John Paul Phelan (Fine Gael)

I move recommendation No. 4:

In page 9, before section 1, to insert the following new section:

"1.—A person, none of whose taxable income is chargeable at the higher rate, who makes a pension contribution within the limit set out in section 779 of the Principal Act, shall be entitled to receive a tax credit contributed to the pension scheme equivalent to relief at the higher rate.".

One of the most controversial tax reliefs available concerns the area of pension provision and it tends to be one of the more inequitable examples of relief. This recommendation seeks to bring some degree of equity to those people on lower incomes who make provision for their pension into the future. By the nature of the relief, those on higher incomes who make larger contributions will get a higher relief.

In the four years I have been a Member of this House the area of pensions has been discussed on numerous occasions. Over half the working population does not appear to make any provision privately for their pensions and will be dependent on State pensions. The purpose of this recommendation is to encourage more people on lower incomes to make provision for their pensions. At the top end of the scale a person can earn up to €247,000 and get relief for pension contributions at up to 42%, which means that the taxpayer contributes €41,500 each year to that person's pension. If we compare that to the fact that many people are not making contributions or being encouraged by the system to make any contributions, it identifies an imbalance that should be addressed. Perhaps the Minister has some proposals to address that imbalance into the future.