Dr. Barra Roantree:

It depends on the distribution of earnings of those who are affected. We would need to go away and do the calculations on that. It is important when we are looking at the tax relief of pension contributions to think about the tax treatment of the draw-down later in life. If we are saying we want everyone to get the same tax relief when they are saving for the pension, why are we not talking about what we are doing to the pension income on draw-down? It is important in the context of pensions to look at both of those relatedly. Some people are of the view that it is unfair or not right that certain individuals can get 40% relief on contributions because they are higher earners at a particular point. At the same time, we need to remember that if they have high earnings over their lifetime, if they have high incomes, they are going to pay 40% on draw-down in retirement. We need to think about those two things. If they are not, if they are only paying 20% in retirement, that means we are essentially allowing them to tax-smooth the way that we do people with unstable incomes in other sectors. We have this feature in farming and we even have it for sports stars. We know their earnings are very concentrated in a period of their lives. We allow them some relief on that by virtue of the fact that those earnings are all made in their 20s or early 30s.

We published a report in 2021 and much of it has found its way into the Commission on Taxation and Welfare's report. If one is concerned about the cost of tax reliefs and thinking about which reliefs are not particularly well targeted, the tax-free lump sum is the most obvious and egregious example. It does not do much to encourage people to save in a pension. It is exceptionally generous to very highly paid people with defined benefit pensions, primarily public servants. It allows them up to €200,000 tax-free and another €300,000 at 20% relief. If one was looking at areas where it might be possible to pare back tax relief to pay for any of the cost of automatic enrolment as currently proposed or a different variant, that is a very clear area at which one would look. It would do a lot more in terms of being able to focus the incentives to save on the groups that one would be concerned about.