Finian McGrath (Dublin North Central, Independent)
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Question 154: To ask the Minister for Finance if he will support a matter (details supplied). [5658/09]

Finian McGrath (Dublin North Central, Independent)
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Question 172: To ask the Minister for Finance the position regarding matters in relation to the new levy (details supplied). [6075/09]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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I propose to take Questions Nos. 154 and 172 together.

The Deputy asks if the Minister will support a matter, i.e. major concerns from public sector workers on the equity of pension levy.

The Government has brought forward several measures to restore stability to the public finances, to maximise economic activity and employment and to improve competitiveness. The new pension-related payment is graduated to reflect different income levels in the public service. As the Government has made clear, the deduction is being made to address the serious budgetary problems facing the country.

The Deputy asks if the new deduction decreases the overall allowable contribution rate made by the individual, if it is calculated on overtime, bonuses etc. which are traditionally non pensionable, if it is fully deductible for purposes of tax and PRSI relief, and if the deduction from Class A1 (PRSI) Civil/Public Sector employees post April 1995 is to be calculated from their integrated or gross salaries.

It is proposed that the legislation will provide that the deduction will not form part of an individual's age related pension contribution limits under the Tax Acts and that it will apply to all remuneration. Certain income that is not pensionable, for example, overtime earnings, will be subject to the deduction, which will be deducted from gross pay by employers before income tax, PRSI and health levies are calculated. Thus, pension contributions will be effectively relieved of tax at the marginal rate. The PRSI class of the public servant does not affect the calculation of the deduction which will apply.