Roisin Shortall calls for 'root and branch' reform of pension tax relief systemThursday 08 November 2012 23.31
There has been a call for a "root and branch" reform of the tax relief system for pensions.
Roisin Shortall said she believed €500 million could be saved if the system was reformed and that 80% of the tax relief was going to the top 20% of earners.
The former junior minister said it was important to tackle the issue in the forthcoming Budget because the system was "so unfair".
Speaking on RTÉ's Morning Ireland, she said: "Many people who can't afford pensions for themselves are actually subsidising pensions for the better off."
Ms Shortall called for reform of the system which, she said, costs taxpayers €2.5 billion a year.
She suggested that the cap be placed on employer or company contributions to pensions, and to limit the amount of tax relief that any one individual can receive in relation to pension contributions.
Ms Shortall said that in response to a parliamentary question on two particular pension products - retirement annuity contracts (RACs) and PRSAs - she found out that 40% of the tax relief was going to people earning more than €200,000 a year, and 70% was going to those earning in excess of €100,000.
"The whole thrust of pension policy benefits people who are very well off and those benefits are coming at the expense of people on very low incomes, who may not have a pension of their own."
She said there was no justification to subsidise any pension over €50,000.
In relation to large pensions for former ministers and members of Government, she also said a special tax should be levied on these, as "austerity had to apply to everyone", even if it meant having a referendum to legislate for this.
"If we continue with the kind of regime there is at present...the 'gravy train' figures we've been hearing about...I don't believe that anyone within politics has any moral authority to make any recommendations in relation to other people's pay", she said.
Minister for Education Ruairi Quinn has said that issues raised by Ms Shortall are matters that will be looked at by Minister for Finance Michael Noonan and Minister for Public Expenditure Brendan Howlin.
Speaking on RTÉ's Morning Ireland, Mr Quinn said that as the Labour Party's spokesperson on pensions in opposition, Ms Shortall "has a lot of information in that area."