Advertisement
If you have a new account but are having problems posting or verifying your account, please email us on hello@boards.ie for help. Thanks :)
Hello all! Please ensure that you are posting a new thread or question in the appropriate forum. The Feedback forum is overwhelmed with questions that are having to be moved elsewhere. If you need help to verify your account contact hello@boards.ie

Emergency budget Pension changes??

Options
  • 01-04-2009 2:50pm
    #1
    boomboombazza
    Closed Accounts Posts: 153 ✭✭


    Eddie Hobbs is advising people to start a pension before the emergency budget. does anyone know why? any idea on exactly what the differences will/could be pre and post emergency budget?


Comments

  • Options
    #2
    Toots
    Administrators, Business & Finance Moderators, Society & Culture Moderators Posts: 16,919 Admin ✭✭✭✭✭Toots


    At the moment, if you put a lump sum into your pension, you can claim tax back on it at your current rate of tax. This can be very beneficial for people on the higher tax bracket. There's speculation that the new budget will only allow people to claim back tax on the lower rate of tax regardless of your tax bracket. I'd imagine this is why he's encouraging people to start a pension now because the window for the bigger tax refund claim could be closed soon. Nobody will know for sure of course until the budget is announced. There was speculation that this would be done in the last budget too, but it didn't happen.


  • Options
    #3
    stepbar
    Closed Accounts Posts: 6,123 ✭✭✭stepbar


    Toots85 wrote: »
    At the moment, if you put a lump sum into your pension, you can claim tax back on it at your current rate of tax. This can be very beneficial for people on the higher tax bracket. There's speculation that the new budget will only allow people to claim back tax on the lower rate of tax regardless of your tax bracket. I'd imagine this is why he's encouraging people to start a pension now because the window for the bigger tax refund claim could be closed soon. Nobody will know for sure of course until the budget is announced. There was speculation that this would be done in the last budget too, but it didn't happen.

    TBH it's probably too late at this stage as getting the paperwork in place can take up to a week (unless the I&I managers are couriering stuff up to head office).

    It's defo obscene that one can get their pension for half nothing (based on a tax rate of 41%). It's a law that should be closed up on TBH.


  • Options
    #4
    [Deleted User]
    Posts: 281 ✭✭ [Deleted User]


    stepbar wrote: »
    It's defo obscene that one can get their pension for half nothing (based on a tax rate of 41%). It's a law that should be closed up on TBH.

    I don't think that it correct to say that you can get your pension 'for half nothing'. After all, the income derived from the annuity/pension fund is taxed at your highest marginal rate when it comes out the other end. Who's to say that the income tax rate will not be well in excess of 41% when claimants draw down their pension?

    The inequities of the current system should be reviewed, but not because the Government think that it will generate perceived savings right now.

    Remember, lots of folks are loosing their jobs and business owners are reporting dramatic reductions in profits. If you aint got a job or have little or no profit you are certainly not going to be looking for tax relief on pension contributions, because you are not going to be putting anything in. Even if you are working, the current market trend is to reduce or stop pension contributions. They are one of the first port of calls for reducing outgoings, if the need arises. Even those that should be starting their pension have put it on the long finger because of the uncertainty.

    Until such time as the Government come up with a coherent and equitable system of encouraging consumers to save for their retirement (perhaps 35% relief for everyone and forget about PRSI relief) they should leave well enough alone. IMHO they will not make any Exchequer 'savings' on this issue in the current climate.


Advertisement