By Sarah Mac Donald - 17 September, 2013
New Study shows how universal pension can be funded.
The new study, which was published on Monday, shows why and how a universal pension can be funded – principally by reducing pension tax reliefs that mostly benefit the richest 20%.
The pension would be set at €230.30 a week, which is the current contributory pension rate, until 2016 and then rise over time to 40% of average earnings.
The proposed universal pension would replace the current contributory and non-contributory state pension.
According to Social Justice Ireland, the study shows that this approach is sustainable in the long term.
The group points out that during the late 1990s and up to the present day, pension policy has provided large tax subsidies to those who needed them least, at significant cost to the Exchequer, while failing to guarantee adequate post-retirement incomes to the majority of the population.
“Ireland could have a Universal Pension for everyone over 65 funded principally by standard rating the current tax-break for private pensions, 80% of which goes to the better off. This approach would be simpler, fairer and more just as well as being sustainable in the decades ahead,” Dr Seán Healy, Director of Social Justice Ireland, said at the launch in Dublin of the latest research study.
“No existing pensioner would lose out and many would experience an increase in the Universal Pension. In particular, those adults aged 66 years and older, in respect of whom reduced payments are now made due to their status as ‘Qualified Adults’, would receive a Universal Pension in their own right,” he said.
According to Michelle Murphy, SJI Research and Policy Analyst, “Introducing a Universal Pension along the lines proposed by Social Justice Ireland would be a strongly progressive change, as nearly 82% of the current tax relief for private pensions accrues to the top 20% of earners, with 56% accruing to the top 10% of earners.”
“Implementation of a Universal Pension along the lines proposed by Social Justice Ireland would provide security, equity and certainty. It would also be just, efficient and sustainable,” she added.
SJI argues that introducing a Universal Pension would: