Pension levy

hmmm

A few commentators have mentioned in the Budget threat that the/a pension levy is staying. What they haven't mentioned is the basic unfairness of the new levy. People who have no guaranteed pensions are going to be paying a levy which will be used to bail out people with guaranteed pensions.

What's even more unfair is the people with no guaranteed pensions are already having to pay large sums into their pensions, while in many cases those with guaranteed (defined benefit) are often paying little or nothing - and are then surprised when they find out their pensions are underfunded. Well happy days, they will now be getting their pensions thanks to the levy.

I'm trying to avoid hyperbole, but this new levy is unfair and unethical. I won't even get started on the stupidity of commissioning reports to find out why people aren't taking out pensions, while at the same time using them as a captive slush fund for government spending.

shedweller

Bailing out private financial institutions that made bad gambles and lost is also unfair and unethical. Sorry, but i had to say it. I know people are sick hearing it but we must not forget that it happened.

hmmm

shedweller wrote: »

Bailing out private financial institutions that made bad gambles and lost is also unfair and unethical. Sorry, but i had to say it. I know people are sick hearing it but we must not forget that it happened.

Can we not derail this thread please.

Jawgap

To quote JFK.....

“There is always inequity in life....... Life is unfair.”


This is not the only example of a levy that is unfair and / or unethical - every tax, levy, charge and fee will be unfair and unethical for some significant portion of the population.


I agree, though, anything that discourages people from making proper pension provision is shortsighted in the extreme.

Gumbo

hmmm wrote: »

A few commentators have mentioned in the Budget threat that the/a pension levy is staying. What they haven't mentioned is the basic unfairness of the new levy. People who have no guaranteed pensions are going to be paying a levy which will be used to bail out people with guaranteed pensions.

What's even more unfair is the people with no guaranteed pensions are already having to pay large sums into their pensions, while in many cases those with guaranteed (defined benefit) are often paying little or nothing - and are then surprised when they find out their pensions are underfunded. Well happy days, they will now be getting their pensions thanks to the levy.

I'm trying to avoid hyperbole, but this new levy is unfair and unethical. I won't even get started on the stupidity of commissioning reports to find out why people aren't taking out pensions, while at the same time using them as a captive slush fund for government spending.

The levy is unfair, so is the extorinate motor tax rates, so is the insurance levy to bail out Quinn. It's all unfair but what we gonna do about it as a nation.......sit on boards and moan about it.

carpejugulum

Same as paying €50 for a 5-minute GP visit to subsidize medical card holders whether you earn 20k or 200k.
Socialism is unethical.

Orchard Rebel

hmmm wrote: »

What's even more unfair is the people with no guaranteed pensions are already having to pay large sums into their pensions, while in many cases those with guaranteed (defined benefit) are often paying little or nothing - and are then surprised when they find out their pensions are underfunded. Well happy days, they will now be getting their pensions thanks to the levy.

The levy won't come close to recapitalising indebted DB schemes. To give you an idea, the 2013 levy will raise around €650 million. The ESB Scheme alone has a deficit of €1.5 billion.

The original levy was designed to rob (sorry levy) money for the "Jobs Initiative". They're being far more coy this time - I suspect it will end up in Central Funds....

hmmm

Orchard Rebel wrote: »

The levy won't come close to recapitalising indebted DB schemes. To give you an idea, the 2013 levy will raise around €650 million. The ESB Scheme alone has a deficit of €1.5 billion.

Yup. Which is why it has set a worrying precedent, what's to stop them making it 1%. Or 10%.

zielarz

I lost all trust I had in private pensions. Increasing the levy proves that they can confiscate this money at any time. Similar thing happened in Hungary but on larger scale. It will happen eventually here.. what's the point of saving then?

hmmm

zielarz wrote: »

It will happen eventually here.. what's the point of saving then?

I disagree with your assumption that it will "eventually" happen, but I agree with your sentiments. People will not invest in pensions and their future if the government changes the rules at every single budget.

I think part of the problem is the Dail is full of people who have never worked an "ordinary" job in their lives - they have no idea how private pensions work, and they tinker with them continuously and act all surprised when the numbers of people who are putting money into pensions falls.

