Thursday 26 February 2009
Pension levy - illustrating 'upside-down' nature of tax reliefs
Gerard Hughes and Jim Stewart of progressive-economy@tasc have taken a closer look at the pension levy, which concluded its passage through the Dail yesterday and is on its way to the Seanad. Click here to read their analysis, which highlights once again the 'upside-down' nature of tax reliefs.
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4 comments:
The point being made regarding anomalies in net impact of Pension Levy is the same as it has always been for private sector pension contributors. Also Dr Whelan(ssisi.ie)estimates that the real cost of public sector pensions is probably of the order of 30% of salary,so such employees have a long way to go before they risk over-paying for the return they will realise on retirement. Further , the the 1.5 times salary, tax-free lump-sum ,enjoyed by public servants is paid without any corresponding reduction in annual pension as is the case in defined benefit or contribution schemes in the private sector
Is the union opposition to the pension levy in principle (no pension levy / no pay cut) or in practice (weird anomalies, as is suggested by above)?
On the principle, would it be better if this had been called a paycut, just with provisions to protect current pensioners? It seems that lots of people on the street think that the government called it a pension levy to hide the fact that it was a cut, while the reality is very different.
More generally, leaving pensions aside, although it is a huge issue, what would be the pay trend benchmark recommended by the authorship/readership here?
My own position would be that the principle of benchmarking established in 2001 should hold - public sector wages should match trends in the private sector - but I understand that's not a popular position! Cost of living instead perhaps?
Just a small point. wages were linked to the cost of living in the 1920s. It was a bit of a disaster, as it only served to shift the ares of conflict from one of wages to one of what should or shouldn't be included in the cost of living index. It led the unions into a bit of a blind alley as they got caught up in the minutiae of the price of bread, meat, eggs, etc, and kept them away from the bigger picture.
While the Government are lauded for making hard decisions, it seems to me that civil servants have been a very easy target – they have no right of reply. They have forfeited their right to join a political party or to comment publically on political matters. This is a key civil and political right. If we are to take commodification to the nth degree, why hasn’t this factored in benchmarking?
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