Sunday 26 February 2017

Minister vague on future of pension tax reliefs

INSURANCE

Laura Noonan

Laura Noonan

SOCIAL Protection Minister Joan Burton has refused to give any commitments on the future of pension tax reliefs and has stressed the need to be "very cautious" on industry proposals to allow workers draw down parts of their pensions early.

The comments from Ms Burton came on the sidelines of the Irish Insurance Federation's (IIF) annual general meeting on Friday, where the group's president called on the Government to give "clarity" on its pension policy.

A new levy is being imposed on private pension funds for the next four years to fund the jobs budget, but Ireland's bailout package requires the industry to deliver €1bn a year extra to the Exchequer.

Newly elected IIF president Gerry Hassett said the Government "urgently" needed to "restore the confidence" in the pensions market by detailing policy measures sooner rather than later.

Some insurance industry bosses were hoping Ms Burton would give some indications on future measures in her speech, but she instead used the address to point out that all sectors of Ireland must do their part for the recovery.

Change

Speaking after the meeting, Ms Burton declined to categorically rule out further changes to pension tax reliefs in the next Budget as a way to eke some of the €1bn demand, saying "no decisions" had been made in relation to Budget 2012.

"The Budget is operating in the framework of the IMF [bailout] agreement," she added. "If we want to change things, we have to find a funding source in another area."

Ms Burton pointed to capping tax relief on pensions at contributions of €60,000 a year as one way to get extra money from the pensions industry, but admitted this was unlikely to be "enough" to make up the €1bn.

The industry has also mooted a scheme which would allow people experiencing financial hardship to make one-off withdrawals from their pension funds.

The plan would raise revenue because the money would be taxed as it was withdrawn.

"I think you have to be very cautions about that [early withdrawal plan]," Ms Burton told the Irish Independent. "It's very important not to undermine pension funds, particularly of modestly paid workers."

Mr Hassett said he was "encouraged" that the minister was open to dialogue with the industry.

Irish Independent

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