45126-Invest. Qual-No111

Investment in Qualityrepeats work carried out by Hughes (2001) using survey data for1994. The data for 1994 show that the top 20 per cent of employees,ranked by gross earnings, benefitted from more than 60 per cent ofthe tax foregone. Repeating the exercise for 1998, the ESRI lookedat which employees are making pension contributions and wherethe tax relief then accrues in terms of position in the earningsdistribution. They then look at where these employees are located inthe household income distribution and the implications for wherethe tax foregone on employee pension contributions is concentratedin terms of that household distribution.TABLE 7.5Location in the Earnings Distribution of Employees withOccupational Pensions, and of Tax Relief on their Contributions, 1998Decile by gross % of those with % of total estimated taxusual pay occupational relief on employeepensions pension contributions% %Bottom 0.7 0.12 2.7 1.03 6.1 1.14 4.4 1.45 8.9 3.56 10.5 5.07 13.1 6.88 16.8 16.19 15.7 21.1Top 21.1 43.9Source: Supplied by the ESRITable 7.5 shows the location of employees with occupational orprivate pension entitlement in the earnings distribution, ranking bytheir reported usual gross pay. About 37 per cent were in the topone-fifth of the earnings distribution, and 23 per cent were in thebottom half. The Table then shows where this tax relief accrues in300