how much of a pension should you have come retirement age

AndrewJRenko

anewme wrote: »

Or rather, like everything else, the people in the middle pay everything.

Not rich enough to afford to pay it and not feel it, nor poor enough to have nothing.

Is this about how it feels or how it actually works?

Rich people pay much more inheritance tax than people in the middle, regardless of how either of them feel about it. The tax only kicks in for children when you have either a very expensive house or a very small number of children. Your average family in your average house won't be paying anything.

Mortelaro

ANXIOUS wrote: »

To correct this post, an equity release wouldn't be available in retirement.

A life time mortgage would be available if retired,which is an equity release ,why wouldn't it be?

A pensioner home owner can release equity in their home via a bank through one of those if they want
Obviously it's better to have what you need saved if you can
But you'll be dead when the lifetime mortgage is redeemed and what's left or not won't matter
The house is no good to you when you're dead

anewme

AndrewJRenko wrote: »

Is this about how it feels or how it actually works?

Rich people pay much more inheritance tax than people in the middle, regardless of how either of them feel about it. The tax only kicks in for children when you have either a very expensive house or a very small number of children. Your average family in your average house won't be paying anything.

Rich people have the benefits of tax planning and avoidance schemes, setting up Trusts, covenants, offshore companies etc. They also usually have rental incomes.

Poor people have nothing, they get everything that is handed out benefits wise.

As a PAYE worker only, everything is taxed at source and any payments are means tested. For example, the pension gap where people leave work at 65 but must either get another job or sign on till 68. Once the job seekers or whatever is means tested, they get nothing. The pensions gap is a crisis facing middle earners mainly.

In my case, a final pot of €700k left to 2 nieces will be fleeced if both are only allowed take €32,500 before tax kicks in. There are a lot of single people middle earners, with a home and a pension pot who would be similar. Single people are discrimiated against re inheritance tax.

Liam D Ferguson

anewme wrote: »

In my case, a final pot of €700k left to 2 nieces will be fleeced if both are only allowed take €32,500 before tax kicks in. There are a lot of single people middle earners, with a home and a pension pot who would be similar. Single people are discrimiated against re inheritance tax.

It is possible to set up a life insurance policy which will pay the inheritance tax liability when you die, without the policy payout itself becoming part of the estate for tax purposes. So your nieces would inherit the lot without it being reduced in their hands by the inheritance tax. But the tax will still be paid and in effect you'll have paid for it because you'll have paid the life insurance premiums until you shuffle off this mortal coil. So this solution benefits your nieces but somehow I suspect that you might not be enamoured with it.

anewme

Liam D Ferguson wrote: »

It is possible to set up a life insurance policy which will pay the inheritance tax liability when you die, without the policy payout itself becoming part of the estate for tax purposes. So your nieces would inherit the lot without it being reduced in their hands by the inheritance tax. But the tax will still be paid and in effect you'll have paid for it because you'll have paid the life insurance premiums until you shuffle off this mortal coil. So this solution benefits your nieces but somehow I suspect that you might not be enamoured with it.

Thats great thanks. All options welcome.

When I looked at the overall situation recently, I realised I probably do need some specialist advice and overall financial and pension planning. So will look into it in the new year.

thebourke

so basically when you come to retirement age and you had a pension pof of 300...you could only get 75,000euro in to your hand tax free..is that correct?
after that the balance of 225k, you have to pay tax on ...what rate?
what happens if you needed the remainder (225k)urgently for something....you can't your hands on it?

AndrewJRenko

anewme wrote: »

Rich people have the benefits of tax planning and avoidance schemes, setting up Trusts, covenants, offshore companies etc. They also usually have rental incomes.

Poor people have nothing, they get everything that is handed out benefits wise.

As a PAYE worker only, everything is taxed at source and any payments are means tested. For example, the pension gap where people leave work at 65 but must either get another job or sign on till 68. Once the job seekers or whatever is means tested, they get nothing. The pensions gap is a crisis facing middle earners mainly.

In my case, a final pot of €700k left to 2 nieces will be fleeced if both are only allowed take €32,500 before tax kicks in. There are a lot of single people middle earners, with a home and a pension pot who would be similar. Single people are discrimiated against re inheritance tax.

You're overplaying the issue on both sides. All payments aren't means tested. Child benefit is a universal payment, for example. PAYE workers benefit from generous tax relief for pension contributions.


