Dr. Micheál Collins:

There are some contributions which are relatively recent, from that period we talked about earlier, for overall pension contributions, but nonetheless it remains quite generous. The pension contributions for higher-income earners are not counted as part of the overall limit on the use of tax breaks. They are very generous pension contribution limits as people move towards retirement age. They tend to be percentages of income and it will be a much higher nominal figure for those with very high incomes.

There are also limits on the overall size of people's pension pots.

They are quite generous relative to the experience of most people and relative to what the vast majority of individuals would even contemplate in terms of pension saving and pension provision. I am not aware of the precise timing of the Department of Finance consultation. It is clear we are in a period where pension issues are changing which, therefore, is relevant in terms of this pension tax expenditure. Taking the current tax expenditure structure for pensions that is in place and simultaneously the proposal for auto-enrolment and a top-up, at first glance the auto-enrolment proposal is a straw-man proposal in that it only sketches out the proposal and the detail will follow. The initial proposal would suggest that the top-up or support from the State for auto-enrolment payments would be proportionally smaller than the tax relief that is available through the existing tax relief system. I would not have thought that inequity is sustainable or acceptable. It would seem to me that one way or the other, if the intention is to retain the tax relief support in tandem with the auto-enrolment support, they would have to be of the same scale in terms of support. It certainly would not be possible for them to be inequitable.

We then come to the very obvious question, which the Deputy was right to ask, as to whether one system with a State top-up as opposed to two systems might be the better route. I would expect some strong push-back from the pensions industry on this issue. As Gerry Hughes and I show in our report, by a long way, the participants in pension savings are earners at the higher tax rate, even when compared relative to the structure of employees across the two income tax rates. One would expect some push-back in regard to the proposals. There is an inevitability of some significant change in this area one way or the other over the next year. The Deputy is right that these are very large resources that the State is allocating in this way and so there are interesting questions arising, stretching to whether, as in the case of countries like New Zealand, we should just get rid of the entire structure and provide a boost to the universal social pension. There are many options and they involve very large amounts of resources and the livelihoods of large proportions of our population not only now but in the decades to come. This is a key tax expenditure area which will certainly to be to the fore over the next year.