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Archive for November, 2010

Pensions & the Government 4 year plan

Pensions & the Government Four-Year Plan

Private Pensions

The main proposals that impact on private pension provision are:

  • All lump sums in excess of €200k will be taxed, probably from Budget Day.
  • In 2011 the Earnings Cap will be reduced from €150k to €115K.
  • Next year will also see the abolition of PRSI & Health Levy relief linked to pension contributions.
  • The Standard Fund Threshold will also be reduced, details in the Budget.
  • The rate of relief for personal pension contributions remains the same for 2011 but proposed reductions are:
Year Reduction
2012 34%
2013 27%
2014 20%
  • There is no indication that the tax treatment of employer contributions will change.
  • There is a very strong hint that the proposed auto enrolment scheme will never happen.

The Government is committed to rising €700m from the pensions sector over the period of the plan and is willing to engage with the industry to examine alternatives to deliver this outcome. This suggests to me that a reduction in the personal relief is not necessarily a done deal.

Turning to pension fund investments, the Government is considering proposals to encourage pension funds to invest in Irish Government Bonds. The NTMA will issue a CPI linked bond next year. The National Pension Reserve Fund will be used to support the Irish Government Bond Market.

Public Sector Pensions

Revised pay and pension arrangements will be introduced for all new entrants. Benefits will be calculated using career average and any pension increases will be linked to CPI. The existing retirement will be raised to link in with the proposed increases in the ages when the state pension becomes payable: 66 in 2014, 67 in 2021 and 68 in 2028. Presumably all private sector schemes will follow suit.

Existing pensions cut as follows:

First €12,000 0%

€12,001 – €24,000 6%

€24,001 – €60,000 9%

above €60,000 12%

Income Tax

The next 4 years will see a reduction of 16.5% in the value of tax credits and tax bands, with 65% of the reductions in 2011. There are other options including a mixture of the above changes to tax rates, PRSI and income levies. Final arrangements in the Budget. On average we will all pay 10% more in 2011.

A number of reliefs will be abolished in 2011 included those linked to trade union subscriptions, rent relief and approved share options schemes. The income tax age credit and age exemptions will be phased out over 4 years.

Social Welfare

Total expenditure will be reduced by €700m and details of rate reductions will be announced in the Budget. We can expect a reduction in the level of state pension payments.

NB Funding rates for Directors pensions are still very attractive.

Residential Property Lettings – Let DNG Flanagan Ford take the stress out of your investment

DNG Flanagan Ford has a dedicated Residential Lettings Division which is headed up by Tess Monaghan. The letting side of their business is proving to be very successful & this is a direct result of the high quality service which is being provided to landlords & tenants. When you choose DNG Flanagan Ford to manage your rental property on your behalf, their job is only beginning when they source a suitable tenant. What you can expect from them includes:

* Excellent customer service

* Experienced letting team

* On call 7 days a week

* 24hr professional maintenance team

* Existing database of quality tenants

* Extensive website coverage

* Prominent window advertising at our city centre office

* Competitive rates

What really sets DNG Flanagan Ford apart from the competition is the aftercare service provided for both landlords & tenants. Tess is always on hand to resolve any issues which may arise from heating & plumbing problems to normal household issues.

Speaking to the Sligo Champion, Tess commented on the current rental market in Sligo. “The rental market, similar to the sales market, has taken a hammering over the past couple of years. Landlords have seen their rental income reduce & in many instances have seen their rental property lie vacant for months on end. In saying this, good houses & apartments are always in demand. When I talk about good properties I mean well presented, clean properties with up to date heating systems, double glazed windows etc. These are all things we take for granted when purchasing a home, but they are very high on the list of requirements for prospective tenants also. I am inundated daily with requests from prospective tenants for all types of properties from 1 bed city centre apartments to 4 bed detached houses within easy commuting distance of Sligo. At the moment, tenants are really shopping around when their leases are coming near the end for a better quality house at an atrractive price. It comes back to the age old scenario that if you have a good product it will rent & will achieve a good rental price. The areas that are proving most popular at present are Strandhill Road & Strandhill village itself. I am keen to talk to anyone with an investment property in these areas, & indeed all areas of Sligo city & suburbs to discuss the service I provide & my competitive rates.”

Some tips for the successful letting of your investment property:

* Choose DNG Flanagan Ford!

* Present your property in a clean, attractive state

* Put yourself in the shoes of the tenant & make sure your property is somewhere you would like to live

* Have a realistic rental figure in mind – too often properties are pitched with a rental price which is excessive & tenants just won’t be interested

* Remember – First Impressions Last

* Remember – Every month your house is vacant you’re losing money

Tess Monaghan is available to talk to landlords at any time & can be reached at 071 9159222, 086 3999062, tess@dngflanaganford.ie, or indeed call to our office at Shell House, Wine Sreet, Sligo