Sinn Féin - On Your Side

Equity and re-distribution must be at the heart of pensions policy - Morgan

11 August, 2006

Sinn Féin Employment and Workers Rights spokesperson Arthur Morgan TD, responding to the report by the Pensions Board entitled "Special Savings for Retirement", has said that the mandatory private pension scheme proposed by the Board will not deliver equitable income security for future pensioners. He went on to outline the party's support for an extension of the state pension and argued that a universal 'basic-income' pension funded out of the general taxation system would be progressive and redistributive, and would ensure independent pensions for all men and women.

The Louth TD said: "Sinn Féin welcomes the report from the Pensions Board as a kick-start to a much needed debate on the direction of pension's policy. We also welcome the fact that the Board stated in the report that there was considerable support amongst its members for an increase in the State pension as a means of improving retirement incomes for all existing and future retirees.

"Pension policy at present is neither equitable nor progressive. It is failing lower paid workers and women. Little attention has been paid to the escalating cost of the inequitable tax reliefs that have accompanied the drive towards private pensions. A wealthy minority have been able to take advantage of excessively generous tax incentives paid for by all workers, including low paid workers, through the taxation system.

"According to figures which I obtained from the Department of Finance in May, tax relief on contributions by employers and employees, and exemption of income and gains in pension funds, cost the state a whopping €1.8 billion in 2002. In the same year tax relief on 'Retirement Annuity Contracts', available to the self-employed and to employees not in occupational pension schemes, cost the state €185million.

"The system proposed by the Pensions Board would continue the trend within pensions policy of providing greater benefits to higher income earners. Low-paid workers can simply not afford mandatory pensions. It is therefore not an equitable solution to the issue.

"The ending of tax reliefs under such a scheme would be a very welcome step forward. But the fact that the state would be paying 5% of eligible income would give considerably greater benefit to a person at the top end of the income eligibility scale compared to the bottom end. Those earning under €15,000 have no eligibility under this proposed scheme.

"Sinn Féin believes that the provision of a basic non-means tested universal pension for all people of retirement age funded out of the general taxation system is the only option where the objective is ensuring independent pensions for all men and women.

"This would also be the most progressive and re-distributive option and the amount of the pension would be based on what is necessary for a pensioner to achieve a certain specified decent standard of living.

"A second tier of pensions related to social insurance contribution (under which 'home makers disregards' would be replaced with gender neutral 'Carers' Credits' for years spent on caring duties) should augment this basic pension. In conjunction with this there needs to be a significant immediate curtailment of the tax incentives for occupational pensions, PRSAs and approved retirement funds. The objective should be the elimination of these incentives and the redirection of this funding into the basic non-means tested pension." ENDS

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