But leaving that aside, asking DC pensioners to pay for guaranteed gold plated DB pensions is a disgrace.

Gumbo

hmmm wrote: »

I disagree with your assumption that it will "eventually" happen, but I agree with your sentiments. People will not invest in pensions and their future if the government changes the rules at every single budget.

I think part of the problem is the Dail is full of people who have never worked an "ordinary" job in their lives - they have no idea how private pensions work, and they tinker with them continuously and act all surprised when the numbers of people who are putting money into pensions falls.

But leaving that aside, asking DC pensioners to pay for guaranteed gold plated DB pensions is a disgrace.

I may start saving my pension payments in a shoe box if it gets any worse. Just put it on typist of things to grab incase of a fire, along with the son and my phone so I can call DFB!

TRS30

Socialising debt is the new norm in this country. Why loss out when you can get someone else to pay for you!!

Farmer Pudsey

It always amazes me that people think that a tax is ringfenced. It is a tax the orginal levy was for jobcreation yet all the money was not spend. Will they return the excess to the Pension funds, ''will they [EMAIL="f@@k';'"]f@@k''[/EMAIL]. It is the same with this it is a tax. What is the rise in DIRT ring fenced for, taxes on cars and fuel are not ringfenced for roads etc.

When a finance minster see a pot of money he thinks can I get my hands on some of that. In reality the new tax is a pittance compared to the fees taken by the providers if the old levy goes at the end of this year. It is these fees that are more of a reason not to invest in pensions and the poor returns by fund mangers rather than a 0.15% tax longterm.

On defined benifit schemes this is the government own problem they knew it was an issue for the last 5-10 years I think and have refused to address the issue.

Gumbo

Farmer Pudsey wrote: »

On defined benifit schemes this is the government own problem they knew it was an issue for the last 5-10 years I think and have refused to address the issue.

Didn't they change the system for new employees for career average now in stead if final salary DBS scheme.

Farmer Pudsey

kceire wrote: »

Didn't they change the system for new employees for career average now in stead if final salary DBS scheme.

I am talking about the liability arising in private sector DB schemes (Waterford Glass alone 300 million) that the government ignored after an EU directive in the noughties.

hmmm

hmmm wrote: »

A few commentators have mentioned in the Budget threat that the/a pension levy is staying. What they haven't mentioned is the basic unfairness of the new levy. People who have no guaranteed pensions are going to be paying a levy which will be used to bail out people with guaranteed pensions.

What's even more unfair is the people with no guaranteed pensions are already having to pay large sums into their pensions, while in many cases those with guaranteed (defined benefit) are often paying little or nothing - and are then surprised when they find out their pensions are underfunded. Well happy days, they will now be getting their pensions thanks to the levy.

I'm trying to avoid hyperbole, but this new levy is unfair and unethical. I won't even get started on the stupidity of commissioning reports to find out why people aren't taking out pensions, while at the same time using them as a captive slush fund for government spending.

Private DB schemes are just as affected by this levy. It doesn't just apply to DC.

hmmm

bluewolf wrote: »

Private DB schemes are just as affected by this levy. It doesn't just apply to DC.

Private DB schemes can also benefit from the proceeds of this fund if the schemes close while in deficit. People with DC pensions have no such guaranteed pensions, yet they are having to bail out people who do have guaranteed pensions.

hmmm

hmmm wrote: »

Private DB schemes can also benefit from the proceeds of this fund if the schemes close while in deficit.

Where did you get that from?
Lots of schemes have wound up in deficit, I have yet to hear of any getting payouts. If in deficit, the fund is allocated proportionately in many cases.
In fact, trustees can decide to reduce members' benefits in accordance with the levy whether closing or not.

Don't get me wrong, I think the idea of the levy is completely ridiculous considering the ageing pyramid and overreliance on state pensions, but I don't really get the ire directed specifically at DB schemes who are also suffering it.

hmmm

bluewolf wrote: »

Where did you get that from?

Because the levy is designed to fund this.

