The Society of Actuaries in Ireland has published a position paper on “Taxation of Private Pension Provision”.
The primary purpose of the paper is to examine the effect of reducing the tax relief on pension contributions made by individuals.
Individuals currently receive tax relief at their marginal income tax rate on pension contributions. The National Recovery Plan 2011-2014 proposes to change the tax relief from the individual’s marginal tax rate to the standard tax rate of 20% by 2014.
We set out information in the paper on the probable consequences of these changes.
We also set out information on the effects of changes that have already been made to the pensions tax system.
We conclude that the changes that have already been made have had substantial impacts. In light of this, we call for deferral of further changes, and in particular changes to tax relief on contributions, pending a comprehensive and holistic analysis of the various changes currently under consideration. We believe that this is critically important in order to arrive at a pensions framework that will be sustainable over the long-term and that will encourage people to make adequate provision for their retirement.