As is the norm, the additional pension contribution to be made by public servants will attract tax relief. The actual amount of tax relief depends on an individual's circumstances but as a broad rule of thumb it is estimated that about one third of the amount will accrue in tax relief to public servants. As a result, the €1.4 billion is a saving on the expenditure side of the account that has implications for the revenue side.
However, in terms of the economic and fiscal impact, a €2 billion adjustment was factored in to the Addendum to the Stability Programme Update published on 9 January. Therefore, the Department's forecasts, which anticipate growth contracting by 4.5% and show aggregate taxes falling by a further 9¼% this year after the contraction of 13¾% last year, already take account of the need to secure reductions of up to €2 billion in expenditure this year.