Very, very rich people may benefit from trusts, but there are really very few of those. And yes, your nieces will have a substantial tax due, but if they go on to inherit from their parents at some point, they won't.

There is no discrimination against you or any single person. The tax doesn't apply to you.

anewme

AndrewJRenko wrote: »

You're overplaying the issue on both sides. All payments aren't means tested. Child benefit is a universal payment, for example. PAYE workers benefit from generous tax relief for pension contributions.


Very, very rich people may benefit from trusts, but there are really very few of those. And yes, your nieces will have a substantial tax due, but if they go on to inherit from their parents at some point, they won't.

There is no discrimination against you or any single person. The tax doesn't apply to you.

Yes, it does.

Inheritance tax discriminates against single people and their Estate.

My Estate has been taxed, as everything in it is purchased from an after tax PAYE income.

Taxing it again is taking the piss.

AndrewJRenko

anewme wrote: »

Yes, it does.

Inheritance tax discriminates against single people and their Estate.

My Estate has been taxed, as everything in it is purchased from an after tax PAYE income.

Taxing it again is taking the piss.

You could make the same arguement against VAT, LPT, Motor Tax - all purchased from after-tax PAYE income. That's pretty much the nature of tax.


You are not discriminated against, because you won't be paying any tax from your estate. Your nieces will have the opportunity to benefit from generous tax exemptions from their parents, same as anyone else.

ixoy

anewme wrote: »

Inheritance tax discriminates against single people and their Estate.

How does it discriminate single people as opposed to a married childless couple? In both cases they'd be gifting it ultimately to someone who isn't a descendant and probably in the Group B category for tax.
So as a married couple, I'd bypass my sister in favour of her children because otherwise it'd be taxed twice (Group B from me to her, and then Group A from her to them in the long term).

ANXIOUS

Mortelaro wrote: »

A life time mortgage would be available if retired,which is an equity release ,why wouldn't it be?

A pensioner home owner can release equity in their home via a bank through one of those if they want
Obviously it's better to have what you need saved if you can
But you'll be dead when the lifetime mortgage is redeemed and what's left or not won't matter
The house is no good to you when you're dead

No Irish bank is offering this.

ANXIOUS

Liam D Ferguson wrote: »

It is possible to set up a life insurance policy which will pay the inheritance tax liability when you die, without the policy payout itself becoming part of the estate for tax purposes. So your nieces would inherit the lot without it being reduced in their hands by the inheritance tax. But the tax will still be paid and in effect you'll have paid for it because you'll have paid the life insurance premiums until you shuffle off this mortal coil. So this solution benefits your nieces but somehow I suspect that you might not be enamoured with it.

Yes, Section 72. That is getting into a very specialised area, I've seen some people who shouldn't have it being insured for huge sums.

aristotle25

thebourke wrote: »

so basically when you come to retirement age and you had a pension pof of 300...you could only get 75,000euro in to your hand tax free..is that correct?
after that the balance of 225k, you have to pay tax on ...what rate?
what happens if you needed the remainder (225k)urgently for something....you can't your hands on it?

I am not an expert but I believe the options you have with the 225k are:

1) Buy an annuity from your pension provider e.g. they may give you €6500 per year for the rest of your life but you essentially give all of the 225k to them for that benefit.

2) Invest the 225k into an ARF from which you need to drawdown a min of 4% p.a.
This ARF can be left to your estate.

Tax rates you pay depennd on your overall income.

If you are in a pension scheme they may be a pension adviser, ask to talk to them, they are paid to give you this type of info so use them. Or start researching, loads of info on the web obviously...e.g https://www.newireland.ie/wp-content/uploads/pdfs/300302_V13.02.16_Your_Guide_to_Retirement_Options.pdf

Geuze

anewme wrote: »

Because it's mine. My home, my money.

That I've built up over 50 years, by myself.

I've paid enough tax on it already, I want to leave it to someone who can use it.

The Govt. have got enough from me already, and then some. I'd rather blow it in Vegas on Red or Black, if it comes to it, than let them fleece me again. Charity seems the right way to go.

OK.

It is interesting that CAT seems to arouse strong opinions in people.

Geuze

thebourke wrote: »

so basically when you come to retirement age and you had a pension pof of 300...you could only get 75,000euro in to your hand tax free..is that correct?
after that the balance of 225k, you have to pay tax on ...what rate?
what happens if you needed the remainder (225k)urgently for something....you can't your hands on it?

