THE GOVERNMENT IS scaling back on its predecessor’s plans to cut pension tax relief from 41 per cent to 20 per cent.
Former finance minister Brian Lenihan had introduced plans to cap tax relief on pension contributions at 20 per cent by 2014 under the four year plan. The National Recovery Plan 2011 – 2014 said the cap would save the state €865m over those four years.
Instead, the government plans to introduce a 33 per cent flat rate on all contributions, according to a report in today’s Sunday Times (subscription required).
When that flat rate will be introduced is unclear, but the 33 per cent figure is in line with recommendations made in a National Pensions Framework report in March 2010. That report stated it was setting out a framework for how the then-government could meet its earlier commitment to “introduce a single 33 per cent rate for tax relief on private pension provision in the context of the national pensions framework”.
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