HIGHER RATE taxpayers are likely to cease or reduce personal pension contributions if reductions in tax relief signalled in the budget are introduced, a survey on Irish pension provision has found.
The study carried out by PricewaterhouseCoopers (PwC) found that 86 per cent of higher rate taxpayers would look to cut back or stop additional voluntary contributions, with 18 per cent looking to opt out of company pension arrangements altogether.
Nearly two-thirds of the 285 respondents to the biennial survey said changes in Finance Act 2011 will make it less attractive for employers to provide pensions for staff.
Authors Alan Bigley and Anna Kinsella said responses pointed to “concern that erosion of tax reliefs have created a real risk that employees and employers will disengage from the pensions process”.
Forty-three per cent of Irish employers have already made changes to their pension arrangements, with a focus on limiting the amount of employer contributions to be paid.
However, seven out of 10 have yet to consider the impact of the increased State pension age on their employees.
Among defined benefit pension schemes, the survey says that 40 per cent of respondents have seen reduced pension benefits in recent years, with 27 per cent seeking increased employee contributions to address scheme deficits.
