Pensions

Wednesday 23 July 2014

The Punt: Noonan's raid on pensions is proving costly

Published 17/07/2014|00:00

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Michael Noonan

THOUSANDS of working people who are lucky enough to have a pension have had their funds raided in the past two weeks.And the raider, who has pocketed €670m, is acting within the law.

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The Government has dipped its hands into the funds of around 750,000 working people in the private sector following a decision made in the last Budget by Finance Minister Michael Noonan, pictured.

And no, there has been no press release from the Department of Finance marking this.

Calculations by Samantha McConnell of IFG show that someone on the average industrial wage who starts savings at 35 will end up with a pension pot of €200,000. The impact of the levy means that this person will have their pension reduced by €1,000 every year for the rest of their life.

The first levy of 0.6pc imposed on the total value of each fund was introduced in 2011. This has to be paid for four years from 2011 to 2014. In the Budget, Mr Noonan added an additional levy of 0.15pc, to apply this year and next. Pensions fund administrators and trustees are required by law to lop 0.75pc off the value of funds as of June 30 last. Most of the money is being paid at the moment.

We are constantly told not enough people have pensions and those that do are not saving enough.

Pension savers will be forgiven for concluding that you just cannot win.

Britain hardening on Europe

IT'S already been dubbed the night of the long knives. David Cameron's clear-out of the UK cabinet is, understandably, getting a lot of headlines across the water.

It was his appointment of Philip Hammond to the post of Foreign Secretary, in particular, that peaked the interest of The Punt.

Mr Hammond, pictured, is regarded as a staunch Eurosceptic and his appointment is part of an apparent attempt by Mr Cameron at giving his cabinet a more Eurosceptic look. You might say that's not surprising given the Tory view on Europe.

But Mr Hammond has nailed his colours to the mast. He publicly agreed last year with then Education Secretary Michael Gove and said that if there was a vote to pull the UK out of the EU, he'd back it unless there was a change of relationship.

"I believe that we have to negotiate a better solution that works better for Britain if we are going to stay in," he reportedly said.

But given his new position - as the man at the centre of that potential renegotiation - the appointment sends a clear signal to the rest of the EU about the British position.

And as has been said on several occasions, if that hardened British position is reflected in a referendum, it wouldn't be good for Ireland.

Merrill, Dublin, Kelly Martin and Me

The Punt is intrigued to read in a new biography of New Zealand prime minister John Key's business connections to Ireland and former Elan boss Kelly Martin.

The antipodean multimillionaire worked with US bank Merrill Lynch, opting to be paid the bulk of his salary by way of shares and options rather than cash. It was a shrewd decision that enabled him to amass a fortune estimated at NZ$50m (€32m).

Mr Key, pictured, joined Merrill in 1995. He set up its foreign exchange business, luring big corporate clients. Mr Key, who spent about seven years as the head of Merrill's international currency trading unit, commuted between London and New York. But he was also closely tied to Dublin. He was on the board of Merrill's capital markets bank, which was established here, and had transferred most of Merrill's London business to Dublin to take advantage of the low tax rate.

But in 2001, as he turned 40, Mr Key decided to leave Merrill. He visited Kelly Martin, who was a senior vice president at the bank, to tell him he was going. Mr Martin (who became CEO of Elan in 2003), tried to persuade Mr Key to stay, offering him the role of global head of sales.

Mr Key declined, knowing his political ambitions would be halted if he took it. He was elected NZ prime minister in 2008.

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