"It is imperative that the Irish Government establish a similar Pension Protection Fund to that of the UK in an effort to ensure that adequate insurance is in place in the event of a pension fund becoming insolvent."

Got ya now, yeah. Crossed wires there. It's more complicated than handing it out to all DB schemes in deficit for sure

golfwallah

The pension levy must be just about the biggest rip-off pulled-off by government - bigger than Property Taxes, bigger than Water Charges - yet all happening without as much as a whimper of protest.

And this "silent tax" affects DB (180,000 people) and DC pensions (240,000 people) in equal measure - whether you are retired now or hope to be retired sometime in the future.

See this report in the Sunday Independent:

The State is getting away with this because few grasp how the levy works, such is its complexity.

It is due to reap €675m this year, with this year's levy deducted from retirement funds in the past few days.

The yield is greater than the amount of money to be collected from the property tax, and more than water charges will take in.

The controversial levy was introduced by the Government in 2011.

It affects around 180,000 people who have defined-benefit pensions, and around 240,000 who are members of defined-contribution schemes.

This outrageous, massive levy, introduced as a temporary measure, was supposed to be scrapped last year but is still with us, hitting private sector pensioners and future pensioners directly in the pocket - to fund government overspending in other areas that are less easy to tackle.

With the budget looming next week, it's time for this unjust tax to stop!

BoJack Horseman

There is a trade off with it though.

Its directly offsets the reduction in vat in the hospitality/entertainment sectors & a reduction in travel tax.

The pseudo-lefty parties don't seem to give a toss about it because it isn't sexy enough.

If Noonan intends to keep the 9% vat rate, the levy will stay..... Especially as opposition is modest compared to other taxes.
2 more years if I had to guess.

Godge

hmmm wrote: »

A few commentators have mentioned in the Budget threat that the/a pension levy is staying. What they haven't mentioned is the basic unfairness of the new levy. People who have no guaranteed pensions are going to be paying a levy which will be used to bail out people with guaranteed pensions.

What's even more unfair is the people with no guaranteed pensions are already having to pay large sums into their pensions, while in many cases those with guaranteed (defined benefit) are often paying little or nothing - and are then surprised when they find out their pensions are underfunded. Well happy days, they will now be getting their pensions thanks to the levy.

I'm trying to avoid hyperbole, but this new levy is unfair and unethical. I won't even get started on the stupidity of commissioning reports to find out why people aren't taking out pensions, while at the same time using them as a captive slush fund for government spending.

To some people, water charges are unfair and unethical.
To other the public service pension-related deduction is unfair and unethical.
To others the property tax and the household charge are unfair and unethical.
And to many the universal social charge was unfair and unethical.

All of these charges were paid by some people and not by others. There is no consensus on who should be in or out. Those who pay resent those who don't. Those who don't pay keep quiet.

There is no objective measure of what is unfair and unethical. From one point of view, those who can afford to pay into a pension fund are wealthier than those who cannot afford to pay anything towards a pension. Taxing a small portion of that wealth seems fair and ethical to those without any pension.

If this is a disguised attempt to have another PS-bashers thread, the PRPD has had a greater effect on public sector workers than the pension levy so your anger is misplaced. It may be you are looking at places like the banks, I don't know.

hmmm

BoJack Horseman wrote: »

There is a trade off with it though.

Its directly offsets the reduction in vat in the hospitality/entertainment sectors & a reduction in travel tax.

To which the obvious question is why TF a pension levy should have anything to do with VAT on the hospitality sector in the first place?

the levy will stay..... Especially as opposition is modest compared to other taxes.
2 more years if I had to guess.

It will probably stay because people will only notice the theft when they come to retire. The damage is done, the government has shown that it is willing to dip into peoples pensions to pay for day to day expenses, and to pay for underfunded DB schemes. The only reason the government picked on pensions in the first place is because people were locked in, they wouldn't dare touch something like bank deposits which are mobile.

The damage this has done to future pension provision is just mindblowing - no Irish government will ever get buy-in for a mandatory pension scheme (which is the future of pension provision worldwide). It's Irish short-term stroke politics at its very worst.

hmmm

Godge wrote: »

There is no objective measure of what is unfair and unethical.

