Mary Lou McDonald
Question:107 Deputy Mary Lou McDonald asked the Minister for Finance the saving that could be made to the Exchequer from reducing the earnings cap on pension contributions from €115,000 per annum to €80,000. [30742/11]
View answerTuesday, 25 October 2011
Questions (92)
Written answers
The current annual earnings cap of €115,000 acts, in conjunction with age-related percentage limits of annual earnings, to put a ceiling on the annual amount of tax relief an individual taxpayer can obtain on employee or personal pension contributions. I am informed by the Revenue Commissioners that the full year yield to the Exchequer arising from reducing the earnings cap to the amount mentioned in the question is currently estimated to be of the order of €95 million. This figure is provisional and subject to revision. A breakdown of the figures by reference to income levels is available only in respect of the tax relief for contributions to Retirement Annuity Contracts (RACs) and Personal Retirement Savings Accounts (PRSAs) and to the extent that these contributions are included in the personal tax returns of tax payers. With regard to occupational pension schemes (schemes set up by employers), the figures in respect of employee contributions are available only in aggregate form. Information on such contributions is not captured in such a way as to make it possible to associate contributions with individual income levels. For that reason the estimated yield to the Exchequer in respect of these contributions is extremely tentative. The estimated yield is based on assuming that tax relief which would be affected by the changes mentioned in the question is currently allowed at the top income tax rate of 41% and at the maximum age-related percentage limit of earnings. The figure provided could therefore be regarded as the maximum Exchequer yield in respect of those taxpayers.