Senator proposes last gasp amendment to Finance bill to end alleged “inequitable” practice.
Senator Ciaran Cannon is today proposing an amendment to the Finance bill. The key legislation is currently being debated in the Seanad.
The stated aim of the former leader of the Progressive Democrats is to bring PRSA schemes in line with other pensions; employers’ contributions to PRSA schemes are currently subject to the Universal Social Charge, which is not the case with other schemes.
PRSAs were established under the Pensions (amendment) Act 2002. The Personal Retirement Savings Accounts are investment vehicles operating according to different rules than occupational pensions.The schemes are available to the self-employed and employed and must be invested in “pooled funds.”
Where occupational schemes are not open to all permanent staff Employers are obliged to offer workers at least one PRSA. PRSAs aimed to add choice and competition to Ireland’s pensions and investment market.
PRSAs’ higher degree of flexibility could arguably imply funds paid into them are more akin to income than funds paid into occupational schemes.
Fine Gael’s press release advises, “As it stands, employees are not taxed on any contributions employers make towards their pension plans. In the case of PRSA schemes however, workers are charged a Universal Social Charge and PRSI on employers’ contributions which can amount to as much as 11% on the amount paid.”
Senator Cannon’s proposal would change the current practice, which he describes as “inequitable.” The Seanad is expected to vote on the matter later today.
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