Please send your queries to Dominic Coyle, Q&A, The Irish Times, D'Olier Street, Dublin 2 or e-mail to dcoyle@irish-times.ie. This column is a reader service and is not intended to replace professional advice. Due to the volume of mail, there may be a delay in answering queries. All suitable queries will be answered through the columns of the newspaper. No personal correspondence will be entered into.

Rental income

I am an Irish citizen, long resident in the UK. I recently inherited a property in Ireland that I have let. I understand that I have a choice as to where I can pay tax on rental income - in Ireland or in the UK. I would be grateful if you can confirm this is the case. If so, can you confirm as to which jurisdiction is the most cost-effective in terms of paying tax on this income - in Ireland or in the UK where I work and where I pay tax at the standard rate?

Ms M.L., London

The information you have been given is not correct. The position on rental income is that it will be taxed at the standard rate here in Ireland. This is the case with all rental income regardless of the residence of the person who owns the property.

If you are letting the property through an agent, they should withhold this tax from the rent before remitting the balance to you. If you do not have an agent, your tenant is obliged to deduct the tax from the rent and send it on to the Revenue Commissioners. At the end of the tax year, you will have to file a return, on the basis of which the tax authorities will determine whether you owe any tax at the marginal rate.

One thing to remember is that, before tax is assessed on the rent, there are expenses that can be deducted. These are expenses involved in letting the property, including agent's fees if you incur them. They also include repairs, insurance and maintenance/management fees. In addition, you can claim the capital cost of fitting out the property over seven years.

The other factor to bear in mind is that there is a double-taxation agreement between Ireland and Britain. What this means is that you cannot be taxed in both states on the same income. So, in cases like this, where the Revenue Commissioners insist on taxing you on rental income in this jurisdiction, you will not face any tax charge in Britain on that income.

Pensions

It's very gratifying to read week after week about the vast array of pension options becoming available these days - and the crucial advice to people to "start as early as possible" to secure their future - assisted by the excellent pensions legislation coming on stream. It is also nice to see the ongoing index-linking of so many schemes, especially for those leaving the public sector (i.e. being financed by us taxpayers). But I wonder if any thought is being (or can be) given to those who are "prisoners of the past", i.e. beneficiaries of what might be called "old-style" pension schemes - and who are being badly left behind. In my own case, I negotiated an amicable early retirement package (lump sum and pension) way back in 1981.

The company provided a non-contributory plan for its executives - but it contained no specific provision for ongoing review. I know that recent research has indicated that most companies do, in fact, provide index-linking or else review pensions at frequent - if not regular - intervals, so that they can keep pace with cost-of-living growth levels. But the company that I left has carried out such a review only once - about 1985 - so you can just imagine how far that 1981 pension has deteriorated in value after nearly 20 years.

Is there any avenue or other recourse available in such a case (other than perhaps "name and shame")? This is one of the largest companies in its industry sector, employs about 40,000 people worldwide, and is returning record profits in this current year. I have tried the pension company that is administering this scheme (and is a trustee), but its persistent response is "it's a matter for the discretion of the company itself . . ." The company is totally obdurate in its continued stance. Is it worthwhile approaching the Pensions Board, the Ombudsman, or even "going public"?

Mr T.B., e-mail

I fully understand your frustration. Trying to survive on a pension whose real value is diminishing rapidly over time is no fun at all. Unfortunately, turning the clock back is not an enforceable policy.

As you mention, innovations in pension provision and pension legislation have greatly improved the outlook for those planning pensions now and in the future. However, people who have already retired find they are tied to arrangements that prevailed at the time. In general, unless there is specific provision within the rules of your pension fund for regular reviews, you are essentially at the mercy of your former employer - provided you are dealing with an occupational scheme. Those in personal pension schemes have even less recourse.

You can understand why companies are a little chary about playing outside the rules. They contribute to schemes on the basis of expected liabilities, and any contributions you may have made ended when you left the company's employ. In a situation like yours, where you say the company employs about 40,000 worldwide, any deviation from the rules in terms of the sort of review you seek could leave the company open to a huge bill for which it had not budgeted. This is particularly so if they have a substantial number of pensioners like you, who took an early retirement package.

I would imagine the Pensions Board would tell you there is nothing it can do as, even in your difficult situation, you do not claim that the company has acted outside the rules of the scheme to which you signed up. Similarly, it is unlikely that any new legislation - for all the good things it may bring to pension provision - will or can act retrospectively to force your pension fund to improve your situation beyond that agreed.

Your situation is an illustration of why people should not agree early retirement pension packages without taking independent financial advice. I know such advice costs - after all, financial advisers have to make a living too - and that at such a time you are looking to maximise income and minimise costs, but your experience shows how valuable they can be.

Doing the work yourself, it is tempting to look at the headline monthly pension and the lump sum, without considering the impact of inflation. Presented with the cost to your monthly pension of allowing for an escalator - an annual percentage increase to allow for or mitigate the effect of inflation - the substantial cost often deters people. As your experience shows, especially for those retiring early and in good health, an escalator provision is critical.

It is of no consolation to you, but maybe others will avoid a similar mistake.