The pension levy was theft, and lazy theft. People invested in pensions on the understanding that they would receive tax relief on the way in, pay tax on the way out and their money would be locked in. The government choose to dip into those funds and use that money as their own.

There is a massive difference between stealing the assets of citizens and imposing new taxes.

Taxing a small portion of that wealth seems fair and ethical to those without any pension.

Pensions are taxed already.

If this is a disguised attempt to have another PS-bashers thread, the PRPD has had a greater effect on public sector workers than the pension levy so your anger is misplaced.

Different things. The pension levy on the PS was to make them pay towards the costs of their pensions. The pension levy imposed by the government involved taking a slice of the pension savings themselves.

BoJack Horseman

hmmm wrote: »

To which the obvious question is why TF a pension levy should have anything to do with VAT on the hospitality sector in the first place?

Ask Noonan.... Offsets are inevitable & the move was welcomed at the time.

no Irish government will ever get buy-in for a mandatory pension scheme (which is the future of pension provision worldwide). It's Irish short-term stroke politics at its very worst.

True dat..
I shudder at the thought of a mandatory pension.
If not for this, more for poor growth & penal fees.

Godge

hmmm wrote: »

The pension levy was theft, and lazy theft. People invested in pensions on the understanding that they would receive tax relief on the way in, pay tax on the way out and their money would be locked in. The government choose to dip into those funds and use that money as their own.

There is a massive difference between stealing the assets of citizens and imposing new taxes.

Pensions are taxed already.


Different things. The pension levy on the PS was to make them pay towards the costs of their pensions. The pension levy imposed by the government involved taking a slice of the pension savings themselves.

Pensions receive generous tax breaks. The levy claws back a portion (only a portion) of those generous tax breaks. The alternative measure, to restrict tax relief further was considered. That would have made pensions more expensive.

In both the private sector pension levy and the public sector pension-related deduction, the net effect was that people had to pay more for the same benefit. Slightly different measures, same effect.

In the public sector the paying more was not optional. In the private sector, at least you could have the option of paying the same for less benefit.

I think both provisions were wrong and I also believe you cannot oppose one and support the other. However, I also think they were very clever taxes as they raised money from immobile assets. While I dislike both of them, I can see why they happened and why they were needed. And a bit of me inside sees the point of view of the person with no pension fund.

hmmm

Godge wrote: »

Pensions receive generous tax breaks. The levy claws back a portion (only a portion) of those generous tax breaks. The alternative measure, to restrict tax relief further was considered. That would have made pensions more expensive.

The vast majority of pension taxation is paid at the point that someone withdraws their pension. After a series of restrictions over recent years, people are paying a small amount of tax on money they are putting into a pension, paying a levy on their accumulated fund, and are then being taxed in full on the way out. There's also no guarantees that taxation won't change in the future, as there has been constant changing and tinkering with the rules.

Pensions are a social good. They should be encouraged and not seen as slush fund for politicians to dip their hands into.

Slightly different measures, same effect.

They are massively different. The PS pension levy was for a completely different purpose, which was to get people paying for their pension in the first place.

However, I also think they were very clever taxes as they raised money from immobile assets.

The pension levy was lazy, not clever. Anyone can slap a tax on an immobile pension, but it makes no sense to do so if you also somehow want to incentivise people to provide for themselves in the future. Even the OECD is scratching its head to understand why our government has been so short sighted.

And a bit of me inside sees the point of view of the person with no pension fund.

In other countries bringing in mandatory (or soft mandatory) pensions have been the answer to increasing pension coverage amongst those with no pensions. That's a dead idea in this country now following the levy, despite Joan Burton commissioning a never ending series of reports.

Godge

hmmm wrote: »

They are massively different. The PS pension levy was for a completely different purpose, which was to get people paying for their pension in the first place.

I am not getting into this with you but public servants were already paying 6.5% towards their pensions. The rest of the cost was essentially made up by their employer - the State. So it was a case of pay more for the same.

