PD manifesto pension proposals would add to confusion, says IAPF

The Government should replace tax relief on pensions with a Special Savings Incentive Account (SSIA)-style bonus on contributions, the chairman of the Irish Association of Pension Funds (IAPF) said last night.

Speaking at the industry body's annual dinner in Dublin, Joe Byrne said people did not understand the current system of tax relief on pensions and that the reliefs were not generous enough for low-income earners.

A €1 matching contribution for every €1 put into a pension by retirement savers would be the simplest approach, Mr Byrne said.

However, similar pension proposals put forward by the Progressive Democrats as part of their election manifesto last weekend would make pensions more confusing, he added.

The PDs proposed a €1 addition for every €2 contributed for people on lower to middle incomes who pay tax at the standard rate, while keeping the existing system of tax relief for those who pay tax at the higher 41 per cent rate.

"One of the problems we have is that there is enough complexity in pensions as there is," Mr Byrne said.

The introduction of mandatory pensions would be counter-productive, Mr Byrne said, and would be resented by many people who had competing demands on their money.

He also called for approved retirement funds to be made available to people who save for retirement under defined contribution occupational schemes. Currently, these savers are forced to buy an annuity on retirement that is of questionable value for money, he said.