MINISTER JOAN BURTON has said she is considering a cap on tax relief for pension contributions.
She said that she commissioned the study, which gives the first such data and information on the subject ever in this country, after she became minister when she realised the information was not available.
“We’re going to be able to say this to people – look, depending on the product you buy you may end up paying relatively modest charges… but please watch out because you could end up spending an awful lot of money.”
She added that the department will probably commission a similar study every three years. The minister also advised that people need to ask their pension advisor about the charges they are going to pay.
The Minister said that she is on record as saying that she prefers the idea of capping tax relief on pension contributions, adding that this is included in the Programme for Government. “One of the things we have to do in relation to pensions is to promote pensions for people on modest incomes,” she said.
She added that this would involve: “If you save for a pension that yields a pension of €60,000 a year, you would still get tax reliefs, and a full range of tax reliefs on that, but once you go over €60,000 the State would no longer subsidise that through tax breaks.”
The capping would apply to both public and private pensions.
She said that in the longer term, when the county has recovered a bit, she could look at the system in Australia and New Zealand of auto-enrolment into a universal scheme. This would involve savings to supplement the State pension.