Pensioners to fight back against 10pc levy on incomes
Published 15/08/2011 | 05:00
PENSIONERS paid out of private-sector schemes are set to take a 10pc hit in their income, it has emerged.
The pensioners of Tara Mines have started a campaign against the new pensions levy after it emerged that their retirement income is to be hit hard.
Their spokesman, Tom Kelly, said the pensioners who listened to advice from the Government to provide for themselves and their dependents are to have their pensions funds pillaged.
"I do not believe this government pension levy will create jobs," said Mr Kelly yesterday. "Exempting pension schemes from the levy if they were willing to invest say 5pc of their funds in Ireland would generate far more jobs."
The Tara Mines pensioners are seeking a meeting with Finance Minister Michael Noonan on the issue.
Members of the scheme who get a pension of €20,000 a year will see their income cut by €40 a week, the group said.
A letter sent by the trustees of the Tara Mines pension plan states: "While the trustees have not yet agreed on the appropriate benefit reductions, the potential impact on you is severe."
The letter goes on to explain that there will be a 10pc reduction in the pensions being paid for the next four years.
Last May, the Government announced it would impose a 0.6pc levy on pension funds for four years to generate €470m a year to fund up to 100,000 jobs.
Director of policy at the Irish Association of Pension Funds (IAPF) Jerry Moriarity explained that the severe impact on pensions in payment was due to trustees being forced to reduce the reserves being put aside to meet each pension in payment.
This would mean that in the case of someone with a €20,000 pension, the scheme might have put aside €300,000 to meet the pension demands.
But almost €2,000 a year would have to be taken out of this to meet the levy. This would reduce the pension payments by €40 a week.
Last week, it emerged that the Government turned down its own official advice when it introduced the controversial levy on private pensions funds, it has emerged.
The Pensions Board warned the levy would force some schemes that are already in deficit to wind up.
Similar concerns were expressed to Cabinet by officials in the Department of Finance and in the Department of Social Protection.
A confidential briefing, secured by Fianna Fail, shows that Pensions Board chief executive Brendan Kennedy told the minister with responsibility for pensions, Joan Burton, that the levy would impact on the ability of schemes to pay benefits to members.