Rightwing

golfwallah wrote: »

The pension levy must be just about the biggest rip-off pulled-off by government - bigger than Property Taxes, bigger than Water Charges - yet all happening without as much as a whimper of protest.

And this "silent tax" affects DB (180,000 people) and DC pensions (240,000 people) in equal measure - whether you are retired now or hope to be retired sometime in the future.

See this report in the Sunday Independent:


This outrageous, massive levy, introduced as a temporary measure, was supposed to be scrapped last year but is still with us, hitting private sector pensioners and future pensioners directly in the pocket - to fund government overspending in other areas that are less easy to tackle.

With the budget looming next week, it's time for this unjust tax to stop!

A typical raid on the private sector. It's getting harder to do, but people should keep as much of their wealth as possible out of reach from Government.

creedp

Rightwing wrote: »

A typical raid on the private sector. It's getting harder to do, but people should keep as much of their wealth as possible out of reach from Government.

Tut tut .. advocating that people should break the law.

Rightwing

creedp wrote: »

Tut tut .. advocating that people should break the law.

Tax evasion v tax avoidance.

golfwallah

Godge wrote: »

To some people, water charges are unfair and unethical.

This is a false argument, IMO, as water charges and the pension levy are not comparable, the former being a charge for consumption of a scarce resource (indiscriminately as between private and public sector) and the latter a transfer by government of private retirement income to propping up unaffordable public overspending today.

To other the public service pension-related deduction is unfair and unethical.

There is no comparison between private and public sector pensions. The former are generally provided on a funded basis (through worker and employer deductions), whereas the latter are provided on an unfunded basis out of current taxation. If a private company becomes insolvent it will be wound up - its pension fund, unlike those in the public service, can’t rely on future income / taxation to provide pensions for its workers.

To others the property tax and the household charge are unfair and unethical.
And to many the universal social charge was unfair and unethical.

These also are invalid comparisons as these taxes apply to all citizens – regardless of whether public or private sector workers.

All of these charges were paid by some people and not by others. There is no consensus on who should be in or out. Those who pay resent those who don't. Those who don't pay keep quiet.

There is no objective measure of what is unfair and unethical. From one point of view, those who can afford to pay into a pension fund are wealthier than those who cannot afford to pay anything towards a pension. Taxing a small portion of that wealth seems fair and ethical to those without any pension.

The whole point is that the pension levy is not a small tax as you are portraying it – it is very large – much bigger than either property tax or water charges. It is also a major disincentive to thrift / self-reliance, which governments have historically encouraged in order to remove a further future pension burden from the state.

If this is a disguised attempt to have another PS-bashers thread, the PRPD has had a greater effect on public sector workers than the pension levy so your anger is misplaced. It may be you are looking at places like the banks, I don't know.

Dismissing threads or opinions that are anyway sympathetic towards the private sector, which is the very source of funding for the public sector, as “another PS-basher” is no substitute for reasoned / balanced argument. I don’t know anyone in the private sector, who dismisses the need for public services that are reasonable, affordable and governed by one set of rules for both sectors. For example, if a private company engages in activities that do not change in line with market requirements it will quickly run out of money and be closed – result = loss of jobs for management and workers. Public Sector entities, on the other hand, can keep going or change very little and very slowly, by borrowing almost unlimitedly on the strength of future taxes.

Sheldons Brain

golfwallah wrote: »

Public Sector entities, on the other hand, can keep going or change very little and very slowly, by borrowing almost unlimitedly on the strength of future taxes.

Public sector bodies even when successful and very much in demand will be interfered with by politicians.

Many of the actions of the government were lazy and counter productive in the long run, including the levy on private pension funds. These stunts need to be unwound as soon as possible, but the temptation of these politicians is to go for further short termism.

golfwallah

Godge wrote: »

Pensions receive generous tax breaks. The levy claws back a portion (only a portion) of those generous tax breaks. The alternative measure, to restrict tax relief further was considered. That would have made pensions more expensive.

This is a misrepresentation of what is not in fact a tax break but rather a deferral of tax until benefits start to be received (at which point, income tax has to be paid).

