Is it time to withdraw tax subsidies?

The Pensions Board recently announced new funding standards for occupational pensions.

Two high profile companies are considering closure of their defined benefit pensions for new employees as a result. I suspect this threat is more to do with the Government’s plans to reduce the tax benefits enjoyed by the industry.

Both AIB, as a major pensions provider, and INM, as a major advertiser for the industry, stand to lose a lot if the Government introduce their long overdue reduction in pensions subsidies.

The under-funding of pension schemes was caused by loopholes in the 1990 Pensions Act. It left so many options open for employers to reduce their contributions. They were allowed to take contribution holidays and alter their workers’ age profile by selective redundancy. They are now closing schemes to new employees and leaving others with little or no pension. Even the funding period was extended during the boom years. Is it time for the Government to withdraw all tax subsidies from under-funded pensions schemes?

Michael Terry

Castleknock

Dublin 15