IRELAND - The Irish Association of Pension Funds (IAPF) has urged the minister for social and family affairs, Seamus Brennan, to ensure all forms of pension provision operate on a level playing field from a tax perspective.
IAPF chairman, Joe Byrne, said the association wished to avoid the risk that existing occupational pension schemes would unravel as members moved to individual Personal Retirement Savings Accounts (PRSA) contracts.
Byrne allowed that the proposed creation of a e1 for e1 government top up to PRSAs was a “very positive change to the tax regime” which could encourage greater levels of retirement savings, particularly from those in the standard rate tax band and those outside the tax net, where pension coverage is lowest.
But he cautioned that an equivalent simple tax credit mechanism should apply to contributions to occupational pension schemes so as to ensure that the tax treatment of all forms of pension saving are identical.
Byrne’s comments were made following the publication of the Pensions Board report on the National Pensions Review.
The IAPF welcomed the news that a comprehensive review of the Minimum Funding Standard would be a priority task for the new Pensions Board.
We continue to be concerned that the current regime, if left unaltered,will result in a dramatic reduction in defined benefit coverage in theprivate sector in a very short period of time, said Byrne.
The IAPF has proposed that a state backed annuity fund be established as a risk sharing mechanism to support DB schemes in cases of involuntary insolvent wind ups.
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