In both the private sector pension levy and the public sector pension-related deduction, the net effect was that people had to pay more for the same benefit. Slightly different measures, same effect.

You're mistaken here again - the net effect is not the same. Private sector pensions have effectively been reduced or the capacity to provide increases has been removed by the levy, which is a raid on private funds to shore up deficits elsewhere in the public purse. The public service pension levy, on the other hand, is to pay for benefits already being received by those contributing - it is not a transfer to other areas that are not benefiting from these deductions.

In the public sector the paying more was not optional. In the private sector, at least you could have the option of paying the same for less benefit.

This is also a misrepresentation of what is happening. Neither public nor private sectors have the option of not paying the levy. The biggest difference is that private sector pensions have to reduce their benefits (mainly through inflation by maintaining the same level of cash payments) to balance their books. There is no similar requirement for public sector pensions, which are paid out of current taxation.

I think both provisions were wrong and I also believe you cannot oppose one and support the other. However, I also think they were very clever taxes as they raised money from immobile assets. While I dislike both of them, I can see why they happened and why they were needed. And a bit of me inside sees the point of view of the person with no pension fund.

I wouldn't agree that the pension levy is a clever tax nor was it needed. It sacrifices long term benefits of self reliance towards short-term gain of running public spending deficits. It's a rip-off, pure and simple.

The only real difference is that public service workers are organised in their opposition, whereas private sector workers are not.

zielarz

golfwallah wrote: »

With the budget looming next week, it's time for this unjust tax to stop!

It will stay. That's an ideal situation for government. 600 miliion in tax and nobody is complaining.. definitely staying..

golfwallah

zielarz wrote: »

It will stay. That's an ideal situation for government. 600 miliion in tax and nobody is complaining.. definitely staying..

Unfortunately for private sector pensioners, current and future, that seems to be the case – you need a strong lobby to get anything done. Action on any issue is directly related to the volume of noise created about it.

The merits and de-merits of any argument about pensions or any other budgetary issue are mere window dressing, compared to the strength of political and/or lobbyist support, available to fight your corner’s interests.

For example those on social welfare pensions and unemployed have Tánaiste and Minister for Social Protection, Joan Burton. Public Sector employees have Minister for Public Expenditure and Reform, Brendan Howlin and of course, the public service unions.

Private Sector employee pensions – well, they have the Irish Association of Pension Funds (IAPF), which, according to their website is “a non- profit, non-commercial organisation whose aim is to promote financial security for all retired people”.

I had a quick look through their website – it seems to be largely focused on protecting employers and pension trustees, as opposed to pensioners themselves. The pension levy does get some space, but very little and certainly not enough to make any impact on our political decision makers.

Here’s what Rachael Ingle, Chairman of the Irish Association of Pension Funds, had to say about it, commenting on the upcoming Budget way back in October 2013:

Huge sums have already been extracted from pension savers through the pension levy and this is clearly impacting their ability to survive; it is time to stop regarding people’s retirement savings as a source of short-term tax revenue when it’s far more important to ensure we encourage people to save for the future in order to prevent a bigger crisis down the line. We need to ensure we can have a pension system in Ireland that is secure, fair and simple.

I fully agree but, unfortunately, token statements like this are totally insufficient, drowned out by other more effective lobbyists and not likely to influence those in power.

So, if you are a contributor or beneficiary of a private sector pension and want an end to the pension levy rip-off, you will need to start voicing your concerns to some authority figure, such as your company’s head of pensions or directly to your fund’s trustees.

golfwallah

I understand from one pension fund manager that existing pensioners have already had their pensions reduced because of the levy and that future pensioners will also feel the pinch (albeit, actuarially adjusted based on how many more years they will be paying into their funds).

This rip-off of private sector pensions to subsidise public sector workers with far better “gold plated” defined benefit pensions is a time bomb in the making, according to yesterday’s Sunday Independent article:

large swathes of Middle Ireland already cannot understand why they should have to pay an additional tax on defined contribution pensions in order to fund public-sector pensions that are defined benefit, and invariably more generous. And while it's a more slowly boiling source of resentment than utility taxes, the levy - if continued - could bring political divisions to a head in 2016 in a way the Government has not yet foreseen.

