THE Government plan to fund its jobs initiative with a raid on private pensions was heavily criticised yesterday.
Experts said the move would mean reduced pensions for thousands of workers and that the levy would force many schemes to close.
Finance Minister Michael Noonan said the levy of 0.6pc on the value of assets in private funds would be in place for four years and would raise €470m each year.
He said he was conscious of the concerns of the pensions industry about the levy.
"However, the imposition of the levy is for a relatively short period to encourage job creation in areas of our economy most likely to deliver employment quickly," he said.
The minister said he had chosen private pensions because alternative taxes would be more damaging to the economy.
It will be left to the trustees of company-defined benefit schemes and to the administrators of private pensions to work out how the levy will be imposed. The Department of Finance said legislation would be introduced to allow trustees or administrators the option of lowering the benefits being paid out of schemes.
Irish Association of Pension Funds director Jerry Moriarty estimated that the levy would mean an average of €500 a year coming out of the pension savings of 750,000 people.
As the bulk of pension fund assets were invested abroad, the new levy was aimed at bringing money back into Ireland to fund job creation, the minister said.
However, IBEC boss Danny McCoy said many pension funds were already in serious difficulty and the levy could make matters worse.
Ciaran Phelan of the Irish Brokers Association claimed that the levy could be a precursor to a levy on bank or credit union deposits if the country's finances get any worse.
"This is a stealth tax imposed on the savings of ordinary people by politicians and civil servants who have ensured that their own pension benefits remain gold and diamond-plated," Mr Phelan said.
Pensions expert Tony Gilhawley disputed the minister's claim that the levy would only be in place for four years.
"The levy will last for at least a decade. A 'temporary' levy on life assurance and pension premiums introduced in July 1984 lasted eight-and-a-half years," he said.
Meanwhile, the head of taxation at Chartered Accountants Ireland, Brian Keegan, said there had been no legitimate explanation from the Government as to why this levy should be confined only to those making pension provision within the private sector.