Róisín Shortall (Dublin North West, Labour)
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Question 28: To ask the Minister for Finance the savings to the Exchequer if the reckonable salary upon which maximum pension contributions are based were reduced to €10,000, €20,000, €30,000 and so on at intervals of €10,000 up to €100,000 and based on both employee and employer pension contributions in the case of a defined contribution plan and the value of the increase in the member's benefit in the case of a defined benefit plan [39634/10]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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Under current arrangements, an annual earnings cap of €150,000 acts, in conjunction with age-related percentage limits of annual earnings, to put a ceiling on the annual amount of tax relief an individual taxpayer can obtain on employee or personal pension contributions to pension savings. I assume that the Deputy is suggesting that the existing annual earnings cap be reduced to the levels set out in her question.

The full year yields to the Exchequer arising from reducing the earnings cap as suggested are set out in the following table. The figures are provisional and subject to revision.

A breakdown of the figures by reference to income levels is available only in respect of the tax relief for contributions to Retirement Annuity Contracts (RACs) and Personal Retirement Savings Accounts (PRSAs) to the extent that these contributions are included in the personal tax returns of taxpayers.

With regard to occupational pensions, (that is, schemes set up by the employer), the figures in respect of employee contributions are available only in aggregate form. Information on such contributions is not captured in such a way as to make it possible to associate contributions with individual income levels. For that reason, there is a high degree of estimation involved in costing the changes proposed and the estimated yields to the Exchequer are extremely tentative.

Employer contributions to occupational pension schemes are not taken into account for the purpose of the annual earnings cap and age-related limits. Furthermore, such contributions are also only available in aggregate form and it would not be possible to associate them with individual taxpayers. Employer contributions are not, therefore, included in the estimates detailed above.

The estimated yield is based on assuming that tax relief which would be affected by the changes mentioned in the question is currently allowed at the top income tax rate of 41% and at the maximum age-related percentage limit of earnings. The figures provided could therefore be regarded as the maximum Exchequer yields in respect of affected taxpayers.