Brian Cowen (Laois-Offaly, Fianna Fail)

Tax relief is provided at an individual's marginal income tax rate on amounts contributed to pension schemes, subject to limits. Relief is also provided on contributions made by employers to such schemes and on the amount of profits and gains generated by the investments held by the pension schemes. Pension benefits payable on retirement are taxable subject to an entitlement to take a tax-free lump-sum cash benefit.

Over half of all people in employment are covered by voluntary private pensions and the tax relief arrangements described have assisted in this regard. For people in employment aged between 30 and 65 years, the pension coverage level in the fourth quarter of 2005, according to the Central Statistics Office's quarterly national household survey, was approximately 62%. This compares to a target of 70%, to be met sometime after 2013, suggested by the national pension policy initiative.

The 2006 budget and Finance Act took steps to address some important equity issues and to limit the cost to the Exchequer of tax relief provided to higher income earners. Among several commitments in the new programme for Government to improve pensions, there is a commitment to develop proposals, in the context of the Green Paper on pensions and in consultation with the social partners, to provide an SSIA-type scheme in an effort to make supplementary pension provision more attractive to those on low incomes. This would further address pension adequacy and equity concerns and be negotiated under the aegis of the social partnership agreement.

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