Sinn Féin would raise employers’ PRSI and seek to allow less tax relief for “gold-plated” pensions to fund its plan to bring the qualification age for the State pension back to 65.
The party’s finance spokesman, Pearse Doherty, offered details of Sinn Féin’s proposals amid the debate on reforming Ireland’s State pension regime.
A commission set up to examine the system has recommended that the qualification age would not begin to increase to 66 until 2028.
Competing political promises over when someone should qualify for the State pension was a key battleground in last year’s general election with Sinn Féin under cutting other parties by saying it would return the age to 65.
The Coalition deferred the planned rise of the pension age to 67 – which was due to happen this year – while the Pensions Commission considered the issue.
Sinn Féin leader Mary Lou McDonald said on Tuesday that the commission’s report should be published.
She said that Sinn Féin setting the age at 65 was “the mark of a progressive and a civilised society and economy” and put the cost of this at €127 million.
She told RTÉ’s Morning Ireland that Sinn Féin would increase employers’ PRSI by four percentage points over the course of a number of budgets to help fund her party’s proposal.
Ms McDonald said Sinn Féin was not suggesting that PRSI should be increased for the self-employed and Mr Doherty later confirmed to The Irish Times that it was not proposing to increase the tax for other workers.
She said Sinn Féin wanted to set a salary ceiling for tax relief that would apply to a private pension but she could not offer the figure it would be set at during the interview. Later, at a Sinn Féin press conference, Ms McDonald said that Sinn Féin wanted to see the salary ceiling for tax relief lowered to €60,000.
The maximum amount of earnings taken into account for calculating tax relief currently stands at €115,000.
She said Mr Doherty would offer detail on the party’s proposals to increase employers’ PRSI.
He later said that, under Sinn Féin’s plan, employers’ PRSI would be increased on the portion of income above €100,000 to a rate of 15.75 per cent over a number of budgets.
The rate would stay at 11.05 per cent for the first €100,000.
He said the higher rate would still be lower than the average euro-area rate for employers’ PRSI.
Mr Doherty said that even a 2 per cent increase in the employers’ PRSI rate on the portion of income above €100,000 would bring in €118 million.
He said this figure was similar to the €127 million annual cost for returning the State pension age to 65 – an estimate he said was provided by a Government department.
Tánaiste Leo Varadkar claimed on Tuesday that Sinn Féin’s proposal to increase employers’ PRSI would be a “business-harming, job-killing” tax increase.
In response, Mr Doherty claimed that Fine Gael wanted to cut the tax base by €500 million, saying this was “shortsighted” and suggested investments in hospital beds and building homes was “a far better use of taxpayers’ money”.
The Irish Fiscal Advisory Council has estimated the annual cost of delaying an increase in the pensions age to be €575 million.
Mr Doherty said that was a “gross figure” and that a separate government estimate put it at €453 million.
However, he said that either way the cost of the pension age staying at 66 had been factored into the budgetary arithmetic under the summer economic statement until 2025.
He said the cost of Sinn Féin’s proposals to bring the age back to 65 therefore remained at about €127 million.
Mr Doherty conceded that this would rise due to demographics but pointed to one estimate of about €20 million per year and said, in the context of a budget of billions of euro, “that’s not a big issue”.
On lowering the salary ceiling for tax relief for private pensions to €60,000, Mr Doherty said the present ceiling of €115,000 would allow for somebody to put in almost €50,000 in a single year and added: “To us that’s gold-plated pensions.”
Mr Doherty said lowering the ceiling to €60,000 would bring in €187 million.
He also said Sinn Féin had a proposal to reduce the size of the pension pot a person can accumulate while continuing to get tax reliefs from €2 million to €1.5 million. He said this would return €200 million to the exchequer.
Read More: SF would target PRSI and ‘gold-plated’ pensions to return qualification age to 65