Pension

rodneytrotter15

Padre_Pio wrote: »

Here's what revenue say


So they're included in my 20% tax relief.

I was full sure they weren't included. Does it make any sense paying more than % exemption ?

AndrewJRenko

McGaggs wrote: »

There's advisors out there that work with various civil servants pension schemes, and they don't have a clue how anything else in pensions works. They believe that the whole PRSA AVC can be taken as a lump sum, but Ga6il to realise that the lump sum paid by the civil service pension uses up just about all of the maximum amount allowed.

The lump sum depends totally on the grade - relatively few staff have the luxury of using up their lump sum max.

Cute Hoor

2012paddy2012 wrote: »

I always thought when I retired I get it all back with bells on

2012paddy2012 wrote: »

I asked the broker at the start - can I get this out basically in a lump sum when I retire - he indicated yes

If the broker indicated that you could take it out basically in a lump sum when you retired, then what he said was absolutely correct.

If the broker indicated that you could take it out basically TAX FREE in a lump sum when you retired, then what he said was absolutely incorrect and tbh I'd be going back challenging him on his advice, because it would have been ludicrous (that's the kindest I can be) advice that any and every broker would know was incorrect..

AndrewJRenko

2012paddy2012 wrote: »

In my case I saved for nearly 20 years in a prsa- I asked the broker at the start - can I get this out basically in a lump sum when I retire - he indicated yes but there may be other options

Well i could take a small amount between the revenue limits and superannuation limits etc etc - then go for another prsa or an ARF OTHER options - that would further tie up the money - it’s when you retire you want a few Bob not another 10 years out the road - I cashed mine In - no other option - returned near 50 percent - prsa usc all the gains made on tax relief etc -
I was in government work - all I’m saying is get proper advice from an independent accredited broker

Was this an AVC rather than a PRSA? I'm guessing that you reached the lump sum limits with your standard pension.

The J Stands for Jay

AndrewJRenko wrote: »

The lump sum depends totally on the grade - relatively few staff have the luxury of using up their lump sum max.

Isn't it just 3/80 per year of service for everyone?

AndrewJRenko

McGaggs wrote: »

Isn't it just 3/80 per year of service for everyone?

I'm not sure of the exact calculation tbh, but you'd want to be at a senior grade with long service to be coming near the Revenue max.

The J Stands for Jay

AndrewJRenko wrote: »

I'm not sure of the exact calculation tbh, but you'd want to be at a senior grade with long service to be coming near the Revenue max.

It would take long service, but the level of pay would be irrelevant.

AndrewJRenko

McGaggs wrote: »

It would take long service, but the level of pay would be irrelevant.

3/80 of a clerical officer salary is very different to 3/80 of a principal officer salary.

Cute Hoor

McGaggs wrote: »

Isn't it just 3/80 per year of service for everyone?

Is that 3/80 per year for every year of service up to a max of 1.5 times salary, if I am reading that right

The J Stands for Jay

AndrewJRenko wrote: »

3/80 of a clerical officer salary is very different to 3/80 of a principal officer salary.

With the Revenue maximum being 2/3 of final salary, it doesn't matter what the salary is because it just takes 40 years service at 3/80 per year to hit the maximum. If there was something in the pension scheme that gave extra years that wouldn't count in the Revenue calculation, it'd take less than 40 years.

The J Stands for Jay

Cute Hoor wrote: »

Is that 3/80 per year for every year of service up to a max of 1.5 times salary, if I am reading that right

That's right

Bass Reeves

2012paddy2012 wrote: »

In my case I saved for nearly 20 years in a prsa- I asked the broker at the start - can I get this out basically in a lump sum when I retire - he indicated yes but there may be other options

Well i could take a small amount between the revenue limits and superannuation limits etc etc - then go for another prsa or an ARF OTHER options - that would further tie up the money - it’s when you retire you want a few Bob not another 10 years out the road - I cashed mine In - no other option - returned near 50 percent - prsa usc all the gains made on tax relief etc -
I was in government work - all I’m saying is get proper advice from an independent accredited broker

PRSA's for people in your circumstances are often not explained clearly. It is similar to over investing in pensions unless you intend to try to use it as an inheritance vehicle and that is risky with nursing home charges

My own opinion is that when your pension fund is going to hit the high tax rate on drawdowns you are better off looking at other investment strategies. You also have to be mindful that taxation and other considerations may have to be taken into account.

