Answer: Irrespective of whether you have received a letter or not, you are still obliged to do a return. At this stage it will have to be done online,as the closing date for ‘paper’ returns was 7th May last. In addition I would reiterate for listeners the fact that if you pay by debit or credit card it will be taken from your account immediately.
The Revenue have indicated that they are going to dedicate considerable manpower to those who have not made a return. In addition any landlords who are resident overseas are also liable for the tax and once again the Revenue will follow up on these people if they do not make a return.
Question: I am currently saving €400 per month in a bank account. This is long term savings and I am unsure as to whether or not to take out a Life Assurance plan.
Answer: Traditional Life Assurance Savings Plans need somewhere between 7 and 10 years for them to operate effectively. In addition, the funds that these plans are exposed to carry a risk element. Alternatively, you could consider saving for a period of 2 years and taking the lump sum at that time, and reinvesting it in a Capital Guaranteed Bond.
Question: My employer has recently told me that he was setting up a pension scheme for the staff. Is it a good idea for me to join or should I make my own arrangements?
Answer: Considering the fact that the employer will also be making a contribution to your pension, entering the scheme at work is without a doubt the most attractive route for you to go.
David discusses the Property Tax – what people who haven’t received their letters from Revenue should do and also advises a listener on Savings and Investments.
Question: I am paying a variable rate on my mortgage of around 5%. When compared to the ECB rate of 0.75%, this appears to be shockingly high. Do you think there is a likelihood of reduction in mortgage rates this year?
Answer: Irish banks are looking to raise revenue wherever they can, in order to restore themselves to profit ability. Customers like yourself, who have variable rate mortgages, are being targeted with inordinate increases in interest rates. With the lack of competition in the mortgage market, the option of switching your mortgage is limited. Even if you could do so, the chances are that the new lender may also be charging this type of rate.
I do not believe that the interest rate on variable mortgages will be reduced anytime soon.
Issue: AIB increases Variable Mortgage Rate, as possible reduction in ECB rate looms.
Comment: The ECB announced a reduction in their interest rate of .25% to 0.5% today. It is very hard to understand the increase in AIB’s rate last week in view of the ECB’s move. As I have commented previously, AIB made this decision to increase rates in order to help their profitability, at the expense of the customer.
Question: Can you please explain why Deposit Rates have fallen so much, when I see announcements by banks of increases in their lending rates?
Answer: Deposit rates in Ireland were inordanarily over the last few years due to the need for banks to raise funds in the retail market. When you look at an ECB rate of 0.5% it is not hard to see why Deposit Rates in Ireland have fallen so much recently. The possibility of an increase in rates in the foreseeable future is virtually “nil”.
Question: I have been in a pension plan with my current employer for many years. What happens to this is if I leave my current employer?
Answer: When you leave an employer, most people move their pension benefits into a Personal Retirement Bond. This bond gives you control over how these monies are invested and you have a variety of options in this regard. The rules regarding retirement however do not alter.
This morning David discusses the AIB increase in Variable Mortgage Rates, why Deposit Rates have fallen so much and what happens to your Pension Plan when you leave your current employer.