Financial Resolution No. 5 provides for the reduction in the earnings limit which, in conjunction with age-related percentage limits, governs the maximum amount of tax relieved contributions an individual can make in any one year to pension products. The limit is being reduced from €150,000 in the current year to €115,000 for 2011. Deputies may be aware that the pension tax legislation provides for an individual who pays a pension contribution after the end of a tax year but on or before the return filing date for that tax year to elect to have the contribution treated as if paid in the earlier year. Clearly, with the reduction of the earning limits for 2011, individuals may well be tempted to retrospectively maximise their tax relief for 2010 where they have not done so already by allocating contributions made next year to 2010. This would give rise to significant tax refunds in 2011 that we simply cannot afford. Accordingly, the resolution seeks to limit such exposure by deeming the earning limits for this year to be €115,000 as well as for the purpose of such elections.

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