Saturday, October 17, 2009

Pension tax relief cut is "attack" on middle earners.

A proposal in the new Programme for Government for a single rate of tax relief on private pensions is an “attack” on middle income earners, the Irish Association of Pension Funds (IAPF) said on Monday.

IAPF Director of Policy Jerry Moriarty said the measure, which would introduce a single rate of tax relief of 30 per cent, would dissuade people from saving for their pensions.

Currently, workers receive tax relief on contributions equal to the rate at which they pay income tax, either 20 per cent or 41 per cent.

Mr. Moriarty also dismissed the suggestion the proposal would encourage lower paid workers to invest in their pensions, saying it was “not a priority for people in the current economic climate”.

When contacted for comment, Green Party Finance Spokesman, Senator Dan Boyle said a standard rate made sense because of the inequality of the current system where people on lower incomes receive less relief.

Rejecting the suggestion that it was unfair to tax earners on their contributions as well as their pensions once paid out, Mr. Boyle said the government was “taxing expenditure now for an uncertain future”.

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