Alice-Mary Higgins (Independent) | Oireachtas source

This is the most crucial recommendation and, therefore, I would appreciate it if the Minister could indicate how intends to tackle this issue. There has been extensive media coverage of the deep structural inequities within our contributory pension system, which ensure that those who have taken time to care for someone or to contribute to society in different ways have been penalised through the averaging system. They are predominantly women. The pension gap is very large and it has increased from 35% to 37% in recent years. There are deep inequities in the way total contributions are calculated, which was acknowledged in the then Government's Green Paper on pensions almost a decade ago. These are only partially addressed by the home-maker's scheme because it only applies from 1994 onwards. The scheme does not extend back to 1973 when women were still being asked to leave the public service when they married. The marriage bar was removed that year but it should have been ensured that there were no disadvantageous measures in the pensions system. That should have been part of a response to Europe's ruling against the State.

That is an historical issue but there is also an issue going back to 2012. Extensive reports from Age Action Ireland and others have highlighted that, despite knowing that the method of calculating contributions to the pensions system is unfair, those on lower contributions were further penalised from 2012 onwards. Up to 40,000 people, predominantly women again, have been affected by this issue. The vast majority of those in receipt of the top rate of contributory pension are men, but while that rate remained the same, the lower and reduced rate of pension was cut substantially. When these issues were raised and as the figures were discussed in an effort to address the inequity, we were told the cost would be too high. Even though it is an acknowledged inequity, we were told the Government cannot afford to remedy it. The cost is estimated to be a paltry €70 million to address the 2012 inequity and €10 million every year thereafter but this is beyond our resources as a nation. However, the Minister for Employment Affairs and Social Protection informed the House last week that the cost to the Exchequer of private pension tax relief is €2.6 billion per year. Analysis shows that the measure disproportionately benefits the top 21% of taxpayer units, who are higher earners. The tax relief is inequitable because through the marginal rate relief we give more tax relief to those on higher incomes than to the vast majority of the population who are on lower incomes and receive standard rate tax relief or less than that.

Private pension tax relief was noted by the troika in its memorandum of understanding with the State as an issue. It is interesting that it is one of the few issues in the memorandum that was not acted on. The troika said the State should move to a standard rating tax relief system either by applying the standard rate of 20% to all private pensions or by introducing a new standard rate of 30%, which would benefit lower earners rather than giving an increased benefit to higher earners. A total of 43% of lower earners who pay the standard rate are only entitled to receive a marginal rate tax relief of 20% on a private pension and very few of them take it up.The usage of the private pension tax relief scheme is predominantly by higher earners and a higher earner can have up to €40,000 a year as a write-off in terms of private pension tax relief. How can we justify not addressing this inequality in our tax relief for private pensions when we are being told we cannot afford to fix the inequalities in our contributory pension system? How can we spend €2.6 billion on private pension tax relief, unequally distributed, when we cannot find €70 million to fix the inequity and the insult experienced by women in Ireland represented by the 2012 changes?