The Professional Insurance Brokers Association (PIBA) has estimated that continuing the levy in this year’s budget will cost that average private sector pensioner €36,000. And this money is now gone into the black hole of public sector pensions.

I’m not surprised people are voting for independents as against the established political parties. Pat Rabbitte’s recent post by-election rant about populism rings hollow – particularly when his own party’s short-term action supports the use of “wheeze” taxes like the pension levy to appease their public sector followers.

Pat and his Labour Party colleagues would do well to reflect that holding onto power with such stunts is like trying to “hold a wolf by the ears”!

Godge

golfwallah wrote: »

I understand from one pension fund manager that existing pensioners have already had their pensions reduced because of the levy and that future pensioners will also feel the pinch (albeit, actuarially adjusted based on how many more years they will be paying into their funds).

This rip-off of private sector pensions to subsidise public sector workers with far better “gold plated” defined benefit pensions is a time bomb in the making, according to yesterday’s Sunday Independent article:


The Professional Insurance Brokers Association (PIBA) has estimated that continuing the levy in this year’s budget will cost that average private sector pensioner €36,000. And this money is now gone into the black hole of public sector pensions.

I’m not surprised people are voting for independents as against the established political parties. Pat Rabbitte’s recent post by-election rant about populism rings hollow – particularly when his own party’s short-term action supports the use of “wheeze” taxes like the pension levy to appease their public sector followers.

Pat and his Labour Party colleagues would do well to reflect that holding onto power with such stunts is like trying to “hold a wolf by the ears”!

This is silly.

The private sector pension levy is not being used to fund public service pensions. That is tabloid nonsense.

Rightwing

golfwallah wrote: »

I understand from one pension fund manager that existing pensioners have already had their pensions reduced because of the levy and that future pensioners will also feel the pinch (albeit, actuarially adjusted based on how many more years they will be paying into their funds).

This rip-off of private sector pensions to subsidise public sector workers with far better “gold plated” defined benefit pensions is a time bomb in the making, according to yesterday’s Sunday Independent article:


The Professional Insurance Brokers Association (PIBA) has estimated that continuing the levy in this year’s budget will cost that average private sector pensioner €36,000. And this money is now gone into the black hole of public sector pensions.

I’m not surprised people are voting for independents as against the established political parties. Pat Rabbitte’s recent post by-election rant about populism rings hollow – particularly when his own party’s short-term action supports the use of “wheeze” taxes like the pension levy to appease their public sector followers.

Pat and his Labour Party colleagues would do well to reflect that holding onto power with such stunts is like trying to “hold a wolf by the ears”!

I've been hoping this would happen for years. You'd swear independents bankrupted the country in the first instance.

The more luke flanagans that get into Europe the better too.

golfwallah

Godge wrote: »

This is silly.

The private sector pension levy is not being used to fund public service pensions. That is tabloid nonsense.

You are obviously a beneficiary of the private sector pension levy rip-off - so, naturally, would see nothing wrong with the private sector propping up public sector pensions - it ain't costing you anything.

Those depending on private sector pensions have already been ripped-off by €36,000 and would not see it the same way that you do!

I guess the word "nonsense" applies to facts that don't quite fit in with your own interests.

Godge

golfwallah wrote: »

You are obviously a beneficiary of the private sector pension levy rip-off - so, naturally, would see nothing wrong with the private sector propping up public sector pensions - it ain't costing you anything.

Those depending on private sector pensions have already been ripped-off by €36,000 and would not see it the same way that you do!

I guess the word "nonsense" applies to facts that don't quite fit in with your own interests.

Well, yes and no actually. I got out of the public service before the public service pension levy so I escaped that one but I have a preserved public service pension - only a few years to go

I now have a private sector pension fund, haven't paid much attention to it but one of these days I will.

You could argue that I am paying the private sector pension levy in order to pay myself the public service pension later but that is ridiculous.

The reality is that the two are unconnected and it is only the tabloids who like to stir it up.

