PRSI deductions and pensions

Sir, – I note that the British chancellor of the exchequer Jeremy Hunt announced another reduction in national insurance contributions in his spring budget and indicated his long-term objective of abolishing such contributions altogether on the basis that they represent “double taxation” of income already subject to income tax (“National insurance cut leads UK budget as Tories also steal flagship Labour policy on ‘non-doms’”, Business, March 7th).

Of course, national insurance contributions in the UK, like our PRSI, are not actually taxation but rather, as the nomenclature indicates, insurance which entitles the contributor to benefits in certain circumstances, including the State pension.

Here in Ireland, however, there is a proposal to extend PRSI contributions to those already in receipt of the State pension.

That would be genuine “double taxation” since pensions, including the State pension, are subject to full rates of income tax and no further “insurance” benefit would accrue to those who have already qualified for the benefits for which they have paid PRSI contributions in their working lives. – Yours, etc,