Pensions Equity Challenge

The Irish SME Association (ISME) is raising funds for a legal challenge to force the creation of a fair system for private sector pension savers. By way of crowdfunding, ISME intends to raise a fund with the help of PAYE workers, professional groups, trade associations, trade unions and SME owners across Ireland in support of three plaintiffs who will challenge tax discrimination against private sector workers before the High Court.

The fund will support the formation of a technical team giving tax guidance, pensions expertise, actuarial assistance together with tax and constitutional law advice for the pension’s equity challenge. We intend to initiate proceedings in the High Court this year.

The last Public Service Pay Commission report found that while there is almost 100 per cent pension coverage in the public sector, the overall figure for the private sector is just 40 per cent. 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 the private sector, meaning most PAYE workers will have only the contributory old age pension of €248 per week to live on in retirement.

ISME is calling on business owners and PAYE workers for private donations of €100, or whatever donors can afford, to support the challenge. As the biggest beneficiaries of this challenge, we call on pension providers to donate a minimum of €10,000 each. ISME also will engage with pension trustees, pension brokers, trade unions and other interested parties who have raised the issue previously, to build the necessary funds.

As part of the Court action in pursuit of fair treatment for private sector workers, we will pursue three objectives:

·       Tax relief for private sector pension savers must be maintained at the current marginal rate of taxation (currently 40%). There must be an incentive for private sector workers to save money for their pensions,

·       Private sector workers must not be discriminated against via the “income ceiling” on contributions. Private sector defined contribution pension savers (who bear the risk on their own pension funds) should not have a ceiling on their earnings imposed below that of the highest earning public sector worker (currently €350,000). Private sector workers should be allowed set aside as much of their own income as they want to give them a decent standard of living post-retirement.

·       Many public sector pensioners enjoy pensions that would require a fund far in excess of the current €2m “standard fund threshold” (SFT) even though they do not have to fund their pension. Yet higher-earning private sector workers are financially penalised if they save more than €2m of their own money for their pension. This blatant discrimination must end, and the SFT must be increased to its 2005 level of €5m.

 The funds generated by this GoFundMe campaign will be audited, this audit will be published on the ISME website, and any undisbursed funds raised will be donated to the following charities:

Social Entrepreneurs:                                 https://socialentrepreneurs.ie/

The Jack and Jill Foundation:                 https://www.jackandjill.ie/

The Friends of the Royal Hospital Donnybrook:              https://friendsofrhd.ie/