund versus a consensus fund would be about 0.1% pa. Very similar to the levy.
I wonder how many people who are complaining, have the optimum selection with regard to the charges paid for their pensions ? Do they know exactly how much of every €100 they put into pension, actually gets into their fund ? Sometimes the important issues get lost in the small detail.
Not really the point is it though. You can argue about the level of fund charges but you can't deny there is a cost to pension providers for providing the service. No different to banking fees.
What does the levy pay for? A VAT decrease for the Tourism sector? Why should I pay for that just because I have pension while all those people who don't have a pension don't pay for it. I used to think people without pensions were foolish. Beginning to wonder now who is the foolish one. It's only takes a sma leap of imagination to see the Government to do an Argentina on it and nationalise pension funds.
It's not the cost of the levy. It's the concept that I have an issue with.
JoeRoberts
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My point comes from the fact that many people with pensions don't even know what fund they are invested in or what charges they pay, yet they will suddenly wake up with a very small levy in comparison to the savings they could make by investigating their options a bit more.
This is crazy stuff ....
If Mr. Noonan is genuine, then he should be entirely clear on what he is referring to (as we the tax payers who employ him and / or those of us who have pension funds have an absolute right to know), if he is not then he should not be making this type of statement ... but as it stands, it's crazy stuff and in my mind, not acceptable from the Minister.
If Mr. Noonan is genuine, then he should be entirely clear on what he is referring to (as we the tax payers who employ him and / or those of us who have pension funds have an absolute right to know), if he is not then he should not be making this type of statement ... but as it stands, it's crazy stuff and in my mind, not acceptable from the Minister.
Should be taken to European Court
Hi, Just new to this forum. I am also outraged at this break in promise and believe that if nothing is done to stop this he will continue to rob the private pension funds ongoing. He lost all trust of the people and we can have no confidence in what he does from now on. I also believe that this could be unconstitutional and should be challenged in the European court. I recall Angela Merkel saying that when they wanted to rob the pensions in Cyprus in addition to the savings, that it was incomprehensible so it never happened.
I had to retire early due to health reasons and Mercer and trustees decided to take 2.4% from my pension for life! This increase in levy means this life deduction will go up accordingly.
I will look into the european court opportunities as I do recall that the year this theft was comitted the government changed the law to allow for this.
As far as this cloak and dagger situation with the pensions industry is concerned I think it's a smoke screen to take the heat off him. He will never touch the pensions industry. They have too strong a lobby. He could have taxed their profits by this amount!
Hi, Just new to this forum. I am also outraged at this break in promise and believe that if nothing is done to stop this he will continue to rob the private pension funds ongoing. He lost all trust of the people and we can have no confidence in what he does from now on. I also believe that this could be unconstitutional and should be challenged in the European court. I recall Angela Merkel saying that when they wanted to rob the pensions in Cyprus in addition to the savings, that it was incomprehensible so it never happened.
I had to retire early due to health reasons and Mercer and trustees decided to take 2.4% from my pension for life! This increase in levy means this life deduction will go up accordingly.
I will look into the european court opportunities as I do recall that the year this theft was comitted the government changed the law to allow for this.
As far as this cloak and dagger situation with the pensions industry is concerned I think it's a smoke screen to take the heat off him. He will never touch the pensions industry. They have too strong a lobby. He could have taxed their profits by this amount!
It really is incredible,rather than forcing the pension industry to pony up he just goes ah shur twill be easier to just take it directly and cut out all that chit chat negotiations stuff
It beggars belief,it really absolutely beggars belief.
If there was a legal mechanism I could use to remove my pension from this jurisdiction I would take it,he has proven incapable of keeping is word in relation to this matter.
It beggars belief,it really absolutely beggars belief.
If there was a legal mechanism I could use to remove my pension from this jurisdiction I would take it,he has proven incapable of keeping is word in relation to this matter.
Would think he would have taken legal advice i relation to this? and property rights relating to pensions,would think that its similar to DIRT?
The difference is DIRT is tax on the interest earned from savings, an equivalent to the levy would be government taking 0.6% of a persons savings - and then DIRT etc from the interest.
Seemingly some years ago there was a case taken and won by someone where the court decided a pension was protected as property under the constitution. I think it was a government pension where there wouldn't have been a fund or even have been directly financed from the individuals earnings.
It would seem as a consequence of that decision that pension funds are protected as private property under the constitution.
Also from what I remember 3 years ago the pension industry was toying with taking a case against the government but stood down under the promise it was a 4 year levy and from fear the government would in response simply reduce pension tax relief which be a worse outcome for them.