AFAIK, you can, but you pay income tax on it.

Liam D Ferguson

thebourke wrote: »

so basically when you come to retirement age and you had a pension pof of 300...you could only get 75,000euro in to your hand tax free..is that correct?
after that the balance of 225k, you have to pay tax on ...what rate?
what happens if you needed the remainder (225k)urgently for something....you can't your hands on it?

A pension fund is intended to provide you with an income in retirement. Retirement could last for 30 years or more. It would be an odd decision to cash in all your retirement income in one go, but if you have a separate lifetime income of at least €12,700 per year (e.g. the State Pension) then you can do it.

Any withdrawals will be taxed as if they were income. How much you will be taxed depends on how much you withdraw in the one tax year. With figures like this example you might be under the tax exemption threshold altogether - €18,000 per year for a single person aged 65 or over, or €36,000 for a married couple where at least one is 65 or more. Some of your pension might be taxed at 20%. If you chose to withdraw the whole lot at one go, then a large chunk of it would be taxed at the higher 40% rate. Another reason not to blow all your pension in one year - it's not a savings account; it's a pension.

anewme

Geuze wrote: »

OK.

It is interesting that CAT seems to arouse strong opinions in people.

Sorry, I suppose it is fair to say I am narky enough over it.

Maybe because it's all earned through years sheer hard graft and PAYE only and I've paid tax of top rate at times when I had no food paid the bins on Credit Card rather than go under. I've paid more than my share of tax on my income in this lifetime and what I have left should be mine to do what I like with.

Anyway, best option is to try and mitigate as best I can and will take some advice on it in the new year. Thanks everyone for the advices, most helpful.

KyussB

Ya but you passing on stuff is income/gains to someone else - that's why it's taxed again.

anewme

KyussB wrote: »

Ya but you passing on stuff is income/gains to someone else - that's why it's taxed again.

It's mine. I should be able to do what I like with it. Ive already paid tax on it. Anyway, that's my view on it. I will spend it rather than leave it.

KyussB

That's right, it's yours, you've already paid tax on it. When the people you pass the money on to get the money, it's theirs and they have to pay tax on it, too.

Same way as when you take some of your money, and give it to someone to do work for you - the money is then theirs, and they have to pay tax on it, too.

anewme

KyussB wrote: »

That's right, it's yours, you've already paid tax on it. When the people you pass the money on to get the money, it's theirs and they have to pay tax on it, too.

Same way as when you take some of your money, and give it to someone to do work for you - the money is then theirs, and they have to pay tax on it, too.

I pay people for doing work. Its a contract. I dont know them.

I dont need to pay my family. Its not work.

It's not the same at all.

Anyway, I dont want to keep going on about it, as its a different topic. As I said, I will seek specialist advices on Estate planning.

Liam D Ferguson

anewme wrote: »

I pay people for doing work. Its a contract. I dont know them.

I dont need to pay my family. Its not work.

It's not the same at all.

Anyway, I dont want to keep going on about it, as its a different topic. As I said, I will seek specialist advices on Estate planning.

It's a fundamental part of the tax system that you pay tax when you receive money or goods from any third party. Your relationship with the third party can affect the rate of tax, but just because you're related to the person giving you the money it does't therefore exempt the recipient from tax. If your nieces were working for you they would pay tax on that income.

(*) You get paid for doing a job; you pay tax.

(*) You receive a large gift of money or property; you pay tax.

(*) You inherit money or property; you pay tax.

I'm ignoring tax exemptions, limits etc.

Once your nieces receive the money from you, it's no longer your money. It's now their money and they pay tax on the receipt of that money. If they have any left over when they die and they pass it on to their nieces, their nieces will pay tax.

anewme

Liam D Ferguson wrote: »

It's a fundamental part of the tax system that you pay tax when you receive money or goods from any third party. Your relationship with the third party can affect the rate of tax, but just because you're related to the person giving you the money it does't therefore exempt the recipient from tax. If your nieces were working for you they would pay tax on that income.

(*) You get paid for doing a job; you pay tax.

(*) You receive a large gift of money or property; you pay tax.

(*) You inherit money or property; you pay tax.

I'm ignoring tax exemptions, limits etc.

Once your nieces receive the money from you, it's no longer your money. It's now their money and they pay tax on the receipt of that money. If they have any left over when they die and they pass it on to their nieces, their nieces will pay tax.

The exemption limits are shocking for single people. It is definitely time for specialist advice.

