Pension super tax

Markcheese

Would a pension super tax be workable... Anyone over 40/50 grand a year pension.. Hit with a 95 % pension tax.... Presume most pension pots are fixed in Ireland (can't be easily squireled away)

staker

Depends on whether you want to keep onto your seat next election I'd say.

Markcheese

Probably more of a case of turkeys voting for Christmas... Most pensioners aren't anywhere nere that level of pension... (personally I think pensions need to be dealt with anyway, the young are being mortgaged to pay pensions present and future.... )

Manach

Re: OP - State or Private pensions or both types?

kippy

I see where this is coming from with news that monies from the bank bailout went directly into paying the pensions of ex senior figures in the banks (the AIB one was the one used, paying a pension of €500,000 per annum)
The finance ministers and government in general said there was little they could do to reduce these pensions (due to employment contracts) and in fact the previous administration should have made it so bailout money could not be used for this.

I do believe however that it would be completely doable to tax, at a high rate (80% or so) any pension over a certain threshold. Standard tax to the threshold, 80% on everything over that. It doesn't take a rocket scientist to see that this is the way of clawing back some of these crazy pensions without effecting contracts/leaving oneself open to legal issues.

However, as mentioned, there are two things stopping this, politics and the fact that ex politicians would also fall within this bracket.

Markcheese

Well if it's a tax it would have to be across the board I assume... It'd be tough on some.. But they're unlikely to go hungry or barefoot ... To get a huge pension pot you probably availed of large tax breaks..

kippy

Markcheese wrote: »

Well if it's a tax it would have to be across the board I assume... It'd be tough on some.. But they're unlikely to go hungry or barefoot ... To get a huge pension pot you probably availed of large tax breaks..

It has to be across the board, effecting all pensions over a certain threshold.
However the "band" may just begin at 100,000 for example. So it wouldn't effect pensions under 100K.

Markcheese

100,000 euro thats a huge pension, start low... And once you start drawing a pension you should pay tax on your entire income...

kippy

Markcheese wrote: »

100,000 euro thats a huge pension, start low... And once you start drawing a pension you should pay tax on your entire income...

I didn't say it wasn't a huge pension.
Initially it would ensure those at the highest end of pensions (senior staff in organisations including the one discussed above) would get cut.

Not sure what you mean in the second sentence. The first 100K would be taxed as normal, anything over that at the higher rate.

kippy

http://www.breakingnews.ie/ireland/aib-asks-former-directors-to-consider-voluntary-pension-cuts-573227.html

AIB is asking it's former directors to consider taking a voluntary cut to their pensions.

It emerged last week that some former bankers who presided over financial institutions at the height of the boom were drawing pensions of up to half a million euro.

AIB has said that it cannot force such former staff to forego some of their pension pot, but it's asking them to consider doing so voluntarily.

It is understood upward of 15 letters have been sent to former directors including Eugene Sheehy and Colm Doherty.

Heard the current CEO saying that they would appeal to the "morals" of the current pensioners in asking them to volunteering to give up some of it.

Have we learned nothing?

Markcheese

kippy wrote: »

I didn't say it wasn't a huge pension.
Initially it would ensure those at the highest end of pensions (senior staff in organisations including the one discussed above) would get cut.

Not sure what you mean in the second sentence. The first 100K would be taxed as normal, anything over that at the higher rate.

Just meant if some- one starts drawing a pension in Ireland at any age ( a former... politician,senior civil servant..senior banker) then any other income (say from junket committees, mateship company director positions, or double jobbing) then their whole income should be taxed as pension...
It would also have to be made difficult for an individual to move their whole pension pot out of ireland to avoid paying huge tax....

kippy

Markcheese wrote: »

Just meant if some- one starts drawing a pension in Ireland at any age ( a former... politician,senior civil servant..senior banker) then any other income (say from junket committees, mateship company director positions, or double jobbing) then their whole income should be taxed as pension...
It would also have to be made difficult for an individual to move their whole pension pot out of ireland to avoid paying huge tax....

These things are all achievable with the right will.
The will doesn't appear to be there though.

Markcheese

Well it's a bit of an extreme suggestion,and would affect a good number of former (and current) politicians as well as their more well heeled supporters... Thought this was a good idea for the last few months but since the aib pension thing blew up... I think the government shouldn't waste a good crisis... Even if it does mean turkeys voting for Christmas..

noodler

A 95% tax?

Excessive.

I do think we need a cap on pensions in the Public and State-Owned sector though. Pensions should only be linked to salary up until a certain figure imo.

Private Sector can do what it wants since it actually has to have funds set aside and DB schemes are getting rarer and rarer.

Markcheese

I'd propose it to be an excessive tax on excessive pensions... You can't go and retrospectively cap the pension of state or private pensions... A lot of private defined benefit schemes haven't been properly funded ( hence the AIB debacle ) ... And how many private pensions out there (apart from bank / semi state / politicians would it affect..
Maybe it should be a defined benefit super tax ...
Still don't think it'd be a bad thing to highly tax pensioners who would have had huge tax breaks in the boom to establish massive pensions ( and if they had any sort of accountant would legally had a stupidly low effective tax rate... )
Don't mean to leave anyone destitute and hungry... But tax isn't fair, it's about getting as much as you can off those who can bear it and won't leave to avoid it ...
And I would aim a lot lower than 100,000 , maybe progressively punitive from 30 to 80 grand and then yes excessive...