# Workers should be encouraged to provide for their own pensions and periods of unemployment.



## Brendan Burgess (11 Sep 2017)

An excerpt from my pre-Budget submission on behalf of the Taxpayer

*Workers should be encouraged to provide for their own pensions and periods of unemployment.* 

Under the current system, a person who has worked hard and paid tax and PRSI all their life, gets the same OAP as someone who has never worked a day in their life. This is wrong. All PRSI should go into an account in the taxpayer’s name.  A person’s pension and unemployment benefits would depend on how much they have in their fund. If they have nothing in their fund, they would get no dole. They would have to get a job. If they are retired and have nothing in the fund, they would get a non- contributory pension in line with that paid in other EU countries which would be a lot less than the current level.

Such a policy would have many beneficial side effects:

·  It would always be in someone’s interest to work. While they are working, they are building up their retirement pot. While they are not working, they would be running it down.

·  While unemployed, they would not be getting welfare payments. They would be getting their own money back.

·  The public would appreciate the true cost of providing for their pensions which is a lot higher than the meagre 4% they are asked to contribute at present.

·  Tax evaders would lose out. PAYE workers whose income is fully subject to taxation and PRSI would benefit most. People who hide their income would have smaller pensions as a result.


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## Firefly (11 Sep 2017)

Brendan,

Whilst I agree that people should be incentivised to plan for their pension, I think the current system of relief at the marginal rate is not fair on lower earners. Higher earners have a better chance of making a pension provision for themselves and can get 41% of contributions back. However, the low paid are really the ones at most risk in retirement and so should get the same incentive as the higher paid in my opinion. I think it should either be 41% relief for all or 20% relief for all. The other points are good though - people should fund their own pension.


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## MrEarl (11 Sep 2017)

Firefly,

You make a good point here in terms of wanting to make it more equitable.

For me, I think the most equitable way to deal with the problem is to give tax relief on a decreasing scale, so that everyone starts off getting the largest possible incentive, but then it steps back as they pay more into their pensions.

Something like:


First €20k pa in contributions @ 41% tax relief
Next €20k pa in contributions @ 20% tax relief
Thereafter, no tax relief on contributions.

Obviously there is plenty to debate in terms of what figures we agree to use, but in principal it seems a far more equitable system.

Also, the figures only refer to individual contributions, not employer contributions.


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