Any lad with a few wild sucklers has no interest in maximizing pension contributions.
Sucklers are a sneaky investment in themselves… most Saturdays are spent chasing them which keeps the women out of the shopping centres. Savage savings in that. No pensions could match them returns.
Wouldn’t have a clue about the CS scheme tbh.
Assume you would be making payments to max out tax relief, if so then it makes sense in a general sense.
Im not a pensions expert at all it is a minefield but spent a few quid getting proper advice a few years back that was well worth it
They’ll have to means test the state pension and any lad with a private pension will lose out.
No, but that’s what the fucker said. Look he’s a mate of Stinker so I agreed to meet him.
In fairness, I’m happy, I’ve stuck the shillings in the safest non performing fund. I’ll look st again in 18 months.
I’d imagine the idea is that the 330k will give you an income that won’t reach the tax thresholds and keep the balance in cash at the bank. Therefore in a low inflation environment you are balancing off the lack of growth in your cash fund versus the tax you would have paid if you drew the money out of a pension fund.
But the balance in cash at the bank will have been taxed already? So pay tax and then get no growth?
You’re already c 50% ahead with the tax relief into the pension. Its lunacy to stick it in a cash fund. Even a bad year if you lost 25% on your fund your still winning
I suppose it depends whether you are putting in funds into your fund over and above the tax free threshold
What %age of people do that? Less than 1%?
For those on the higher rate of tax, you should max out (or as much as you can afford) your pension contributions. You benefit 2 ways: 1. Avoid paying tax now, 2. Get the capital accumulation on the full amount over the lifetime of the pension.
Now, the next objective is to reduce your tax liability when withdrawing from the pension. Aged 55, you should consider taking an income from your pension. You get a guaranteed income for life at a (most likely) lower rate of tax.
You can take a tax free lump sum initially, plus you withdraw 4% of the pension value for each year thereafter. Key point here is that the pension funds should continue to grow each year at 3 - 4% so you aren’t really reducing the value of the pension investments.
Also, you still have the option to work away at the same time, but less pressure to maintain a high salary.
FAO of the pension geeks on here:
A relation asked me a query over the weekend which I have no idea about.
They retired from their job a few years back and have been drawing from a private pension. They are entitled to claim the state pension in a few months time.
What do they need to do in this instance to claim the state pension along with their own? Assume they will be means tested?
The state pension is not means tested assuming you have ‘paid your stamps’ to a sufficient level over the years
They would have. So there is no implication on the private one or taxation?
Bizarrely you need to make an application to DSW to tell them you are coming of age and give them bank deets etc.
https://www.welfare.ie/en/pdf/spc1.pdf
That’s the form. They’d need to apply 3 months before pension age to get paid on the day they turn 66 but if they’re late it’s ok as payments backdated.
The state pension is taxable but no PRSI due on it. They’ll need to do a tax return or form 12.
There is a taxation implication. They are both treated as income
Ok and how is this managed by the pensioner?
I see @Appendage has mentioned a tax return form so it is self evaluation or how is it paid? What would be the tax thresholds for pension income? similar to PAYE?
An OAP can earn approx €18k per annum with no tax liability. The old age pension is just over €12,500 a year.
I’d suggest reducing their tax credits and lower rate threshold in in their private pension to account for the additional income. Otherwise they’ll have to make a payment for income tax before mid November every year.
Are there any loose targets you should be hitting at 5 year intervals to know you’re on target for a pension that will make your life at very least comfortable. e.g Age 30, 35, 40 etc…
There’s a big snowball effect in play so it’s hard to know how big the snowball should be at various points along the way.