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IBEC fear pensions fall-off

IRISH employees are likely to save less for their pension pot because of tax changes, new research has found.

Employers' group IBEC said the reduction in pension reliefs in the budget leave employees and the Government in a vulnerable position in the future.

The Government must review its pensions policy urgently as the State may be left having to financially support those who have not made adequate provision for their retirement, the group said.

The tax relief on pension contributions has been reduced from 48pc to 41pc for those taxed at the marginal rate of income tax and from 27pc to 20pc for those taxed at the standard rate. Under the National Recovery Plan, the rate of income tax relief on pension contributions will be reduced from 41pc to 34pc in 2012, to 27pc in 2013 and 20pc in 2014.

Over half of employers with voluntary pension schemes expect staff participation in voluntary company pension plans to fall as a result of Budget 2011. Employees in almost three-quarters of companies surveyed expressed concerns to bosses about the pension taxation changes, according to IBEC.