Retirement income gets another €500m hit as State levy kicks in
PENSION benefits for those who are retired and those still working in the private sector will be further reduced after almost €500m was deducted from schemes in the past few days, experts said.
The Government has been called on to rethink its pensions policy.
The Irish Association of Pension Funds (IAPF) said this was happening at a time when eight out of 10 private sector company schemes were in deficit. The IAPF questioned if any jobs have been created from the four-year levy on private pensions, as it said Dail answers to opposition TDs did not indicate if any jobs were created.
The levy was designed to stimulate job creation along with cuts in the VAT rate to 9pc, for tourism-related industry.
Head of the IAPF, which represents the trustees of pension schemes, Jerry Moriarty, said: "We said last year that the levy was poorly thought out and that there were better options and we now urge the Government, once again, not to continue to make the same mistakes."
He said that when the Minister for Finance was recently asked to report on the number of jobs that have been created over the past 12 months as a result of pension levy deductions, he was unable to identify any specific jobs created from the first €465m that was "confiscated from workers' pensions".
"He did point to 'tentative signs of an improvement in labour market conditions' but couldn't attribute any directly to the levy, which must be galling for all those employees and pensioners whose incomes have been reduced because of this levy.
"Mr Noonan also reiterated that the Government is giving its highest priority to job protection and job creation. It is clear from today's unemployment figures that this strategy is not working."
The IAPF argued that if the Government continued with the levy for the next two years, pension savers would pay another €1bn to the Government that would disappear into general exchequer finances and the pensions paid to those savers would be reduced.
Mr Moriaty said there were opportunities to use that money, and possibly more, such as investing in infrastructure projects that could provide a return to funds and help to give the economy the kick-start it needs.