Friday, December 06, 2013
The Coalition’s failure to reduce tax relief for high-end pensions is protecting “a golden circle”, including ministers themselves, and is a conflict of interest, former minister Roisin Shortall declared.
Ministerial pensions came under the spotlight last night after the Government was accused of targeting those with low pensions to subside those on high-end ones, including office holders themselves. Ex-Labour TD Ms Shortall criticised ministers, saying the Coalition had reneged on promises to overhaul relief for pensions and instead were a group of protected high earners minding their own pensions. The claims came as TDs passed the Finance Bill, giving effect to budget measures. Finance Minister Michael Noonan’s department denied well-off pension holders were being let off the hook but also admitted legal restrictions prevented them making retrospective changes to schemes. Ms Shortall told the Dáil that pension tax relief costs the taxpayer €2.5bn a year and about 80% of this went to the top 20% of earners. The Government reneged on a promise to drop tax relief for pensions in excess of €60,000, she said, and benefits could still accrue for schemes valued up to €100,000. Mr Noonan had instead made up a budgetary shortfall by increasing the pension levy by 0.15%, she claimed, which meant people on smaller pensions were subsidising those with high-end ones. “The Government is continuing to perpetuate the golden circle arrangement for people on the inside and in the know,” she said. The failure to tackle high-end pensions directly benefited ministers and high-earning public servants, she argued. The Government had “hid behind” its own legal advice in failing to tackle higher pensions, she said, and independent advice should have been sought. “This is a group of very well protected high earners who are continuing to featherbed their own pensions,” said the Dublin North West TD. Mr Noonan’s department said the changes to the pensions regime would “restrict the capacity of higher earners to fund or accrue large pensions through tax relieved or subsidised sources and would do so over time in line with the programme for government commitment”. However, his officials did say that following legal advice there had been a need to protect or “grandfather” pension rights. This was to prevent legal action and included ensuring there had been no “retrospective or unjust treatment” to pension schemes, his office said.