Government could save €1bn a year with fairer tax relief system - ERSI

The Government could save around €1bn a year, if it implemented a fairer tax relief system for pensions.

An ESRI study has found that high income households gain most from their contributions.

That is because they get tax relief at the 40% rate - while those who earn less get 20%.

Dr Karina Doorley from the ESRI says a standardised 30% rate could bring in big savings for the exchequer.

She said: "The total cost of tax relief on pension contributions in Ireland, if you take into count the implicit contributions also made by the State for public sector pensions is somewhere in the region of €2bn.

"If there was a reform that standardised tax relief on these pension contributions you could expect to save up to half of that."

- Digital Desk