IBEC says levy may shut pension schemes
Published 18/05/2011 | 05:00
EMPLOYERS' body IBEC warned yesterday that the Government's proposal to levy pension funds will force some employers to shut down pension schemes. Imposing the levy would also lead to cuts in pensions for some workers, the business body said.
Director of industrial relations at IBEC Brendan McGinty described the levy as a tax on those who had the foresight to save for their retirements.
He said employees now faced higher pension contributions, lower retirement income and the potential closure of schemes altogether.
Although he welcomed the Government's jobs initiative, Mr McGinty said that funding it through a pensions levy would have significant unintended consequences.
Mr McGinty said the Government had already accepted that three-quarters of defined benefit pension schemes were in serious difficulty.
He warned that the levy would discourage employees in all kinds of pension schemes from saving for retirement -- leaving the state to pick up the tab and creating an even bigger pensions crisis.
IBEC urged the Government to abandon its plan to cut income tax relief on pensions by 2014.
People should have early access to additional voluntary contributions (AVCs), and the Government should examine the potential for Irish pensions to invest in Irish Government or infrastructure bonds so that funds were not lost to employers and workers.
"The Government has failed to acknowledge that the cost of the pensions levy will be primarily borne by employers and employees," the IBEC boss said.