Your personal finance queries answered

I did not pay the health levy, do I pay the USC?

Q

Previous to the Budget I did not pay the health levy as I was in receipt of a widow’s pension. I am also in full-time employment and consequently did not pay the health levy on my earned income. With the USC, will I be exempt from paying the USC on either my widow’s pension or my earned income? - Ms KG, e-mail

A

You will be exempt from paying the new universal social charge (USC) on your widow’s pension as Department of Social Protection payments are not taken into account when assessing liability to the charge. However, any earned income will be subject to the charge.

Is the pension cut a breach of contract?

Q

I have been informed that my pension is to be cut in line with public service pensions. I was a hospital employee and paid superannuation towards my pension which was calculated on a specific basis which I did not think could ever be legally cut or reduced, although of course it could be taxed in line with everybody else.

It seems to me that this is a breach of contract and denial of an entitlement and certain discrimination against public service pensioners who will in fact be losing three times as much as someone on a private pension. Can they do this? - Ms MC, Dublin

A

It’s true to say that the notion of cutting a pension of which one is already in receipt is not something that has occurred heretofore. However, it is also true that public service pensions in their current form are widely considered to be unsustainable.

Unlike those public servants still in employment, whose remuneration has been cut significantly in recent years, public service pensioners have seen no cutbacks even though their pension has traditionally moved in line with salary increases of working public servants. Because of the exceptional nature of this move, the Government was obliged to introduce legislation specifically to sanction such a move. A challenge through the courts is always possible, although I have heard of no such move as yet.

Why is all my pension cut?

Q

I am a retired public servant, with 35 years service, and my pension has been cut by an average of 6 per cent. I also bought three years notional service just before I retired. This was a voluntary, commercial decision on my part, and I could have invested the money elsewhere. Any thoughts? - Mr DC, e-mail

A

It’s not the answer you will want to hear but the fact that you made a personal choice to purchase notional service in order to enhance your pension will not allow you to escape the cut on this portion of your pension.

This column is a reader service and is not intended to replace professional advice. No personal correspondence will be entered into.

Please send your queries to Dominic Coyle, Q&A, The Irish Times, 24-28 Tara Street, Dublin 2. E-mail: dcoyle@ irishtimes.com