Small firms lobby group ISME and Brokers Ireland have outlined ways in which pensions discrimination against the self-employed and private sector workers can be addressed.

ISME chief executive Neil McDonnell (pictured) said the gold-plated pensions available to politicians and public servants are simply not affordable for workers in the private sector.

“While political and public service pensions are indexed upwards annually with incremental pay as well as regular pay increases, the Revenue Commissioners are trying to devise ways of further reducing the ability of private sector workers to finance a pension they can afford to live on after they retire,” McDonnell added.

“The nature of public service pensions means that a private sector worker who wants to save for a pension as good as a public servant earning the same salary would have to save at least half of their earnings throughout their working life. Revenue rules do not permit this.”

The last actuarial assessment of public service pensions estimated them to be in deficit by almost €150bn. “This shortfall will have to be paid by private sector workers who have no hope of ever being able to save for a pension as large as that of their public sector colleagues. This is immoral and unjustifiable,” said McDonnell.

In Association with

ISME and Broker Ireland have identified a number of measures that would cost less than €50m to initiate a program of levelling-up for private sector workers this year.

These include maintaining marginal tax relief on pensions contributions, retrospective indexation of the €115,000 income ceiling back to 2011, and annual indexation of the ceiling pegged to public sector pay to protect it from inflation.

The ISME/Brokers Ireland analysis is available to download here.