Published Tuesday, September 27th, 2022


Budget 2023 announcements will have more importance than usual to individuals and firms, particularly those under significant pressure from rising inflation. From a private pensions and benefits perspective however, Budget 2023 is perhaps notable more for what it doesn’t include, rather than for what it does. It also provides an important indication of reform measures that may lie ahead. 


The Budget statement is dominated by measures aimed at tackling the rapidly-rising costs of living and business:  the government will be providing an €11bn package, which includes over €4bn of one-off actions, to help the country cope with continuing global economic uncertainty and the highest rates of inflation seen in decades.  The package delivers a mixture of tax cuts, social welfare spending and financial aid for business, as well as further support for energy bills, housing costs, and childcare in particular. 


The government expects the inflationary environment to remain challenging in the short-term, with rates dropping back only slightly to 7% in 2023 from a projected 8.5% peak in 2022.  




The lack of pensions and benefits measures in the Budget is not unexpected given the immediately pressing nature of severe cost of living increases.  


However, the Minister for Social Protection has already commented publicly in recent days on the work that the government is progressing on a number of key policy initiatives relating to advancing reforms, introducing an auto-enrolment retirement savings scheme, and the implementation of a new master trust regime.  Change in all of these respects may not be coming in 2023, but there are some signals that it may be coming in 2024.


The time-frame for these measures remains unknown.  It is possible that the current economic uncertainty will present an obstacle to the government’s timetable. 


Some other points to note:

  • The government has confirmed that it is now developing a “medium-term roadmap” for personal tax reform.  This will take into account the issues and recommendations discussed in the Report of the Commission on Taxation and Welfare.  This is perhaps an indication that next year’s Budget could contain significant measures relating to tax treatment of pensions and employee benefits.
  • For now, though, the current system of tax reliefs and allowances in relation to private pension saving remains unchanged.  It is clearly positive that the government continues to recognise the importance of an environment that encourages further pension accumulation. 
  • The rate of weekly State Pension (Contributory) is to increase in January by €12 to €265.30 (€13,795.60 per year).  Although this is a material increase relative to previous years, it is below the government’s own inflation rate projections.  The increase will once again affect all ‘integrated’ defined benefit schemes which calculate benefits and/or contributions by reference to the State Pension. 
  • Although not covered in today’s statement, the government has also recently confirmed that it will be introducing new measures to give individuals the right to work until they are 66 and, if they wish, to defer the payment of their State Pension until age 70 at the latest.  This will give rise to a number of considerations for employers both in the context of workforce management and policy, as well as implications for the benefits provided from pension and death benefit schemes.  The government’s decision to keep the State Pension age at 66 instead of re-introducing the phased increase to 68 recommended by last year’s Pension Commission report also continues to raise fundamental questions as to the long-term sustainability of the State Pension.
  •  The government has also opted not to re-introduce the pre-retirement AVC access facility.  This was a temporary measure brought in following the last recession which allowed pension savers to make a once-off withdrawal of up to 30% of the value of their AVC fund.  While this would have provided additional respite for some facing financial hardship, there had been concerns around the impact this would have on the eventual adequacy of retirement income. 




For employers, the government has termed this year’s Budget as a “significant intervention…in the Irish economy to protect employment”. 


Financial aid packages have been announced both for larger firms involved in exporting and manufacturing, and also for small to medium sized enterprises to help with energy bills.


In addition:

  • A Temporary Business Energy Support Scheme has been announced to assist with increasing energy costs.
  • The 0.80c increase to the hourly minimum wage (to €11.30) has been confirmed.
  • The annual limit for the Small Benefit Exemption, which allows employers to provide limited non-cash benefits or rewards (for example, vouchers) to employees which are not subject to income tax, PRSI or USC, will increase from €500 to €1,000
  • The Key Employee Engagement Programme is to be extended until the end of 2025

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