Dáil Éireann Debate, Tuesday - 27 November 2012
209. Deputy John Lyons asked the Minister for Finance his views on a report (details supplied) on pension tax reliefs which highlighted the extent of tax subsidisation of the pensions of higher income earners; if he has any plans to reduce the current threshold and maximum pension pot allowable for tax relief; and if he will make a statement on the matter. [52308/12]
View answerI am aware of the recently published report referred to by the Deputy. I assume that in his question the Deputy is referring to the annual earnings cap which operates in conjunction with age-related percentage limits to determine the annual amount of tax-relievable contributions that can be made by an employee or individual to pension savings and to the maximum allowable pension fund for tax purposes at retirement (the Standard Fund Threshold - SFT). I would point out that the scale of pension saving reliefs available to higher earners, in particular, has been significantly restricted over recent years. The SFT was reduced from over €5.4 million to €2.3m in Budget and Finance Act 2011 while the annual earnings cap which operates in conjunction with age-related percentage limits to determine the annual amount of tax-relievable pension contributions has also been reduced over a period from its peak of over €275,000 in 2008 to its current level of €115,000 per annum.
In my 2012 Budget speech in December last, I said that the incentive regime for supplementary pension provision will have to be reformed to make the system sustainable and more equitable over the long term. I said that my Department and the Revenue Commissioners would work with the various stakeholders in the next year to develop workable solutions. On foot of this, a broad informal consultation was undertaken this year across a spectrum of stakeholders in the pensions sector to establish their views on further changes to the incentive regime for pension saving.
I will give due consideration to the views of all interested parties in the context of any proposals I may make to Government regarding the incentive regime for pension saving.
