Business group ISME has launched a crowdfunding campaign to help finance a legal challenge to bring more parity between private-sector and public-sector pensions.

ISME is hoping to raise €500,000 from the GoFundMe campaign to support three plaintiffs who will challenge alleged tax discrimination against private sector workers before the High Court.

ISME has outlined three objectives that it will pursue in the case:

• Tax relief for private sector pension savers to be maintained at the current marginal rate of taxation (currently 40%)
• Private sector defined contribution pension savers should not have a ceiling on their earnings imposed below that of the highest-earning public sector worker (currently €350,000)
• An increase in the standard fund threshold from €2m to €5m.

The context for the High Court legal challenge was summarised in a statement issued by ISME this week. “The last Public Service Pay Commission report found that while there is almost 100% pension coverage in the public sector, the overall figure for the private sector is just 40%,” ISME stated.

“Workers in the private sector who aspire to a pension even close to that enjoyed by a public sector worker earning the same salary, would have to surrender more than a third of their salary. Even if they could afford it, our taxation rules constrain them from doing so. Our taxation system permits only third-division pensions for private sector workers.”

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Neil McDonnell (pictured), CEO of ISME, added that private-sector workers and SME owners should enjoy, as far as is possible, parity with public-sector workers in the pensions system. “Every private sector pension saver will benefit from a successful court challenge and we are asking for funding support so this can be achieved,” he continued.

“It is ironic that those in the public service who declare tax relief on private pensions to be ‘tax expenditures’ are themselves the beneficiaries of an enormous transfer of wealth from private-sector workers to the public sector.

“Tax relief on private-sector pensions savings is tax deferred, not tax avoided. With the support of the SME community, we have a great opportunity to fix this and to ensure a fair pension system on behalf of private-sector workers.”

ISME’s crowdfunding campaign is hoping to gain the support of PAYE workers, professional groups, trade associations, trade unions and SME owners. Four days into the campaign, €4,600 of the €500,000 target has been raised.

ISME said that the funds raised will be used to create a technical team giving tax guidance, pensions expertise and actuarial assistance, along with tax and constitutional law advice for the pension’s equity challenge, which is to be initiated this year.

The business group is looking for donations of €100 from business owners and individuals in the SME community. ISME is also calling on pensions providers to donate at least €10,000 each.

Any undisbursed funds raised via the GoFundMe campaign will be donated to Social Entrepreneurs, The Jack and Jill Foundation and The Friends of the Royal Hospital Donnybrook.