Róisín Shortall (Dublin North West, Independent) | Oireachtas source

I strongly support Deputy Broughan’s amendment. The Government’s pension levy underlines the complete disarray in its pensions policy. Two promises were clearly made by the Minister for Finance, Deputy Michael Noonan, last year. First, he promised to tackle the very unfair pension tax relief on high-end pensions. Pension tax relief costs the taxpayer €2.5 billion a year, the vast bulk of which, about 80%, is going to the top 20% of earners. From the start, it is a very unfair system. Last year we were promised that tax relief would not be available on a pension in excess of €60,000, a promise particularly emphasised by the Labour Party which decided to call it some sort of a wealth tax. That would have been a progressive move had it happened. Unfortunately, the Minister for Finance has broken that promise. Now, people can accrue pensions up to €100,000. Those who have exceeded the €60,000 threshold will be allowed to continue to accrue further pension benefits up to €100,000. Accordingly, the expected revenue from that promised measure is vastly reduced. It was supposed to save €250 million. Now, because of the backtracking and the breach of that promise, it will only raise €120 million. There is a shortfall of €130 million in the budget figures as a result of the Minister breaking that promise and going back on the commitment given last year. To make up the shortfall, he has increased the pension levy.

Another commitment the Minister made last year was that the pension levy, which has caused so much difficulty for many people’s pension entitlements, would be abolished in 2014. That is the second commitment the Minister has broken in the budget. Far from abolishing it, he is actually increasing it in 2014 and it will continue to apply in 2015. The revenue expected to be raised through this measure is €135 million. It is clear that because of his failure to attack the high-end pension issue, the Minister is targeting those on low and average pensions to recoup the saving. He is compounding the inequality within the pension system. People on small pensions or taxpayers with no pension provision of their own are subsidising those with high-end pensions up to the level of €100,000. There is no fairness in this at all. It is a significant breach of the two commitments made last year. Not only do those in defined contribution schemes and defined benefit schemes have a 0.6% levy on their meagre private pensions but, now, they will have an additional levy. It is completely unfair and flies in the face of any sense of equity in the system.

The Government is continuing to perpetuate the golden circle arrangement for people on the inside and in the know. The fact that it has not tackled high-end pensions directly benefits Ministers, for example, and high earning public servants, the very ones who decided to backtrack on the promises made last year and added a further imposition on those with minor pension provision instead. This is a significant conflict of interest. The people who stand to benefit from a Government policy are the very ones who have designed it. They then hide behind a line about legal advice. I have already challenged the Minister for Finance and the Minister for Public Expenditure and Reform, Deputy Brendan Howlin, to produce this legal advice to show us why they could not follow through on the commitment given last year. Of course, they refused to provide that advice. Those who have provided it are all part of the apparatus of government at senior level and are the very ones who are conflicted on the issue. They are the same kind of people who will benefit from the backtracking on the commitment to tackle high end pensions. The Government should, at the very least, be seeking independent advice. Otherwise, we cannot come to any other conclusion but that this is a group of very well protected high earners who are continuing to featherbed their own pensions, at the expense of those who have small pensions which will be now further reduced as a result of the measure in question. It is completely unacceptable. No other jurisdiction would allow a group of insiders to look after themselves in the way this group is doing. It is shameful.

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