Dáil Éireann Debate, Wednesday - 18 September 2013
206. Deputy Pearse Doherty asked the Minister for Finance if the introduction of last year's proposal to reduce the standard fund threshold for pensions, projected to raise in the region of €250 million, would impact on the savings that could be made by a proposal to standardise the pension tax relief rate and reduce the income linked pension ceiling to €70,000, projected to raise €555 million. [37814/13]
View answer207. Deputy Pearse Doherty asked the Minister for Finance the saving he expects to make in private pension tax reliefs from the introduction of last year's budget proposal to reduce the standard fund threshold for pensions, which will see people above the SFT losing their pension tax reliefs [37815/13]
View answerI propose to take Questions Nos. 206 and 207 together.
In my Budget 2013 speech, I announced that changes to give effect to the commitment in the Programme for Government to cap taxpayers’ subsidies for pension schemes which deliver pension income of more than €60,000 will be put in place in 2014.
An examination of the various options for change, including possible changes to the Standard Fund Threshold (SFT) regime, is continuing.
An estimated full year saving of €250 million was provided for in respect of these changes, as outlined on page A 10 of the Budget 2013 booklet. The Budget 2013 booklet makes clear, however, that the savings figure is provisional as further detailed analysis of the necessary changes and their impact would be required. That detailed analysis is ongoing.
Given that whatever changes are introduced to deliver on the Programme for Government commitment will further restrict the current scale of pension tax relief available to higher earners, it might be expected that such changes would have some impact on the scale of savings that might otherwise be achieved, for example, by a reduction in the rate of tax relief on pension contributions. However, as I have explained in previous replies to questions in this area, the estimated cost of tax relief on supplementary pension contributions and the estimated savings from any proposed changes to those reliefs are based largely on aggregate data and will vary according to a range of factors, including the scale of contributions made from year to year and the numbers making such contributions. In these circumstances, it will not be possible to isolate the impact of any particular change on those estimates.
In addition, and as stated in my Budget 2013 speech, tax relief on pension contributions will continue at the marginal rate.
