FORMER Junior Minster Roisin Shorthall has criticised the limits to pension tax relief as a means for allowing “the golden circle to continue”.
The new limit on the amount of tax relief people can get for putting money into pensions will deliver €130million less in revenue than the Government originally expected.
In 2011, the Government had promised to introduce measures to ensure that tax reliefs could not be used to provide an annual pension of more than €60,000.
However, Ms Shorthall told RTE Radio's Morning Ireland today: “They’ve introduced a regime where the formula will allow people to accrue pensions up to €100,000 [before paying tax].”
“The government promised to apply a limit of €60,000 for pension relief, and they’re not actually doing that.”
“Because of that, there’s a shortfall of €130million,” she said.
In Budget 2013, the Government said it expected the changes would deliver €250m in additional tax revenue annually when introduced in 2014.
But Ms Shorthall said the pension tax relief cap was not enough, and she described it as “low hanging fruit” which should have been targeted long before there were cuts to education.
“The government also promised to ditch the pension levy but they’re not doing that.”
She said it would ensure that the “bulk goes to the top earners”.
“People on really small pensions are being targeted,” she said.
“It’s allowing for the gold-plated pensions to continue.”
The Independent TD said Ministers and top civil servants would come out unscathed financially in relation to their pensions.
“The people who drafted this legislation have a vested interest in this – they’re senior public servants and ministers who continue to accrue big pensions.”