News Editorial

Friday 22 August 2014

Pension levy is akin to a heist on ordinary people

Published 27/03/2014 | 02:30

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SECRETARY General of the Department of Finance John Moran was asked yesterday if the controversial levy on the pensions of private-sector workers would cease as planned in 2015. He was unable to offer any assurance that the levy would go when he spoke at an Irish Association of Pension Funds conference.

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The taking of a chunk of money out of ordinary people's hard-earned pension pots is akin to a heist.

Finance Minister Michael Noonan had promised when he introduced it in 2011 that it would last for no more than four years.

In last October's Budget he reversed engines by not only extending the levy, but upping it for this year. It will continue to 2015, when he said it would go. Few believe that will now happen.

The money raised is supposed to be used to create jobs. However, figures on just how many jobs have been created from the money are hard to come by.

The levy has ended up reducing the size of pension funds of those who are yet to retire, and has lowered the payments to those who are already retired.

It had been applied at a rate of 0.6pc in June of every year on the value of pension assets.

This year it has risen to 0.75pc of the assets of pension funds, and then it will be imposed at a rate of 0.15pc in 2015.

It is a classic stealth tax. Because most people are not asked to register for it and pay it directly by writing a cheque or making an electronic payment, people do not notice they are paying it.

But paying it they are, and the levy is on track this year to raise more than the property tax.

A working couple will have €2,500 taken from their retirement savings this year alone by the levy, IBEC has calculated.

The levy was tolerated up to now because of the exceptional economic mess when it was introduced and because it was supposed to be for just four years.

Extending the timeframe is unacceptable. The Government must stop robbing workers of their futures and scrap the levy.

Irish Independent

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