Róisín Shortall (Dublin North West, Labour)
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Question 77: To ask the Minister for Finance the position regarding the proposed changes to tax reliefs on pension contributions; the way proposals announced in the four year plan will impact differently on public and private sector workers [45783/10]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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The National Recovery Plan contains proposals for changes to the tax and other relief arrangements for private or supplementary pension provision over the period of the Plan, including a gradual reduction to standard rate income tax (20%) relief on employee/individual contributions to pension arrangements commencing in 2012. Pension contributions are made by certain employees in both the private and public sectors. Certain changes, including the removal of employee PRSI and Health Levy relief from employee pension contributions will take effect in 2011. While not a contribution to supplementary pension provision, per se, employee PRSI and Health Levy relief will also be removed from the public service pension-related deduction from 2011 while tax relief on the deduction will also be reduced to the standard rate over the period 2012 to 2014.

The National Recovery Plan includes some indicative impacts of the main income tax changes and, in terms of the changes to the existing reliefs on pension contributions, estimates that the net pay of a single individual in the private sector on €55,000 would fall by about 2.5% over the period to 2014 on foot of the main changes to pension reliefs involved.

The fall in net pay for a single individual on the same pay in the public service could be greater or less, depending on their circumstances, because of the reduction in tax and other reliefs on the pension-related deduction as well as on employee pension contributions which are made by the bulk of public servants.

The Plan recognises that the various changes proposed may reduce saving for private pension provision. The Government is committed to raising €700 million from the pension sector over the period of the Plan and is willing to engage with the sector to examine alternatives to deliver this outcome.