Pension trustees call on Minister to abandon levy
Published 20/05/2011 | 05:00
PENSION trustees are to meet Minister for Finance Michael Noonan next week and demand that he abandons plans to slap a levy on schemes.
The Government yesterday published a second Finance Bill paving the way for the tax of 0.6pc to be imposed on the value of assets in private pension plans.
The levy is being imposed to fund the Government's jobs initiative.
Trustees or administrators who fail to pay the levy will be fined €380 for every day that they are late with the payment.
Paul O'Brien of the Irish Association of Pension Funds, which represents the trustees of company schemes, said it would call on Minister Noonan to remove the levy when they meet him. "We think it is unfair and will be passed straight on to the members of schemes. It will damage the idea of that you can lock money away for the long term without having it dipped into," he said.
The bill allows trustee or administrators to reduce the pensions being paid out to retired people.
This is the first time this has been allowed under Irish law.
This will leave those in charge of pensions with impossible decisions to make about how the burden of the levy is to be spread between workers still paying into a scheme, those yet to retire but who have left the scheme and the retired members, pensions experts said.
This will be the case where employers are unable or unwilling to meet the levy cost, analysts said.
The levy will have to be calculated based on the value a fund had yesterday, with half of the 0.6pc amount due by July 25.
However, the Government has made no move to impose the levy on approved retirement funds (ARFs), despite criticism that wealthy individuals such as former Irish Nationwide boss Michael Fingleton have put their pension money into these investments.
Also set to escape are those whose pension is paid out of an annuity.
And vested personal retirement savings accounts (PRSAs) will not be levied. These are products where no funds are drawn down but they cannot be used to provide an income. They are generally used for inheritance tax planning.
The levy will apply for four years and is payable twice a year at the rate of 0.3pc on each due date.
The bill gives the Finance Minister the power to name a day when the €3 air travel tax will be scrapped. No date has been set for this yet.
It also provides for a second reduced VAT rate of 9pc for goods and services in the tourism and entertainment areas from July 2011 to December 2013.
The rate will then revert back to 13.5pc.
The 9pc rate will apply to restaurant and catering services, hotel and holiday accommodation, cinemas, theatres, certain musical performances, museums, art galleries, fairgrounds or amusement parks.
It will also affect sporting facilities, hairdressing services and printed matter such as magazines and newspapers.
The Finance Minister said the bill's central objective was to assist in the creation of jobs.
"The bill will achieve this objective through fostering confidence that will stimulate economic growth across the domestic sectors, and especially the tourism sector," said Mr Noonan.