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Opt in/out government pension scheme

  • 29-03-2022 7:09pm
    #1
    horgan_p
    Moderators, Education Moderators Posts: 2,607 Mod ✭✭✭✭


    So this could be very interesting, specifically if you are in your 40s without a pension.

    So if the money comes out pre tax and if your employer will match the contribution, you could get 4 euro for as little as .75 cent

    you kick in in 1.5 euro, your employer matches it. Then the government throws in a euro to make it 4.

    If your 1.5 euro is pretax then it potentially costs you as little as .75 euro. 

    So in effect you are getting 4 euro for .75 cent.


    Unless I'm completely wrong and I hope someone will correct me



Comments

  • #2
    Geuze
    Registered Users, Registered Users 2 Posts: 13,592 ✭✭✭✭Geuze


    You don't get pension income tax relief AND the State contribution.

    In the AE scheme, the State makes a cash contribution, which replaces the tax relief in existing pension plans.

    You save 1.50, the taxpayer adds 0.50, to make 2.00 total.

    This is equivalent to 25% tax relief.


    See AAM for several discussions.



  • #3
    horgan_p
    Moderators, Education Moderators Posts: 2,607 Mod ✭✭✭✭horgan_p


    https://www.boards.ie/discussion/comment/118854244#Comment_118854244

    So in effect the 6% comes from my NET income ?

    Not a great deal if I can get 40% relief from my current arrangement



  • #4
    Geuze
    Registered Users, Registered Users 2 Posts: 13,592 ✭✭✭✭Geuze


    Yes, correct.

    That very point is made by Burgess on AAM.

    https://www.askaboutmoney.com/threads/the-6-contribution-is-of-gross-income.226892/


    It is not attractive for people in existing schemes, getting 40% tax relief.



  • #5
    JimmyVik
    Registered Users, Registered Users 2 Posts: 5,367 ✭✭✭JimmyVik


    I would not be investing in this unless the governmet come out and garauntee that it is impossible for them to dip their hands in it in the future, like they have already done to peoples pension funds.

    It smacks of getting a big fund together should the government need it all in the same place to dip into for a rainy day. The reality is that you will not have sole access to that money. The government can and will take whatever it wants to. If they didnt plan to do this then no harm in them stating this and making it law that they cant touch it.



  • #6
    Jim2007
    Moderators, Business & Finance Moderators Posts: 10,363 Mod ✭✭✭✭Jim2007


    https://www.boards.ie/discussion/comment/118865312#Comment_118865312

    Mod: On this forum we concentrate on factual discussions. There is a forum for conspiracy threads, take it there.



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  • #7
    The J Stands for Jay
    Registered Users, Registered Users 2 Posts: 5,786 ✭✭✭The J Stands for Jay


    https://www.boards.ie/discussion/comment/118854244#Comment_118854244

    This is a big issue. The government is giving people less than what they currently give, and are shouting about it being a great deal. And the employer contribution levels are extremely low.

    In my pension scheme I lay in 4% to get 20%. I also get tax relief on my 4%.



  • #8
    dotsman
    Registered Users, Registered Users 2 Posts: 3,636 ✭✭✭dotsman


    I think people need to understand that this is aimed at low-income workers. These guys pay little or no tax, therefore would get little or no tax relief using the traditional pension schemes. Likewise, they would typically work for employers who don't contribute anything to their pension. As a result, these people typically don't bother investing in a pension.

    Along with the auto-enrollment, for low income workers, this is a good idea. For everyone else, there is no change.



  • #9
    Jim2007
    Moderators, Business & Finance Moderators Posts: 10,363 Mod ✭✭✭✭Jim2007


    https://www.boards.ie/discussion/comment/118874197#Comment_118874197

    If you are going to be around when these people need a pension, it is really important you make sure they have a pension because they will represent the majority of voters.....



  • #10
    dotsman
    Registered Users, Registered Users 2 Posts: 3,636 ✭✭✭dotsman


    https://www.boards.ie/discussion/comment/118874485#Comment_118874485

    Exactly. This is for the good of society as whole. Although, to be accurate, I wouldn't consider those currently without a pension as the "majority" of voters, merely a "significant minority".



  • #11
    babyducklings1
    Registered Users Posts: 225 ✭✭babyducklings1


    https://www.boards.ie/discussion/comment/118875036#Comment_118875036

    Think they are at least it’s constantly trotted out in the media that the majority of workers have no pension provision think it was something around sixty percent they said. Could be wrong though.



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  • #12
    babyducklings1
    Registered Users Posts: 225 ✭✭babyducklings1


    https://www.boards.ie/discussion/comment/118875036#Comment_118875036

    Yeah was wrong in previous post nearly 60 % have pension according to CSO

    https://www.cso.ie/en/releasesandpublications/ep/p-syi/statisticalyearbookofireland2020/soc/pensioncoverage/



  • #13
    Jim2007
    Moderators, Business & Finance Moderators Posts: 10,363 Mod ✭✭✭✭Jim2007


    https://www.boards.ie/discussion/comment/118875036#Comment_118875036

    Well it is also for your own good.... if they don't have a pot of their own, they will be coming after yours!



  • #14
    Mickeroo
    Administrators, Computer Games Moderators, Sports Moderators Posts: 32,346 Admin ✭✭✭✭✭Mickeroo


    Maybe someone can answer this question for me as my employer is not certain.

    If I set up a private pension now for myself and my employer facilitates paying it out of my wages every week (rather than me just paying it straight from my bank every month) will I still be auto enrolled in this scheme when it goes live?

    My reading of it is that I will still be auto enrolled in the scheme as my employer is not contributing anything to the pension I am going to set up now ie it is not an occupational pension.

    Thanks!



  • #15
    Liam D Ferguson
    Registered Users, Registered Users 2 Posts: 542 ✭✭✭Liam D Ferguson


    https://www.boards.ie/discussion/comment/118946086#Comment_118946086

    Yes you'll be auto-enrolled as your employer is not operating an Occupational Pension Scheme.

    Be wary of signing up for any private pension now that has up-front charges and/or penalties if you stop contributions after a few years, as you possibly will to join the Auto-Enrolment scheme. Plenty of choices out there on private pensions that won't penalise you in any way for stopping contributions so it's worth asking the question.



  • #16
    Mickeroo
    Administrators, Computer Games Moderators, Sports Moderators Posts: 32,346 Admin ✭✭✭✭✭Mickeroo


    https://www.boards.ie/discussion/comment/118947991#Comment_118947991

    Thanks, appreciate the advice, will definitely bring that up before I sign up to anything.



  • #17
    Henry Ford III
    Moderators, Business & Finance Moderators Posts: 17,742 Mod ✭✭✭✭Henry Ford III


    Every pension has charges. We've discussed this a few times before.

    If you are being advised by a Broker they'll either charge you a fee or earn a commission from the insurer for placing the new business with them.

    All fees and commissions must be disclosed. Nothing is hidden.

    Commissions aren't fixed. They can be reduced or even waived if the fee route is being taken.

    In general on smaller stuff the commission route is preferable with the fee route better value for bigger ticket business.

    Commissions is a dirty word but it really shouldn't be so in relation to modern pension policies. Commission levels are a fraction of what they were in the late 1980s btw.



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