Pensions and rampant inflation

Sir, – Cliff Taylor expresses wearied exasperation at the failure of Government so far to announce the introduction of a PRSI charge on private-sector pension income (“Game, set and match to older generation on pensions”, Opinion & Analysis, August 6th). He refers to such income as “currently exempt” from PRSI. Introduced in the 1970s as a contribution to be made to the national Social Insurance Fund (SIF), PRSI has applied from the outset to “insurable employment” money, collected from people in employment, to help pay for the State contributory pension and other social welfare benefits. Contributions are payable by all liable employees up to pensionable age so that retired employees have already paid their full share of contributions due. PRSI was never a tax on post-retirement income and the question of an “exemption” does not arise.

To begin now to subject private-sector pension income to PRSI would be a most radical step. It would simply be a new tax levied to a large extent on retirees who can ill-afford such an imposition at this time. To put the matter into perspective, I believe my own case is representative of the position of a large percentage of private sector pensions. My scheme has only nominal provision for inflationary increases such that the amount of pension I currently receive is actually less than the amount receivable nine years ago. How could that be? The reason is the infamous (and not so well-known) pension levy of 2014. In my case, the levies (there were in fact two such levies) more than wiped out the modest pension increases received during those nine years. Such is the position of a large cohort of private-sector pensioners. Some private schemes have no provision at all for inflation.

Inflation has always been a concern for those on fixed, or largely fixed, income, and particularly existing pensioners with little or no means of changing or improving their circumstances to meet new challenges. And now we are entering an era of horrendous and unprecedented inflation. Without intending to be facetious, the prospect of a long retirement ahead may not be something that everyone should be looking forward to with unqualified enthusiasm.

We hear almost every day now of this, that or the other union, sector or whatever demanding to be compensated for inflation. No doubt many of these demands will be met, to some extent at least. Some offers already made have been rejected. No such offer can be expected by the pensioners referred to in this letter. But we would, I think, at least like to know that we will not be further squeezed by the introduction of a PRSI charge. The Pension Commission indicated a levy of 4 per cent as being appropriate. Unbelievable, but any PRSI charge would be insupportable. – Yours, etc,