IRELAND - A call for legislative reform on integrated pensions has been met with skepticism from the Irish Association of Pension Funds (IAPF).
Delegates at the Labour Party annual conference supported a motion to urgently examine the best possible way to remove pension integration where possible in private and public pension schemes – a practice which results in the deduction of the old age pension from the contributory pension.
Roisin Shortall TD, spokesperson on social and family affairs, told the conference she planned to bring amendments to the next Social Welfare and Pensions Bill to address issues surrounding occupational pensions that are linked to the value of the state pension.
She said: “This motion highlights one of the main problems with this type of pension in that increases in a pensioner’s state pension often erode the value of his or her integrated pension.
“They are particularly disadvantageous to women, carers, and part-time workers. In the worst cases, pensioners may receive no benefit at all from their occupational pension.”
But Jerry Moriarty, director of policy at IAPF, said the issue of integration was complex and it was hard to see what type of effective legislation could be introduced to tackle the issue.
He said: “It may be better to address the issue through discussion between employers and employee representatives rather than by the introduction of legislation.”
Shortall also highlighted inequities relating to the government’s move to incentivise pension take-up through tax relief. She claimed high earners were favoured in the way in which relief was awarded.
“It discriminates in three ways,” she said. “Firstly, with more disposable income, higher earners are in a better position to avail of tax relief.
“Secondly, while the maximum possible tax relief is capped, these caps are based on a percentage of you income, meaning the more you earn, the higher the cap.
“Thirdly, the reliefs are applied to your marginal rate of tax, so the more you earn, the better rate of relief you secure from the state.”
Moriarty said IAPF had also argued for greater equity in the system of tax relief.
He said: “In our budget submissions for 2006 and 2007 we called for the extension of higher rate tax relief to lower paid workers and that this should be done on a tax credit basis to increase transparency for all workers.”
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