It is quite likely that government may reduce pension contributions reliefs at some stage in the future or may tax employer contributions as BIK or place limits on these contributions. It may decide to standardise relief when compulsory pension come into effect to align taxation benefits for lower paid workers.

However on drawdowns it may decide to flat rate the lump-sum element instead of it being a set percentage of the pot or related to income averages as at present. These would have taxation effect on the rest of the pit.

PRSA for public sector workers were often misssold. They were really only apt where a worker either had substantial non pensionable pay in there wages such as overtime or non pensionable allowances. The other workers that PRSA's were applicable to was to workers that would not achieve a full pension before retiring or that intended to retire early.

However there is a sting in the tale. Most people assume that the cap on pensions is the two million max cap. There is however another revenue maximum that limits any pension that you can draw to a maximum of 2/3 of you averaged salary. In state pensions this is achieved when one hits max service and achieves a pension of half your wages and a lump sum of 1.5 years salary.

My understanding is revenue can take the excess funds. Some people consider that pension can be used as method of wealth accumulation and that is not strictly true.

AndrewJRenko

McGaggs wrote: »

With the Revenue maximum being 2/3 of final salary, it doesn't matter what the salary is because it just takes 40 years service at 3/80 per year to hit the maximum. If there was something in the pension scheme that gave extra years that wouldn't count in the Revenue calculation, it'd take less than 40 years.

I was talking about the €200k maximum lump sum

https://www.pensionsauthority.ie/en/lifecycle/tax/tax_on_lump_sums_at_retirement/

jcon1913

McGaggs wrote: »

You're forgetting the property tax when you talk about raising of pensions.

Under funding on irrelevant to everyone except older people with their defined benefit pensions (which are a thing of the past). The risk of fraud affecting a pension is much less than the risk of a dodgy tenant. Not forgetting that property is a depreciating asset with a finite lifespan, requiring maintenance expenditure to keep it on a state capable of producing an income.

Someone looking to put away €400 is not in a position to buy a property without a loan. The repayments are not an allowable expense for tax (only the interest is allowable), meaning that, rather than producing an income, it may require additional funds to pay the costs.

I’ve met a lot of people in their 50s 60s and 70s with 500-1500 per month income from a rented house with the mortgage paid years ago.

Some heartache- but most will tell you “best decision I ever made “

Bass Reeves

AndrewJRenko wrote: »

I was talking about the €200k maximum lump sum

https://www.pensionsauthority.ie/en/lifecycle/tax/tax_on_lump_sums_at_retirement/

The 200k is an overall limit. It is subject to one of two other limits. 25% of your fund is one limit on this case you need 800k in your fund before you can access 200k.

The other limit is on the case of where you are drawing a DB pension you are limited to 1.5 times the average of your best three years in the previous ten years.

There is another catch which can catch you earlier. If you worked in a company longterm and got a redundancy package( like the banks will do as they close branches) there is a tax relief on redundancy that is limited by the amount of your pension lump sum.

Cute Hoor

jcon1913 wrote: »

I’ve met a lot of people in their 50s 60s and 70s with 500-1500 per month income from a rented house with the mortgage paid years ago.

Some heartache- but most will tell you “best decision I ever made “

500-1500 per month income - Is that after tax and expenses

The J Stands for Jay

Bass Reeves wrote: »

My understanding is revenue can take the excess funds. Some people consider that pension can be used as method of wealth accumulation and that is not strictly true.

The balance goes to the employer of your pension (including lump sum) is greater than ⅔ of your salary. If you're over the €2m, revenue get 40% of the excess, then they can get a second do at the tax when you get your hands on it.

The J Stands for Jay

AndrewJRenko wrote: »

I was talking about the €200k maximum lump sum

https://www.pensionsauthority.ie/en/lifecycle/tax/tax_on_lump_sums_at_retirement/

That's just the maximum that's tax free. Next €300k is taxed at 20% with no USC and prsi.

mountai

My view on Pension Companies ---- Never trust them or have any dealings with them . The amount of these " Funds" that have gone bust , leaving the investors high and dry is criminal . When I started out in business , I was inundated by Insurance/Pension salesmen . Promises of vast amounts of cash were dangled before me . I asked this question ---- If I invested 15% of my income , taking the average industrial wage into consideration , index linked these payments for say 40 years , then tell me -- " What in todays figures , would the Pension figures be , using the same formula for someone who had invested 40 years ago ? " Guess what , not one of these geniuses came back to answer me . Depend on yourselves as I have done . Just my opinion .

