CHANGES TO tax reliefs that would discourage higher earners from contributing to their pensions would be a false economy and could create a serious problem farther down the road, a Fianna Fáil TD has warned.
Dublin South East representative Chris Andrews said the State must encourage people to prepare for their own retirement and that the only way to do this is to make it financially attractive.
Failure to encourage people to take up pensions will ensure the State will have to pay much more in the future, Mr Andrews, a member of the Oireachtas Finance Committee, said.
“I would strongly urge against a situation where we are ‘robbing Peter to pay Paul’,” he said.
“While there is currently enormous pressure to find savings for the State, I believe that when it comes to pensions any steps that might discourage people who are in a position to contribute would be a false economy.”
It has been suggested that the report of the Commission on Taxation may recommend that tax relief at the top rate be reduced to offer greater relief for those on lower incomes in an attempt to encourage them to contribute more to their pensions.
Mr Andrews said he did not believe there was “any evidence” to support such a move. “It may only serve to deter those on middle incomes from continuing or increasing their contributions.
“Many people’s pensions are already suffering due to the downward spiral of the markets and reducing tax relief would only increase this pressure,” he said.
Mr Andrews said the Government’s approach to pensions was critical to the State’s stability and it had an opportunity to implement reform in this area.
He said any reform of the pensions system should be shaped to make pensions more appealing for groups that have a historically poor record of pension uptake.
