George Osborne, the UK Chancellor today published his latest budget where he placed savers at the top of his priority list and announced a range of incentives, the Irish ministry for finance should take note and perhaps even replicate some of Mr. Osborne’s announcements.
For example, savers and pensioners across the UK will benefit from a sweeping overhaul of tax rules that will let them keep much more of their own money.
From July, there will be a new £15,000 limit on Isa’s, which can be used to deliver tax-free returns on either cash or shares and a 10p starting rate of tax on savings income will be abolished. In Ireland, savers are severely punished where they pay a whopping 41% on interest earnings.
Mr. Osborne also revealed new rules making it easier and cheaper for savers to withdraw cash directly from their pension funds instead of buying an annuity. New “Pensioner Bonds” will pay enhanced interest rates to savers aged over 65.
Mr Osborne also confirmed that the personal allowance for income tax will rise to £10,500 from April 2015.
Here in Ireland, there has been steady stream of confusing and mixed messages coming from Government on the issue of personal savings and retirement planning.
While some Government Ministers warn of possible mandatory pension deductions from employee pay packets, the ongoing Government-led raid on private pension accounts (it takes a massive three-quarters of one percent annually from private pension accounts) has led to public mistrust of future Government actions in respect to personal retirement savings.
Additionally, a 41% tax on savings income was designed to punish personal financial discipline.
Ireland now needs a coherent and consistent Government-led strategy on personal financial well-being, including long-term tax policies that will guarantee protection and predictability. To date, the approach to personal financial planning appears to be little more that one managed through a prism of short-term election cycles and vested interest lobbying. This must stop and the interests of all citizens must be put first. Those who plan carefully must be rewarded, not punished!