Bass Reeves

McGaggs wrote: »

That's just the maximum that's tax free. Next €300k is taxed at 20% with no USC and prsi.

That is only available in a PRSA it not available to DB scheme participants AFAIK, I may be incorrect

The J Stands for Jay

Bass Reeves wrote: »

That is only available in a PRSA it not available to DB scheme participants AFAIK, I may be incorrect

It's the same limit for all pensions. DB schemes are unlikely to produce a lump sum that size, likely requiring 40 years servic and a salary of €300k.

dublin49

mountai wrote: »

My view on Pension Companies ---- Never trust them or have any dealings with them . The amount of these " Funds" that have gone bust , leaving the investors high and dry is criminal . When I started out in business , I was inundated by Insurance/Pension salesmen . Promises of vast amounts of cash were dangled before me . I asked this question ---- If I invested 15% of my income , taking the average industrial wage into consideration , index linked these payments for say 40 years , then tell me -- " What in todays figures , would the Pension figures be , using the same formula for someone who had invested 40 years ago ? " Guess what , not one of these geniuses came back to answer me . Depend on yourselves as I have done . Just my opinion .

Bit harsh but yeah Pensions are risky business and people in general don't protect their pension pots to the same degree they would if it was cash,and in reality it is cash,Pension providers are no different to most fund managers ,the so called experts play with your money,if successful they share the bounty while taking a nice slice for themselves ,and if not they still line their pockets while you and your colleagues take the hit.Would much prefer to manage it myself but most work scenarios don't make that possible.

AndrewJRenko

mountai wrote: »

My view on Pension Companies ---- Never trust them or have any dealings with them . The amount of these " Funds" that have gone bust , leaving the investors high and dry is criminal . When I started out in business , I was inundated by Insurance/Pension salesmen . Promises of vast amounts of cash were dangled before me . I asked this question ---- If I invested 15% of my income , taking the average industrial wage into consideration , index linked these payments for say 40 years , then tell me -- " What in todays figures , would the Pension figures be , using the same formula for someone who had invested 40 years ago ? " Guess what , not one of these geniuses came back to answer me . Depend on yourselves as I have done . Just my opinion .

What pension funds used by Irish pensioners have gone bust please? I can't recall any such cases.

dublin49

AndrewJRenko wrote: »

What pension funds used by Irish pensioners have gone bust please? I can't recall any such cases.

Waterford Crystal was the big one,I am sure there are loads with benefits written down you would never hear of.

mountai

AndrewJRenko wrote: »

What pension funds used by Irish pensioners have gone bust please? I can't recall any such cases.

Investments by fund managers are not confined to Ireland. Plenty of these companies have failed. Do a Google search and you will discover.

The J Stands for Jay

mountai wrote: »

Investments by fund managers are not confined to Ireland. Plenty of these companies have failed. Do a Google search and you will discover.

Googled it, and all I could find is stories about government pension schemes not putting on enough money to meet their promises.

The J Stands for Jay

dublin49 wrote: »

Waterford Crystal was the big one,I am sure there are loads with benefits written down you would never hear of.

That was an employer going bust without having funded the DB pension scheme fully. Not a pension scheme going bust.

Cute Hoor

Waterford Crystal & Independent Newspapers were 2 companies who had issues with their DB pension funds, I'm sure there are others but I can't remember, but these were issues of underfunding by the companies involved, and all were related to DB pensions. For better or worse DB funds went out with the Ark.

I'd like to hear who these DC Pension Funds who have failed are, obviously you will have ups and downs depending on financial performance, but failure? Examples please.

AndrewJRenko

dublin49 wrote: »

Waterford Crystal was the big one,I am sure there are loads with benefits written down you would never hear of.

That's not a pension company. It was a company pension - a defined benefit scheme. No one chooses to invest in a DB scheme.

AndrewJRenko

mountai wrote: »

Investments by fund managers are not confined to Ireland. Plenty of these companies have failed. Do a Google search and you will discover.

Go back over what you said, which was; ". The amount of these " Funds" that have gone bust , leaving the investors high and dry is criminal".

Can you point to one or two examples of this - funds gone bust leaving investors high and dry?

You seem to be shifting the goalposts now, talking about investments of those funds, which is a different story.

So have any pension funds actually gone bust, as you suggested?