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Pensions

Cut in private pension tax break could facilitate universal pension for all over 65s

A study by Social Justice Ireland was launched earlier today.

Updated 12:43

SOCIAL JUSTICE IRELAND today launched a new study today on pensions which analyses the possibility of introducing a universal pension in Ireland.

The study found that Ireland could finance a universal pension for every person over 65 mainly by reducing the current tax break for private pensions.

Pensions would be set at €230.30 a week – the current contributory pension rate – until 2016 and then rise over time to 40 per cent of average earnings. Social Justice Ireland said its study showed that the approach is sustainable in the long-term.

“This approach would be simpler, fairer and more just as well as being sustainable in the decades ahead”, Dr Seán Healy, Director of Social Justice Ireland, said today. “No existing pensioner would lose out and many would experience an increase in the Universal Pension. In particular, those adults aged 66 years and older, in respect of whom reduced payments are now made due to their status as ‘Qualified Adults’, would receive a Universal Pension in their own right.”

A survey by Bank of Ireland today found that half of Irish people between the ages of 30 and 45 have not started to save for their pensions yet. On average, this group think they could not afford to contribute €90 a month to a pension. However 75 per cent are not confident that they could retire on the current State pension.

Social Justice Ireland said that a universal pension would provide older citizens, regardless of their previous social insurance contribution record or means, with a guaranteed income during old age.

It described the move as a “strongly progressive change”, as nearly 82 per cent of the current tax relief for private pensions accrues to the top 20 per cent of earners.

Read: Pension fund values see growth of 11 per cent>

Read: Older people in poverty ‘picking between eating and heating’>

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