The Minister for Finance Brian Lenihan said on Tuesday that the total cost of a State pension for an Irish public sector worker, hired after 2004, is 26.1 per cent of pay, and the employee pays on average 4.8 per cent of the cost, before the introduction of the Government’s controversial pension levy.
Lenihan said in a written Dáil answer to a parliamentary question, that fewer than half of all private sector workers have company pensions. Of the 38,572 civil servants employed, 25,000 of them are contributing 5 per cent of their salaries towards their pensions he said.
Nearly one-in-three of all State employees, not including those working for local authorities, earn more than €50,000 a year, and 22,000 of them are paid more than €80,000 a year.
Lenihan also confirmed that one-third of the €1.4 billion to be collected in a the new public sector pension levy will be lost in taxes forgone.
In a reply to Green Party TD Paul Gogarty, the Minister said that some State employees – earning sums just below those subject to the top rate of tax – will pay more in the pension levy than others earning slightly higher amounts.
“Due to the availability of tax relief at the marginal rate for pension contributions, in certain circumstances an individual on a higher gross income may incur a lower net loss than an individual on a lower income as a result of the new pension deduction.
“This situation also applied before the deduction was introduced.
“However, it must be stated that the income tax, PRSI and health levy system is highly progressive. Those on higher incomes pay higher rates of tax,” said the Minister.
The pensions of one quarter of retired civil servants are linked to salaries above €50,000: 1,186 to pay grades between €50,000 and €59,999; 574 to grades earning between €60,000 and €69,999; 381 to those earning between €70,000 and 79,999 and 1,699 to those receiving €80,000 and more.