Contrast that with public sector tax free lump sums on retirement. For a typical public sector average worker on about 46,000 a year, the lump sum is 3.75% of that salary. If multiplied by 40 years service, that is 69,000. The latter figure is equivalent to 144,000 at top marginal tax rates plus PRSI of 52%.

So the public sector worker has a pension 23,000 a year and assuming a life expectancy of 80 from retirement at age 65, the lump sum is worth over 4,000 extra tax free and 9,000 if the tax equivalent figure is used. THe tax free lump sums are incredibly generous for the top half of the public sector pay scale with salaries of 100,000 qualifying.

In the interest of equality before the tax law, tax free lump sums should be taxed. There are no tax free lump sums for the Old Age Pension.