Irish Body Attacks Pensions Tax Relief

by Amanda Banks, Tax-News.com, London

12 July 2005

Irish press reports over the weekend suggest that the country's Pensions Board is recommending dramatic changes to the tax treatment of private pension schemes, in a controversial attack on tax avoidance by the wealthy.

A confidential report to the Department of Finance is said to recommend replacing the current system, which puts no limit on the level of tax-free contributions that can be made into a pension scheme by a business owner, with a cap varying between 15% and 30% of salary, depending on age.

The result could be to force small business owners into choosing between working on into retirement or accepting lower levels of pension income, say critics of the proposals, which would apply to the defined-contribution schemes popular in the private sector.

The Pensions Board is a statutory body set up under the Pensions Act, 1990, and its roles are to regulate occupational pension schemes and Personal Retirement Savings Accounts, and to advise the Minister for Social and Family Affairs on pension matters generally.

The Board admits that the report has been submitted to the Department of Finance, who will not comment, other than to confirm that it is reviewing tax relief on pensions as part of the overall review of tax reliefs announced in this year’s budget.

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