IRELAND – The Irish government has been urged to bring forward proposed changes to the level of tax relief on pension pots by as much as six months in an effort to reduce the need for cuts to areas of welfare spending.
According to TD Brendan Ryan, whose Labour party is one-half of the governing coalition, lowering the threshold for tax relieved pension pots to €60,000 before January 2014 would be "entirely possible" and something the government should consider, given the additional savings it would allow.
In a debate in the Dáil, Ryan noted that the cap would allow for savings of €250m a year, once introduced.
"If this measure were brought in sooner, on 1 July, for example – which independent experts have indicated is entirely possible if the political will is there – it would bring in €125m next year," he said.
"I realise there would be an offset for the levy that is currently there, but that could be adhered to for the remaining months of the year."
He argued that, in the "context" of cuts proposed to welfare spending, the government should consider seriously bringing forward the changes.
"It is a budget adjustment that has been agreed with our partners in government, so it simply seems to be a question of timing," he said.
He added that the savings from an earlier implementation could be diverted to fund the respite care grant – subject to cuts in the most recent budget, unveiled at the beginning of December.
Minister for social protection Joan Burton, responsible for both welfare and pension policy, said she would raise the issue with the Department of Finance.
"It may be a matter for the finance committee, and there is a job of work to be done," she said.
The new €60,000 threshold for tax relieved pension savings was welcomed for lifting the "clouds of doubt" over the pension industry.
Potential changes to the threshold and other tax incentives were scrutinised by a number of industry sources in the months prior to December's budget.
The Irish Association of Pension Funds warned against any changes to the level of tax relief on contributions, saying it could inflict "severe damage" on private pension provision, and concluded the €60,000 cap was the "least worst option" possible.