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1. State pension age changes

The state pension escaped cuts in the four-year plan. However, the pensionable age has been increased to reflect the longer lives we are all living and to reduce the public-sector expenditure.

The pensionable age will increase one year to 66 in 2014, 67 in 2021, and 68 in 2028.

2. Tax relief on contributions is cut

Personal, occupational and PRSA pensions will be hard hit by new tax rules proposed in the four-year plan which reduce the tax relief on yearly contributions in a move which will hit higher earners.

At present an employee who makes pension contribution is given tax relief at the top rate of 41 per cent. This will be reduced to 20 per cent over the course of the next three years up to 2014.

The rate of income-tax relief on pension contributions will drop to 34 per cent in 2012, to 27 per cent in 2013, and 20 per cent in 2014.

Employees also get tax relief on their PRSI and health levy payments. Under the four-year plan the PRSI and health-levy relief on pension payments will disappear immediately.

The impact of these changes is very significant. At the moment, it costs €51 to contribute €100 to a pension. Once the full impact of the proposed changes are felt it will cost €80 to make the same €100 contribution.

3. Tax-free lump sum is capped

Everyone is entitled to take 25 per cent of their pension pot out upon retirement in a tax-free lump sum.

Up to now the amount taken out has not been capped, but the Government is now looking at taxing anything over €200,000.

High earners, especially those with pots worth a few million euros, this is significant and many will have withdrawn as much as they can before the 2011 budget.

4. Retired public-sector workers' pension could be cut

There are also proposals in the four-year plan to reduce the pensions of those who have already retired in an effort to share the burden more evenly. 

For existing public-service pensioners and those public servants who retire before the ending of the ‘grace period’ at end-February 2012, the legislation will provide for an average reduction of some 4% in pensions in line with the following rates and bands. However the reductions are graded according to the size of your pension.