Brian Lenihan Jnr (Dublin West, Fianna Fail)

I do not accept that there are unfair elements in the structure of the public service pension-related deduction. The approach to this deduction is that it applies generally given the fact that all public servants enjoy the benefits of a public service pension, which provides for greater security and more favourable terms than the generality of private sector pensions. The graduated approach to the payment is to ameliorate somewhat the impact on lower paid public servants.

Owing to the availability of tax relief at the marginal rate for pension contributions, in certain circumstances an individual on a higher gross income may incur a lower net loss than an individual on a lower income as a result of the new pension-related deduction.

However, it is important to note that the income tax, PRSI and health levy system is highly progressive. Those on higher incomes pay higher rates of tax. Across the entire public service, on all grades and on all pay scales, the total deductions, which include income tax, PRSI, health levy and the new pension levy, will be higher as a percentage of gross pay as pay levels increase.

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