Eoghan Murphy (Dublin South East, Fine Gael)
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72. To ask the Minister for Finance if he will examine a pension issue (details supplied). [18058/15]

Michael Noonan (Limerick City, Fine Gael)
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While it is not absolutely clear from the details supplied, I am assuming that the questions at issue relate to past changes that were made to the annual earnings limit which, along with age-related percentage limits, determine the maximum tax-relievable pension contributions that an individual can make in a tax year and to the 0.6% pension fund levy which I introduced in 2011.

In that regard, I am informed by the Revenue Commissioners that the earnings limit which was originally set at €254,000 in 2003 and increased through indexation to €275,239 by 2008, was subsequently reduced by the previous Government to €150,000 in 2009 and further reduced to its present level of €115,000 as part of a range of pension-related measures introduced in Budget and Finance Act 2011 by that administration.

It should be borne in mind that all of the pension-related changes made at that time were implemented against the very difficult and challenging budgetary situation which was facing the country and continued to face the country in the years that followed. It was clear that the tax base had to be broadened and tax expenditures curtailed or abolished if the serious financial and economic problems facing the country were to be addressed. Given the very significant cost of pension tax reliefs, such reliefs could not escape attention. Apart from contributing to the curbing of overall tax expenditures, the pension-related tax changes introduced also brought greater equity to the system by impacting for the most part primarily on higher earners. Indeed, I have introduced further restrictions in this area by, for example, reducing the Standard Fund Threshold (SFT) the maximum tax relievable pension fund at retirement to €2 million from its previous level of €2.3 million with effect from 1 January 2014 and by changing the valuation factor used for establishing the capital value of defined benefit pension schemes from a standard factor of 20 to a higher age-related factor that varies with the individual's age at the point at which pension benefits are drawn down. These changes to the SFT regime apply to pension arrangements across the board in both the private and the public sector.

In the same vein, the original 0.6% stamp duty levy on pension fund assets, which I introduced in 2011 and which ended last year, was used to fund the wide range of measures introduced in the Jobs Initiative to protect existing jobs and create new jobs. These include expenditure measures such as the Jobbridge and the Springboard schemes, as well as a number of tax and PRSI incentives, such as the reduction in the VAT rate from 13.5% to 9% for the tourism and hospitality sectors and the halving of the lower employer PRSI rate.  It is the case that the levy does not apply to unfunded public service pension schemes. However, the pensions of public servants have been subject to a public service pension reduction (PSPR) since 1 January 2011. The PSPR was introduced on 1 January 2011 under the Financial Emergency Measures in the Public Interest Act 2010. The PSPR is not a levy but is a pension cut affecting public service pensions, including those of former members of the Oireachtas and Ministers.

While the 0.6% pension fund levy has ceased and the lower 0.15% levy introduced for 2014 and 2015 will not apply beyond 2015, I have no plans to either repay the pension fund levy tax collected or to retrospectively reinstate the higher earnings limit for pension contributions, as may be implied in the details supplied with the question.

Overall, the restrictions in tax expenditures and the funds raised by way of the levy have helped to create the improving financial and economic position of the State. We have begun to see the benefits of this improving position as evident from the changes which I began in Budget 2015 and which will continue in future Budgets to reduce the income tax burden on low and middle income earners.