Gerry Hughes: In a series of reports on our pension system, TASC and the TCD Pension Policy Research Group have argued that the tax relief on pension contributions should be given at the standard rate of tax, in the same way as are the tax reliefs on health insurance and mortgage interest payments.
A report from the ESRI provides new evidence on key pension policy issues which shows that over 80 per cent of the tax relief accrues to taxpayers who are in the top 20 per cent of the income distribution. The report estimates that if the tax relief were given at the standard rate of tax it would provide revenue of over €1 billion per year which could be used to sustain State pension levels in the future as the population ages.
It could also be used to sustain the income of current pensioners. A report from Older & Bolder on older people’s experience of the recession notes that older people have been adversely affected by a range of expenditure cuts including the suspension of the Christmas bonus and reductions in frontline health and social care services. In addition the fear factor for older people has been increased by suggestions that social welfare should be cut in the forthcoming budget and the likelihood that tax revenue which could have been used to improve public pensions, long-term care and primary health care will be used instead to pay interest on the national debt.
Gerard Hughes is an economist specialising in labour market issues relating to pensions, employment and migration. He worked at the ESRI where he was a Research Professor. A founding member of the European Network for Research on Supplementary Pensions and of the Pension Policy Research Group in Ireland, Gerard has published a number of reports on the coverage of pension plans, tax expenditure on pensions and pensioners’ incomes, as well as reports for the OECD and the ILO on private pensions in Ireland. He has contributed to and co-edited a number of books on pensions including Reforming Pensions in Europe and Personal Provision of Retirement Income.