I heard Fr. Sean Healy on the radio yesterday suggesting that all tax reliefs should be at the Standard Rate, including the tax reliefs associated with pension contributions.
Whatever about the logic for this in relation to medical costs etc, I cannot follow the logic in relation to Pensions. If I am only going to get tax relief at say 20% on the contributions but will be taxed at 41% on the income, why save for retirement? Remenber that all the pension income (the original capital and the investment growth) is taxable as income in retirement. So if I am paying more tax on the income than I am getting tax relief on the contributions, it makes no sense in such saving.
Unfortunately the Fingleton example (a complete disgrace for a mickey-mouse building society) only gives ammunition to this argument. But yet again I was disappointed at Roisin Shortall on Q&A last night who jumped on the bandwagon when complaining about pension tax breaks. Alan Dukes had to remind her that there is now a Pension Cap on pension funds. The horse may have bolted in relation to Mr. Fingleton, but why should all the ordinary decent pensioners (prospective pensioners) be penalsied for the actions of a few renagades?
Whatever about the logic for this in relation to medical costs etc, I cannot follow the logic in relation to Pensions. If I am only going to get tax relief at say 20% on the contributions but will be taxed at 41% on the income, why save for retirement? Remenber that all the pension income (the original capital and the investment growth) is taxable as income in retirement. So if I am paying more tax on the income than I am getting tax relief on the contributions, it makes no sense in such saving.
Unfortunately the Fingleton example (a complete disgrace for a mickey-mouse building society) only gives ammunition to this argument. But yet again I was disappointed at Roisin Shortall on Q&A last night who jumped on the bandwagon when complaining about pension tax breaks. Alan Dukes had to remind her that there is now a Pension Cap on pension funds. The horse may have bolted in relation to Mr. Fingleton, but why should all the ordinary decent pensioners (prospective pensioners) be penalsied for the actions of a few renagades?