Pension tax relief ‘should not be cut’

THE Government cannot justify cutting pension tax relief in the budget, according to Standard Life.

It pointed to a recent report from actuarial consultants Milliman which revealed that the pensions sector has exceeded the roika’s savings requirements for this year.

It also reveals that 83% of 2012 savings have already been achieved for 2012.

Recent figures from the Irish Association of Pension Funds (IAPF) show that 155% of the 2011 savings target has been achieved.

Chief executive of Standard Life, Nigel Dunne, said that 100% of the 2012 target is expected to be achieved, based on a continuation of 2011 trends, which involves not cutting income tax relief from 41% to 34% on pension contributions.

“Contrary to public perception, it’s completely within the Government’s gift since they have exceeded their 2011 target and are on track for next year.

“The Government’s priority is to deliver on the savings targets outlined in the National Recovery Plan 2011 — 2014 (NRP).

“However, there is great flexibility as to how those targets are achieved — ie income tax relief does not have to be chopped to 20% by 2014 as suggested by the NRP,” he said.

Standard Life said that the Government has already taken €460.5 million from pension savers this year through the 0.6% levy, which it said the troika does not include in its calculations towards its annual targets.

The Milliman report expects self-employed savings to fall by at least 12.5% in 2011 and €111m tax-relief savings for the Government due to the reduction in pension contributions in 2011.

“We’re confident the Government is keen to maintain the delicate balance between meeting the troika’s savings requirements and not killing off pension savings, destroying further jobs and potentially impoverishing middle income savers in retirement,” said Mr Dunne.