Public servants to get 20pc tax on pensions of €100,000
ALL former public and civil servants with pensions of €100,000 or more will be taxed at a new 20pc rate, Minister for Public Expenditure and Reform Brendan Howlin announced in the Dail today.
The move comes ahead of Budget 2012 next week when taxpayers will learn exactly how the Government is planning to hit their pockets by taking €3.8bn out of the economy.
While it is not expected that the new tax will raise huge amounts of money, the announcement comes on the foot of growing public anger and the unease of backbenchers over recent huge pension pay-offs.
They include payments to Dermot McCarthy, who was the former secretary general to the Government and to the Department of the Taoiseach, who received a package worth €713,000 and Director of Public Prosecutions James Hamilton who got a lump sum of €319,315 and will receive an annual pension of €114,840.
It is understood that the move will affect over 250 people from former ministers and government department secretary generals to consultants and college presidents.
Currently, the first €15,000 of the pension is exempt from tax while a 5pc rate applies to €15,000 to €20,000.
A 10pc rate applies to the €20,000 to €60,000 part of the pension while anything above that attracts a 10.5pc rate.
The Minister is using the new legislation on judiciary pay to push through the changes.
The new will not affect lower to middle income State employees, and is solely for those at the top level.