I think the vagueness from Noonan which holds out the hope the 0.15% levy is a 2 year levy is at least partly to disuade the pension industry from a legal challenge.
So it's probably unconstitutional but the pension industry aren't minded to challenge it and individuals can't afford to.
However if the levy goes on long enough there may be some possibility of a group of soon to retire individuals risking a challenge in the hope of getting a refund of the levy while being immune to the likely response of a reduction in tax relief on contributions.
The more money they take the more worthwhile a court case will be.
The pension industry benefits from significant tax breaks from the Exchequer - and the pension limits that were introduced continue to allow a fund of €2 million be built up (which will continue to support a thriving pension industry into the future). The pension levy - particularly at 0.15% from 2015, and especially when compared with DIRT / exit tax at 41% - won't, and shouldn't, influence pension savings habits, notwithstanding the views captured within this thread.
"Commission cream" is not a technical term I presume?
"Commission cream" is not a technical term I presume?
You could do with a saucer for it,want me to get you one?
The problem is not with '0.15% in 2015'; the problem is the principle of raiding locked-away money. The levy was initially 0.6% - it could easily go back to that level again; or 1% - why not? So a contribution in 2013 might 'only' be hit by 0.75% in 2014 and 0.15% in 2015; but what can a person do to rescue their 2013 contribution if the levy goes back up to 0.6% in 2016 and remains there until retirement in 20/30/40 years time? Absolutely nothing.
A 0.6% levy per annum for 20 years will knock off over 10% of value. Over 40 years, it will knock off over 20% of value. So the possibility of an effective surcharge tax of 10%-20% and you think it shouldn't influence pension savings habits? Really? Because don't forget that, apart from the 25% tax-free lump sum (and who would now take bets that that will be there in 20/30/40 years time?), tax relief is deferred taxation, not absolute 'free money' tax relief. If someone is going to be a high rate tax payer in retirement (for example someone building up a €2M fund...), they should think long and hard about their pension investments. The pension levy absolutely is a consideration and it may, justifiably, influence pension savings habits.
You can put 100 euro in a pension, and you're down 59 euro in take home pay. Then you're heavily restricted on when and how you can access that pension, but the government access it whenever they want.
Or
You can invest that 59 euro outside of a pension instead, you can buy investments in shares at a once off cost, no levies, no annual charges. You can sell them when you want, you can even leave Ireland and sell them where you want. The government will find it difficult to dip into your privately held shares.
It's hard to say if saving for a pension is worthwhile. The argument for having a pension is not so strong that if the government decides to chop an extra 10%-20% off it doesn't affect pensions viability. My own feeling is a combination of prolonged levy and current pension fund charges means that the the tax relief will be completely negated.
I will now be reviewing continuing investing in AVCs,I wasnt terribly happy with the levy but figured there was a definite end date.
Now there is no end date,you have Minfin who is probably looking at this like an old time prospector hitting a gold seam.
Added to this poor performing fund manager who take the cream (not a technical term for the anally retentive among us
) off the top in terms of bonuses,leave pensions looking pretty poor.
I had been thinking for a while anyway of buying shares myself and have been doing a bit of research,probably be better off in the long run if I take over the management of providing for my retirement,the Govt seem to have little enough interest in it.
Now there is no end date,you have Minfin who is probably looking at this like an old time prospector hitting a gold seam.
Added to this poor performing fund manager who take the cream (not a technical term for the anally retentive among us
) off the top in terms of bonuses,leave pensions looking pretty poor.I had been thinking for a while anyway of buying shares myself and have been doing a bit of research,probably be better off in the long run if I take over the management of providing for my retirement,the Govt seem to have little enough interest in it.
Say I have €100 to put away for 40 years and can get a long term rate of 3% on deposit savings gross of tax.
If PRSI didn't apply and DIRT was 20% (as it was a few years ago), I'd have €258 after 40 years.
Applying a total of 45% PRSI and DIRT (current situation), I'd have €192 after 40 years.
In other words, the increased taxes on deposit interest of late have effectively knocked 25% off my ultimate proceeds, this is far worse than even a 0.6% levy over the same period.
If PRSI didn't apply and DIRT was 20% (as it was a few years ago), I'd have €258 after 40 years.
Applying a total of 45% PRSI and DIRT (current situation), I'd have €192 after 40 years.
In other words, the increased taxes on deposit interest of late have effectively knocked 25% off my ultimate proceeds, this is far worse than even a 0.6% levy over the same period.
If the levy had remained at 0.6% the impact would have been similar as it's on the capital balance (assuming a pension fund returning the same 3% net of fees I get €194 after 40 years)
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