SLASHING THE PENSION FUND

An individual may no longer be able to claim tax relief on contributions he or she makes to a pension fund after it reaches €1.5m – and possibly even less – under proposals suggested in the Programme for Government, The Sunday Business Post reports. Currently, someone can accumulate €2.3m through tax-relieved contributions, only just over half of that previously allowed until Budget 2011 slashed the total from €5.4m. In its election manifesto, Fine Gael said it would reduce the figure to €1.5m and Labour is also committed to reducing the pot but did not specify by how much. However, pensions experts now fear the government intends greater than expected cuts to the fund limit. Fionán O’Sullivan, director of IFG Corporate Pensions, said it was clear both parties in government were “fully committed” to reducing the threshold. Meanwhile, The Sunday Times reports corporate pension schemes are fighting Fine Gael plans to impose a 0.5% emergency levy on retirement funds, which would raise €425m for the exchequer. The Fine Gael manifesto endorsed proposals by Irish Life and Zurich Life for the levy on the basis it would cause less damage than cutting tax reliefs on pensions. It was not mentioned in last week’s Programme for Government but remains the bedrock of government pensions’ policy. However, The Irish Association of Pension Funds, which represents large corporate funds, now says a levy would push struggling schemes deeper into deficit. The current austerity plan agreed by the previous government includes a reduction on tax relief on pension contributions to 20% by 2014. Media