Rightwing

Godge wrote: »

Well, yes and no actually. I got out of the public service before the public service pension levy so I escaped that one but I have a preserved public service pension - only a few years to go

I now have a private sector pension fund, haven't paid much attention to it but one of these days I will.

You could argue that I am paying the private sector pension levy in order to pay myself the public service pension later but that is ridiculous.

The reality is that the two are unconnected and it is only the tabloids who like to stir it up.

Technically they are unconnected, but in reality, they can't be. All our taxes go towards the public sector, pensions, services and wages.

Godge

Rightwing wrote: »

Technically they are unconnected, but in reality, they can't be. All our taxes go towards the public sector, pensions, services and wages.

In the same way it can be argued that the public service pension-related deduction is used to fund the tax relief given to those who contribute to private sector pension funds.

Rightwing

Godge wrote: »

In the same way it can be argued that the public service pension-related deduction is used to fund the tax relief given to those who contribute to private sector pension funds.

No, because it's only tax relief.

golfwallah

Godge wrote: »

Well, yes and no actually. I got out of the public service before the public service pension levy so I escaped that one but I have a preserved public service pension - only a few years to go

I now have a private sector pension fund, haven't paid much attention to it but one of these days I will.

You could argue that I am paying the private sector pension levy in order to pay myself the public service pension later but that is ridiculous.

The reality is that the two are unconnected and it is only the tabloids who like to stir it up.

As a future beneficiary of both a public and private sector pension, your point about paying the levy to cross-subsidize yourself may, indeed, be ridiculous, but unfortunately, it is true.

That being said, the vast majority of pensioners depending on private sector pensions are not in your position and end up with just paying the levy to prop up public sector deficits, of which public sector pensions are a huge proportion.

So the papers are not just stirring it up - they are reporting on issues that will impact on more and more people as time goes by. The sad part is they don't realise it yet or, more likely, have more pressing immediate issues to occupy them right now.

That doesn't get away from the fact that the average transfer of value from each private sector pensioner (current and future) = a whopping €36,000.

Say thank you very much Mr. Public Sector Pensioner - but, of course, it's easier to dismiss this silent rip-off as "nonsense", "ridiculous" and "not connected to the public sector".

Rightwing

I would have sympathy for a young public sector worker. I really can't see them getting a whole lot back when retirement comes along.

Godge

Rightwing wrote: »

No, because it's only tax relief.

Not at all, tax relief is tax revenue foregone and in economic terms is considered a tax expenditure, similar to any item of public expenditure.

So yes, it can very well be argued that the public sector pension-related deduction is paying for the cost of tax relief to private sector pensions in the same way that the opposite is argued for the private sector pension levy.

Rightwing

Godge wrote: »

Not at all, tax relief is tax revenue foregone and in economic terms is considered a tax expenditure, similar to any item of public expenditure.

So yes, it can very well be argued that the public sector pension-related deduction is paying for the cost of tax relief to private sector pensions in the same way that the opposite is argued for the private sector pension levy.

You could always argue that allowing people a salary, any salary is revenue forgone.

Mousewar

My own position is that I work in the Public Service (technically) but am not allowed to contribute to the pension scheme. However, in a previous position I was allowed to contribute. Hence I have a Public Service pension waiting for me when I retire (it's based on about 4 years service so constitutes very little money). However, since I stand 'to receive a benefit' under the Pension scheme as a result of these 4 years of contributions I have to pay the Pension levy in my current position. I've worked it out - I'll pay more in Pension levy than I'll earn from the tiny Pension I'll get when I retire. In fact, I'm only 30 years old so by the time I retire I may have spent a six figure sum on the levy in return for a pension worth about 15k in total.
Now, that makes it unfair.

Godge

Rightwing wrote: »

You could always argue that allowing people a salary, any salary is revenue forgone.

A tax expenditure has a specific connotation - see below.

http://en.wikipedia.org/wiki/Tax_expenditure

The tax relief given to private pensions qualifies as a tax expenditure. As such, somebody has to pay for it somewhere. That could well be the public sector pension-related deduction.

The easiest thing would be for people to stop pretending that a particular form of expenditure is covered by a particular form of revenue.