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Nov, 2011

A cap on retirement income would be preferable to any further reductions in tax relief on pension contributions, according to the Minister for Social Protection, Joan Burton. But the days of people in their 50s retiring on pensions of €150,000 are numbered because Ireland can no longer afford such largesse.

“The Programme for Government includes a commitment to capping taxpayers’ subsidies for all future pension schemes that deliver income in retirement of more than €60,000. Another way of reducing the cost to the exchequer would be to reduce the higher rate of tax relief on pension contributions,” she told an accountancy conference in Cork. “Personally, I favour capping taxpayer subsidies on pension pots that deliver an income in retirement of more than €60,000, because I want to preserve the incentive for people on middle incomes to continue to save for their retirement.”

In the speech, which is covered in The Sunday Business Post, she envisaged any such changes would be enacted on a phased basis to avoid the prospect of a large tax bill at retirement.

Meanwhile, in an “exclusive”, The Sunday Independent is reporting an even more “drastic” overhaul of “Rolls Royce” public sector pensions, including a clawback of payments already made to some of the country’s top civil servants who have already retired.

“The proposal has come on foot of mounting public anger and increased unease on the Government backbenches over recent huge pension pay-offs to senior civil servants,” the newspaper “reveals”. “If included in the Budget, recently retired public bosses like Dermot McCarthy, who received a pension package of €713,000, and Director of Public Prosecutions James Hamilton, who received a net pension lump sum of €319,315 and will receive an annual pension of €114,840, will be subjected to the new reduction.”

Quoting “senior government sources”, the newspaper says the proposal is an attempt to regain moral authority for its package of cuts and tax adjustments and would not affect lower to middle income State employees.

Watch this space … but don’t hold your breath.

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