Tax relief on employee pension contributions for higher earners should be halved, and employer PRSI increased, to fund a universal pension scheme based on residency in the State, according to Social Justice Ireland.

The think-tank estimates that introducing the Universal Pension from 2019 would cost an additional €727 million a year,  but said that could be funded by measures, including halving tax relief on pension contributions for higher paid employees, and by hiking employer PRSI from 10.85% to 11.35%.

Last week, the Government published its 'Roadmap for Pensions Reform', which envisages moving to a Total Contributions Approach and an auto-enrolment scheme, which it insists will improve pension provision in old age.

However, in today's report - entitled "The Universal State Welfare Pension: Recognising the Contribution of All Older People" - Social Justice Ireland describes the Government proposals as a missed opportunity, claiming they would still leave many people with inadequate pension provision.

At present, 40% of private sector workers have no retirement provision over and above the State pension, but SJI forecasts that by 2046, 1.3 million will need state pensions.

Social Justice Ireland CEO Dr Sean Healy said that, to deliver equity, every older person who has been resident in Ireland for 40 years would receive a full pension payment, with fewer years' residency delivering pro rata entitlements.

This would replace various welfare payments under other schemes.

SJI calculates that standard-rating tax relief on pension contributions would raise up to €483 million.

It says 70% of the tax relief on pension contributions goes to the top 20% of earners, with more than 50% of the relief accruing to the top 10%.

SJI also urges the Government to cut the Standard Fund Threshold for pension funds from €2 million to €500,000, and to reduce the earnings contribution cap from €115,000 to €72,000.

It argues that, apart from reducing bureaucracy, full implementation of all these measures could raise approximately €949 million in a full year in 2019 - €200 million more than would be required to bring in the universal pension

A person who was resident in Ireland for at least ten years and up to 40 years between 16 and the retirement age would be entitled to the full Universal Pension which would start at €243.30, the current rate of the contributory State pension.

SJI also calls for the social welfare pension to be set and maintained at 35% of average earnings.