Private sector 'has most to lose' on back of relief cut
PRIVATE sector workers will be the biggest losers if the Government moves ahead with its plans to cut the pension tax relief, head of Standard Life Nigel Dunne has warned.
This is because the average private sector worker who has a pension will end up with around €6,000 a year compared with the average public sector annual pension payout of €21,000, he said.
The cut in the pensions tax relief is part of the bailout agreed with the IMF/EU.
Standard Life said that private sector pension funding was already "woefully inadequate".
The average private sector worker will be at least 3.5 times worse off than their well-heeled public sector peers in retirement, Mr Dunne asserted.
Cutting the tax relief on pension savings from 41pc for those on the higher tax rate to 20pc for all will mean it costs 57pc more to fund a pension for those paying tax at the higher rate.
"How can we persuade people to save into their pension if it costs them almost 60pc more?" Mr Dunne asked. "Why would you save into a pension when tax relief is offered at a paltry 20pc on your contributions and 49pc is payable on your retirement income?
"The final straw is that you tell private savers they will have to stump up for the eye-wateringly generous public sector pensions of their peers while they save towards a relatively impoverished retirement.
"The injustice of it towards the private sector is jaw dropping," he added.
Mr Dunne claimed that private sector retirement saving would be killed off if the tax reliefs were reduced.
He also said the policy would end any hopes that hundreds of thousands of private sector workers may have had of owning a decent pension like their well-to-do public sector peers.