Wednesday 21 March 2018

Charlie Weston: Workers could be put off saving for their old age

Charlie Weston

Charlie Weston

THE new report warns that many are paying too much in pension charges.

Social Protection Minister Joan Burton has warned that seemingly small percentages can add up to big reductions when people draw down their pensions.

She has performed a service for those saving for retirement by pointing out the huge costs that can rip the centre out of a pension fund. But there are some downsides.

At a time when many cannot afford a pension, and when the performance of pensions has been bad, there is a danger that this latest report will breed more cynicism around the idea of putting money aside for retirement.

And it comes from a government that has imposed a levy on the private pensions sector -- €470m every year.

And it is grappling with how to deliver more savings from pensions in the Budget.

The savings could be delivered by cutting the tax relief available for those putting money into a retirement fund.

This would cost the typical worker saving for a pension around €800 a year, and impact around 550,000 workers, according to a Milliman actuarial report.

The alternative is to cap the size of pension someone can get tax relief on at €60,000 a year. But that would heavily impact on senior civil servants.

Irish Independent

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