Sir, – In general, it is accepted that those in receipt of the State pension receive more over their years of retirement than provided for by their PRSI contributions. The shortfall is made up by the exchequer.
In contrast, occupational pensions are paid out of funds, contributions to which are made by the pensioners (as former workers) during their working lives. There is no shortfall in the case of a defined contribution scheme because the size of the pension is determined by the fund and not by Government decree, as in the case of the State pension.
The recent pensions commission’s report proposes that occupational pensioners pay 4 per cent PRSI on their pensions to help alleviate the exchequer shortfall.
This is akin to getting those who have already contributed to a collection to contribute more to pay for those who have not contributed enough!
If the State wants to encourage more workers to pay into defined contribution pension schemes, this is surely not the way to go about it! – Yours, etc,
PETER LYNCH,
Knocklyon,
Dublin 16.