Fears pensions will be cashed in for Ferraris
Published 04/05/2016 | 02:30
THE people who look after employees' pensions are opposed to any move to allow them to cash in their pensions when they hit retirement age.
Trustees of pension plans were asked if it would be a good idea to replicate British moves that would allow people who are retiring to take all of their retirement fund in cash.
But the majority of 300 trustees and pension professionals surveyed by the Irish Association of Pension Funds were against the idea.
Britons are now able to take their whole pension pot as cash at retirement by closing their pension pot and withdrawing it all as cash under what is called "pension freedom" rules.
Some people have claimed that this will see the newly retired cashing in their pensions and buying Ferrari sports cars.
The chief executive of the Irish Association of Pension Funds, which represents pension savers, Jerry Moriarty, said the tax authorities would be the big winners if a similar scheme was introduced here.
"While this may seem attractive to the pension saver, the taxman certainly benefits."
He said that in Britain, the first 25pc of a pension can be withdrawn tax-free. But the remaining 75pc is taxed at the individual's highest tax rate.
Mr Moriarty warned: "This has raised concerns in the UK about the ability of individuals to manage their pot in a way that ensures they have a sustainable income for the rest of their lifetime."
Members of defined contributions schemes in Ireland have had the ability to transfer some of their pot to an approved retirement fund for a number of years, which gave them more flexibility than had been available in the UK, the Association of Pension Funds head said.
The survey also indicates that pension experts are not hugely concerned about the possibility of Britain leaving the EU.