As well as my wages I have rental income and my liability is €3500 to be paid by Nov 15th. My accountant says I should consider a deposit pension as my income is 34,000 that I could contribute 9,000 euro and that my 3,500 would go against this. This means that I must have 5,500 to pay in.
Did you ask what the likely tax treatment of the pension would be at retirement? This is a very important issue as if you were going to taxed at the higher rate on the proceeds of the pension all what you would be doing (to a certain extent) would be kicking the tax liability 16 years down the road.
My accountant says I should consider a deposit pension...
This business of watch the tax on the way out is a bit puzzling. If you retired today you'd only pay higher rate tax on income above the srcop and also get credits, this could be up to 40k.QUOTE]Pension advisors should look at the bigger picture and take into account what other income sources that a person may have in retirement.
A lot of people bought property, shares and so on, this will produce an income after mortgage is paid if they have one. Perhaps a person has a UK pension or pension from a previous employment(s), a person may aquire a number of property's before retirement through inherritance or may indeed buy a number of property's before retirement.
You also need to consider how a person would take retirement benefits as well. There is now a lot more people able to avail of ARF options so if they sadisfy the income requirements they maybe able to take their entire fund subject to tax at their marginal rate.
So its only prudent to look at the likely tax treatment of a pension investor as their earned income might be well under the tax thresholds but unearned income maybe very substanial.
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