Cowen to give cash bonus to convert SSIA to pension

Minister for Finance Brian Cowen is expected to give people a cash incentive to convert their SSIA savings into pensions in the…

Minister for Finance Brian Cowen is expected to give people a cash incentive to convert their SSIA savings into pensions in the Finance Bill, to be published today.

However, the Fine Gael party has accused him of not being prepared to go nearly far enough to help the lower paid who are most in need of better pensions.

The Finance Bill will also include new measures to facilitate the Revenue Commissioners in an offensive against tax evasion in the construction sector.

There will also be measures to raise the tax relief available for film production in the Republic.

READ MORE

There has been a great deal of pressure on Mr Cowen from Minister for Social Welfare Séamus Brennan, the Pensions Board and the Opposition to make it financially worthwhile for people, especially the lower paid, to transfer their SSIA savings into pensions.

It is believed that Mr Cowen will provide for a once-off cash payment to lower paid workers if they choose to invest their SSIA savings in a pension.

A bonus of around €2,500 for those on the lower tax rate of 20 per cent who invest €7,500 is expected to be one of the measures in the Bill

However, Fine Gael deputy leader and Finance spokesman Richard Bruton said a once-off bonus for the lower paid was not nearly enough.

He suggested that an ongoing euro-for-euro pension scheme could be introduced without imposing a huge burden on the Exchequer.

He said there was a compelling case for the Government to help people build on the savings culture fostered by the SSIAs by providing a direct cash top-up to the pension contributions of people on low incomes.

Mr Bruton added that there was a clear obligation on Mr Cowen to address the current situation whereby half of Irish workers did not have any pension cover.

Labour spokeswoman on Finance Joan Burton said she would welcome any initiative from the Minister to give the lower paid an incentive to put their SSIA savings into a pension.

Meanwhile in the construction sector it is expected that Mr Cowen will take action on "relevant contracts tax", an area focusing on the relationship between principal contractors and sub-contractors.

It emerged last year that Revenue was to focus one-quarter of its audit inspections on the construction sector and, in particular, on the growing use of sub-contractors on sites.

Sub-contractors, who tend to be hard to track for official purposes, should have 35 per cent of their fees deducted at source so that the funds can be sent to Revenue.

Information on this is now to be gathered electronically in an effort to stamp out situations where builders issue fraudulent Revenue deduction certificates to non-existent sub-contractors for imaginary work.

Some estimates have suggested that the number of unregistered sub-contractors has risen from 36,000 to 56,000 over the past five years.

Registered sub-contractors number about 40,0000.

The Minister will also move to raise the cap on tax relief available for film production in the Republic. This is in an effort to raise the profile of the industry here.

The relief cap currently stands at €15 million, with sources expecting a "substantial" increase in this.

The move was flagged by Minister for Arts, Sport and Tourism John O'Donoghue in India earlier this month. Mr O'Donoghue was attempting to woo Bollywood, the biggest film-producing community in the world.