Pension funds struggling to find cash for new levy payment
Published 17/09/2011 | 05:00
Pension funds are struggling to find the cash resources to pay the new pension levy, the Revenue Commissioners were told at a meeting with accountants.
Minutes of a meeting during the summer highlighted how pension administrators were struggling to find the resources to meet the 0.6pc pension levy, which is charged on the market value of assets in schemes.
"Practitioners raised a concern in relation to the charge being imposed on the pension administrator and their liability to make payment of the levy,'' state the minutes.
"In the case of illiquid investments there may be no cash in the fund and thus no resources to pay the pension levy,'' the minutes add.
The levy is now due to be paid to the Revenue Commissioners at the end of this month.
It is understood the Revenue Commissioners have discussed internally different ways the payment could be made.
However, more than €100m is understood to have already been collected, despite the difficulties some schemes are experiencing.
The funds are to be used as part of the Government's jobs initiative as a form of stimulus.
Almost €500m is expected to be raised this year from the levy, which was deeply unpopular when introduced earlier this year.
Some pension experts argued that the levy would simply worsen existing deficits within occupational pension schemes.
There were also suggestions of double standards as public sector pensions are funded on a pay-as-you-go basis, meaning that this levy will not impact the pension entitlements of these workers.
Meanwhile, the Revenue Commissioners are understood to have received a lower-than-expected number of disclosures under the mandatory reporting regime brought in earlier this year.
Under the regime, professionals and investors must disclose tax avoidance schemes proactively to the Revenue.
It is understood fewer schemes are now in existence due to the property downturn and those that are have already been disclosed.