AndrewJRenko

anewme wrote: »

It's mine. I should be able to do what I like with it. Ive already paid tax on it. Anyway, that's my view on it. I will spend it rather than leave it.

Everytime you spend it, you're paying tax on it btw - VAT.

anewme wrote: »

The exemption limits are shocking for single people. It is definitely time for specialist advice.

Yeah, I suppose the limits should be lowered, but what can you do.

KyussB

anewme wrote: »

I pay people for doing work. Its a contract. I dont know them.

I dont need to pay my family. Its not work.

It's not the same at all.

Anyway, I dont want to keep going on about it, as its a different topic. As I said, I will seek specialist advices on Estate planning.

Even when you take work out of the picture: You can't just give a stranger a huge chunk of money without that person paying tax on it, any more than you can give a family member a huge chunk of money without them paying tax on it.

That's how the entire economy works. You'll be hard pressed to find many financial transactions like that, which don't require paying some tax on the transaction.

anewme

KyussB wrote: »

Even when you take work out of the picture: You can't just give a stranger a huge chunk of money without that person paying tax on it, any more than you can give a family member a huge chunk of money without them paying tax on it.

That's how the entire economy works. You'll be hard pressed to find many financial transactions like that, which don't require paying some tax on the transaction.

I have an issue with how single (and childless couples as someone else pointed out) are treated and what they can pass on. The exemptions are prohibitive and Im sure Im not the only person who feels that way.

I will just have to make sure I spend it all, or spend it now, or get the specialist advice as how to mitigate which is my original question as to how much would I realistically need to keep cash along with my pension.

Heebie

tomwaits48 wrote:

Yes, the company pays 50%, so I kick up €850 myself.

I want a job where you work!
Most companies only match to 5%
Really generous ones go as high as 25% after 30 years of service or so.
50% would be incredible!

Heebie

anewme wrote:

In my case, a final pot of €700k left to 2 nieces will be fleeced if both are only allowed take €32,500 before tax kicks in. There are a lot of single people middle earners, with a home and a pension pot who would be similar. Single people are discrimiated against re inheritance tax.

You should probably consult with a firm that handles such things. You could possibly set up something like a revocable trust, which could pay the money out to them over time in a fashion that could minimise the tax they pay, with provisions to pay out to others in the event something happens to them. (Such as their kids if they have any)
They could probably also get whatever maximum lump sum is allowed by law at the outset directly from your estate.

KyussB

anewme wrote: »

I have an issue with how single (and childless couples as someone else pointed out) are treated and what they can pass on. The exemptions are prohibitive and Im sure Im not the only person who feels that way.

I will just have to make sure I spend it all, or spend it now, or get the specialist advice as how to mitigate which is my original question as to how much would I realistically need to keep cash along with my pension.

They're not treated any differently to anyone else. What you want is special treatment for those you transfer to - for them to not have any tax placed on the transfer - which is contrary to just about every other financial transaction that happens.

That's bullshit. If they want to receive a lump sum of money - they pay tax on it just like everyone else.

Why on earth should everyone else have to pay their taxes, and these people freeload, just because it's a relative giving them the money?

That's total bullshit. They should consider themselves lucky to get a single cent they never had to earn by themselves in first place. If anything, it should be slapped with a gigantic 90+% tax, since they didn't do anything to earn that money.

anewme

KyussB wrote: »

They're not treated any differently to anyone else. What you want is special treatment for those you transfer to - for them to not have any tax placed on the transfer - which is contrary to just about every other financial transaction that happens.

That's bullshit. If they want to receive a lump sum of money - they pay tax on it just like everyone else.

Why on earth should everyone else have to pay their taxes, and these people freeload, just because it's a relative giving them the money?

That's total bullshit. They should consider themselves lucky to get a single cent they never had to earn by themselves in first place. If anything, it should be slapped with a gigantic 90+% tax, since they didn't do anything to earn that money.

What I want is for the exemptions to be fair and to factor in not everyone has children.

Calling me or my family freeloaders is an insult to someone who has worked 50 years. and saying that my Estate deserves to be taxed 90% is a dick thing to say. this is not after hours, so I would not expect that abusive quality of answer.

Whether you like it or not, people will seek options to pass their hard earned wealth whilst incurring minimal tax bills. That does not make either the donor or recipient a freeloader. That's what I'm asking for here, thanks to those re advice on Trusts, passing now etc.