Pensions - KPMG calls for significant increases to SFT and TFLS

Maybe.

I guess we’ll have to wait ‘til the summer to see the recommendations.
 
I was only reading a similar article by Stephen Barrett, an Independant Financiel advisor and a regular contributor on here, who posted this yesterday:

www.linkedin.com

Time to increase the Standard Fund threshold

You used to be able to have as big a pension pot as you wanted/ could afford. In 2005, a cap of €5 million was introduced.
www.linkedin.com www.linkedin.com
 
mtk said:
Didn’t sf say they are going to reduce to 1.5m ?
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They did indeed.

And the UK’s Labour Party have pledged to re-introduce the lifetime allowance of €1.2m in the UK if it wins the next election.

So, it’s a politically contentious area.

My own view is our current thresholds are at about the right level but some form of indexation should be introduced so that the SFT and the €115k net relevant earnings limit gradually rise in line with inflation or wages over time.
 
Can't see the SFT being increased at all, although I expect some sort of fudge/exception to be put in place for senior civil/public servants to overcome the problem of e.g. senior Gardai not going for promotions because their pension funds would exceed the SFT.
 
But senior public servants who do exceed the SFT can pay the excess of fund tax over a 20 year period by taking a slightly reduced pension (and the tax bill is waived if the member dies in that period). Private sector workers do not benefit from such a preferential deal.
As for senior Gardai not going for promotion because of the SFT, makes little sense:
- higher salary
- higher retirement lump sum
- higher pension (even if a small amount is deducted for the SFT tax).

That said, the SFT has not been indexed since it was reduced to€2m in 2014.
 
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Wouldn't it be fairer to link the SFT to the average pension fund.
People who can pull together 2million quid, or have acces to a pension valued at 2 million quid, will, presumably, have substantial income or assets.
Those in the public sector have no choice on their pension arrangments, as membership of the scheme is compulsory and linked to salary.
So, special arrangements on their tax liability is justifiable.
As for all the other wealthy people, whinging about the 2 million threshold, why don't they just invest a portion of their post tax income and use that as pensionable income.
 
Allpartied said:
Wouldn't it be fairer to link the SFT to the average pension fund.
People who can pull together 2million quid, or have acces to a pension valued at 2 million quid, will, presumably, have substantial income or assets.
Those in the public sector have no choice on their pension arrangments, as membership of the scheme is compulsory and linked to salary.
So, special arrangements on their tax liability is justifiable.
As for all the other wealthy people, whinging about the 2 million threshold, why don't they just invest a portion of their post tax income and use that as pensionable income.
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Many private sector employees are obliged to join pension schemes as a condition of employment -either DB or DC. So I don’t see the difference with public sector.
“2 million quid” sounds a lot (and it is if you won it in the Lotto), but in pension terms (using a Revenue “multiplier” of c27:1) it equates to a pension income of c€74,000 - inclusive of any lump sum taken, which will reduce the pension figure.
If the €74k was to equate to say 2/3rds of Salary (with say a full 40 years service), then the Salary is c€115,000 (a good income, but hardly “wealthy”).
 
Allpartied said:
Wouldn't it be fairer to link the SFT to the average pension fund.
People who can pull together 2million quid, or have acces to a pension valued at 2 million quid, will, presumably, have substantial income or assets.
Those in the public sector have no choice on their pension arrangments, as membership of the scheme is compulsory and linked to salary.
So, special arrangements on their tax liability is justifiable.
As for all the other wealthy people, whinging about the 2 million threshold, why don't they just invest a portion of their post tax income and use that as pensionable income.
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I’m guessing you’re in the public sector…

There should be consistency across the board. The SFT should be increased to €2.5m and then index-linked.

The KPMG number is too high, but it’s all a negotiation. Ask for €3.5m and land at €2.5-2.75m.
 
Gordon Gekko said:
I’m guessing you’re in the public sector…

There should be consistency across the board. The SFT should be increased to €2.5m and then index-linked.

The KPMG number is too high, but it’s all a negotiation. Ask for €3.5m and land at €2.5-2.75m.
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I am in the public sector, but like the vast majority of public sector workers, my pension will be well below the average working wage.
I'll get out the smallest violin, I can find, for anyone, public or private, who has to worry about a tax bill, because their pension is too big.
 
Allpartied said:
I am in the public sector, but like the vast majority of public sector workers, my pension will be well below the average working wage.
I'll get out the smallest violin, I can find, for anyone, public or private, who has to worry about a tax bill, because their pension is too big.
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I have a well paid job (private sector) with very marketable skills developed over many years. I diligently pay all taxes due and don't think it is unfair to expect fair pension treatment like high paid public sector employees who have enjoyed much more guarantees of employment in the lean times and pension incomes post retirement. Being double taxed over the SFT is a big demotivation to continue working with my current employer but I'm not sure I want to retire. Let's get in some younger staff with no experience; what can go wrong?
 
kierane said:
Let's get in some younger staff with no experience; what can go wrong?
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Or get in youger staff with experience, skills and ability. Freshen things up. Whats the alternative, stick with the ol' guard. What could go wrong?

If you enjoy your work do not quit just becasue of punitive tax.
 
jim said:
Or get in youger staff with experience, skills and ability. Freshen things up. Whats the alternative, stick with the ol' guard. What could go wrong?
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Look at the fast-shrinking availability of GPs and medical consultants, with younger candidates emigrating to the far side of the world and older incumbents variously retiring earlier or opting to work part-time to escape burnout and crippling taxes.

When people ask "What could go wrong?", lots often goes wrong.
 
Allpartied said:
I am in the public sector, but like the vast majority of public sector workers, my pension will be well below the average working wage.
I'll get out the smallest violin, I can find, for anyone, public or private, who has to worry about a tax bill, because their pension is too big.
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Except you won't be working, you'll be retired...on an index linked pension. Comparing it to the average working wage is not a relevant comparison.

T McGibney said:
Look at the fast-shrinking availability of GPs and medical consultants, with younger candidates emigrating to the far side of the world and older incumbents variously retiring earlier or opting to work part-time to escape burnout and crippling taxes.

When people ask "What could go wrong?", lots often goes wrong.
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100%. The cause for the current review of the pension threshold is not being able to get guards to take promotions as their pensions will go over the pension threshold. Hospital consultants are retiring because of the tax due on their pensions, especially after the High Court agreement.

If you are a public servant on €120,000 a year and have the option of going at 60, you'll just about get in under the €2m cap. There's a lot of public servants earning more than that. I certainly wouldn't call someone on €120,000 a year as wealthy.
 
Whilst I agree that the SFT needs to be increased, I struggle to understand why a public servant (or private) would refuse a promotion - with a higher salary and a higher pension benefit- just because a small portion of the increased pension might be clawed back over a 20 year period.
 
Conan said:
Whilst I agree that the SFT needs to be increased, I struggle to understand why a public servant (or private) would refuse a promotion - with a higher salary and a higher pension benefit- just because a small portion of the increased pension might be clawed back over a 20 year period.
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The idiom of the straw that broke the camel's back explains it.
 
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