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taxed 41 percent on pension while still working after age of 65

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  • 13-06-2011 12:19pm
    #1
    thebourke
    Registered Users Posts: 1,317 ✭✭✭


    My father recently turned 65.He is still working.
    He will still be working on a year by year basis provided he passes a medical.
    He was informed recently that he can collect a pension from the Bord of Works.
    He worked there for about 9 years.
    At first he was getting about 40euro per week on this pension.
    However,now the pension is being taxed at 41 percent...so he is basically getting half ot it now.
    should he be taxed on his pension?
    What about if he stops the pension now and doesn't collect it till he retires from work?
    Will he still be able to backdate the pension to when he finishes work?
    Would he be taxed on it then?


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    #2
    Pablo Sanchez
    Closed Accounts Posts: 1,207 ✭✭✭Pablo Sanchez


    Pension income is treated just like earned income, if he is liable to higher rate tax in his job then he will have to pay it on the income he draws from his occupational pension as well.


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    #3
    coylemj
    Registered Users Posts: 25,437 ✭✭✭✭coylemj


    +1 A pension is treated like any other income i.e. you have to pay PAYE on it. Contributions you make during your working life gets favourable tax treatment and provided you stay below certain limits all of it can be tax-free (up to now anyway) but as soon as you start drawing a pension you have to pay tax on it.

    If he's started drawing the pension he probably won't be now able to defer it. In some pension schemes you can defer the date at which you start drawing the pension in return for which you get a bigger pension but typically once you start drawing it you can't turn off the tap.

    I don't think any Irish public sector pension scheme allows you to defer the start of the pension beyond age 65 so I don't think he had any option in the first place.


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