Just one-fifth register to avoid double pension tax
Revenue won't say if ex-ministers applied for dispensation
Published 14/06/2011 | 05:00
JUST one-fifth of those thought to have large pension pots have registered with the tax authorities to avoid a double tax bill.
And the Revenue Commissioners refused to say yesterday if former cabinet ministers and judges had applied for the special dispensation for their pensions.
The last Budget imposed a limit of €2.3m on the maximum value that can be in a pension for tax-relief purposes.
Those who have pension funds greater than this amount, and have yet to retire, had to apply to the Revenue Commissioners by last Tuesday for a higher threshold.
Failure to do this could mean they are exposed to a tax rate of up to 72pc on any amount over the €2.3m pension fund limit.
A spokesman for the Revenue said yesterday that just 1,200 people registered with it for pension funds that were greater than €2.3m by a deadline that was set last Tuesday.
It had been thought that there were 6,000 funds out there that were greater in value than €2.3m.
The spokeswoman for the tax authorities refused to say if former ministers and judges were among those who applied for what is known as personal fund thresholds.
"We could not possibly give out that information as it would be breaking the confidentiality of their tax affairs," she said.
Pensions experts have calculated the pension pots of the likes of former Taoiseach Brian Cowen at €6.6m, while former Transport Minister Noel Dempsey's pot is estimated to be worth €5.5m.
Most of the former cabinet ministers are drawing a pension before hitting retirement age. The calculation of Mr Cowen's pension is based on what it would cost to buy a pension paying €150,000 a year on the open market.
Lawyer and tax expert Aidan McLoughlin, of the Independent Trustee Company, said the finance acts allowed politicians and public servants to "artificially" undervalue their pension funds.
He added that most politicians may have escaped registering their pensions as they announced their retirement before the cut-off date of December 7 last year.
Financial adviser Karl Deeter, of advisors.ie, said that allowing those with large pensions time to register them to avoid double taxation was a "sop to the rich". "This has given fat cats time to arrange their affairs. It is a sop to those who have plenty of money," he said.
This contrasted with the move by the Government to impose a pensions levy on private sector funds, which will also apply to many of those in receipt of a pension, Mr Deeter said.