Tuesday 12 December 2017

Call for pension levy to be reduced after €68m bonus

Fianna Fail Finance Spokesman Michael McGrath
Fianna Fail Finance Spokesman Michael McGrath
Charlie Weston

Charlie Weston

The levy on private pensions took in much more than expected last year.

The revelation will infuriate those saving for retirement and pensioners who have been hit by it.

New figures show that €68m more than anticipated was raised from the controversial levy last year. And the bumper yield has prompted calls for a reduction in this year's levy.

A total of €743m was pulled in from funds in 2014, according to figures supplied to Fianna Fáil's Michael McGrath in the Dáil.

This brings the total raised from the levy in the last four years to €2.224bn.

It will continue to be imposed this year, despite the Government originally saying the levy would cease at the end of 2014.

However, the rate that it is to be imposed on the assets of schemes falls to 0.15pc this year, with Minister for Finance Michael Noonan promising in the last Budget that it will end next December.

The Government introduced the levy to fund job creation. It is charged on the value of pension assets, and strong gains last year for pension funds mean the yield has shot up.

Mr McGrath said: "One of the most galling aspects of the levy is that the Government is taking money from pension schemes already under the water without any regard for the impact on the scheme members relying on that money for their retirement."

Impact

He said that the impact of the levy would mean that pension scheme members will have lower pensions.

"The Government has calculated that because people don't have access to their pension savings now, they are largely oblivious to this tax. It has been the most daring financial smash-and-grab by any government in the history of the State," Mr McGrath said.

Jerry Moriarty, of the Irish Association of Pension Funds, said the extra €68m from 2014 should be used to reduce the levy for this year. "Pension savers should benefit from the wise investment decisions, not the Government," Mr Moriarty said.

This would be a small contribution in the context of the €2,224bn taken from pension savings by the Government, he added.

Recently, the Pensions Ombudsman Paul Kenny told politicians the levy was "legal but not necessarily fair".

Mr Kenny, who settles pensions disputes, said the levy had hit payments to pensioners. This is because trustees have acted to share the burden among all scheme members.

He told the Oireachtas Finance Committee the reduction in payment would last for the lifetime of the pensioner.

This contrasts with the public sector pensions levy which, "although it is very high, is intended to be temporary".

Irish Independent

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