Call to reduce pension tax reliefs
Former minister of state Róisín Shortall has called on the Government to address the “pension situation” in the upcoming budget, saying the State could save €500 million through a reform of the pension relief system.
Ms Shortall said it was unreasonable for the State to subsidise pensions worth more than €50,000.
“It’s costing the taxpayer about €2.5 billion to fund the pension tax relief regime,” she said.
About 40 per cent of the relief on retirement annuity contracts and PRSAs goes “to people earning in excess of €200,000; 70 per cent of it is going to people earning in excess of €100,000.” she claimed.
The Dublin North TD, who resigned as minister of state at the Department of Health and the Labour Party whip in a row with Minister for Health James Reilly over primary care, said the extremely generous pensions enjoyed by former bankers and politicians galled low and middle incomes families who “are under so much pressure to survive.”
Yesterday, former AIB chief executive Eugene Sheehy announced he would take a voluntary cut in his annual pension to €250,000 from between €300,000 and €325,000.
Speaking in the Dáil afterwards Taoiseach Enda Kenny said Mr Sheehy and others were in receipt of pensions under contractual arrangements which he, as Taoiseach, and the Minister for Finance, could not change.
Speaking on RTÉ’s Morning Ireland today, Ms Shortall urged the Government to seek a way to legally curtail pension entitlements.
Failing that she said there was enough “anger and annoyance among the public” to hold a referendum to change Constitutional property rights.
Minister for Education Ruairi Quinn, speaking on the same programme, advised against “creating some kind of hunt against certain individuals who have rights as citizens and with whom contracts were signed by the previous government”.
Later, Sinn Féin deputy leader Mary Lou McDonald suggested applying a super levy or utilising the taxation code to rein-in expensive pensions.
“I don’t accept that it’s beyond [the Government’s] wit or ingenuity to find the mechanism to sort this out,” she said. “I think it is a matter of political will and I think those in Government would be far happier if everybody looked the other way and shrugged their shoulders.”
Ms McDonald called for an end to pension entitlements for politicians who are yet to reach retirement age and who are still in the labour market. She also said TDs’ salaries should be reduced to €75,000 from €91,000.