As explained in my responses to previous questions in this area, the Revenue Commissioners inform me that breakdowns of the individual contributions to pension savings on which tax relief are sought are only available on an historical basis in respect of Retirement Annuity Contracts (RACs) and Personal Retirement Savings Accounts (PRSAs) and to the extent that these figures are included in tax returns to Revenue. The latest year for which the fullest data in this area are available is 2007. Contributions by employees to Defined Benefit and Defined Contribution occupational pension schemes are returned by their employers in aggregate form each year and are not available on an individual taxpayer basis. In order to arrive at some estimate of the costs or savings from suggested changes to the existing tax relief arrangements, the Revenue Commissioners must make assumptions about the breakdown of these aggregate employee contributions to occupational pension schemes using the historical breakdown of actual contributions to PRSAs and RACs as a guideline. Such breakdowns and the costings derived from them must, however, be regarded as tentative estimates.
Employer contributions to occupational pension schemes are likewise returned to Revenue on an aggregate basis each year. However, there is no acceptable basis on which to disaggregate these contributions across the population of individual contributors to pension schemes in the manner outlined in the question. The estimated figures provided below do not, therefore, take account of employer contributions. Finally, details of the liabilities of Defined Benefit schemes to their members are not required to be returned to the Revenue Commissioners.
Having regard to the foregoing, the estimates of the full year effects to the Exchequer from the application of the caps outlined in the question, in substitution for the replacement of the current annual earnings cap of €150,000 and associated age-related percentage limits, are tentative and are set out in the table:
Proposed Contribution Cap
|
Estimated Exchequer Yield/Cost
|
|
€m
|
10,000
|
151 (yield)
|
20,000
|
80 (yield)
|
30,000
|
38 (yield)
|
40,000
|
10 (yield)
|
50,000
|
12 (cost)
|
60,000
|
27 (cost)
|
It should be noted that the higher contribution caps proposed in the question would give rise to a net cost to the Exchequer as indicated in the table. This arises because claims that currently do not qualify for tax relief due to the impact of the earnings cap of €150,000 and associated age-related percentage limits would qualify for relief in the event of the removal of those limits.
I should also point out that in costing the details of this question as set out above, the response to a previous question (38429/10 of 21 October 2010, Order No 89) was re-examined. The response to that question had indicated that the figures provided at that time had been calculated on the basis of excluding the impact of the existing annual earnings cap and age-related limits. The costings given in that response had, in fact, taken account of those limits. For the sake of clarity and consistency, I am re-stating hereunder the table of figures provided in the response to question 38429/10 but excluding, on this occasion, the impacts of the earnings and age-related limits on the same basis as in the table above.
Proposed Contribution Cap
|
Estimated Exchequer Yield/Cost
|
€
|
€m
|
5,000
|
215 (yield)
|
10,000
|
151 (yield)
|
15,000
|
110 (yield)
|
20,000
|
80 (yield)
|
25,000
|
57 (yield)
|
30,000
|
38 (yield)
|
35,000
|
23 (yield)
|
40,000
|
10 (yield)
|
45,000
|
2 (cost)
|
50,000
|
12 (cost)
|