Tax just a 'levy on little people' as rich can move cash
LARGE numbers of wealthy people and companies are set to avoid the controversial new private pensions levy by transferring their retirement schemes overseas, pensions experts warned yesterday.
This will mean that the new tax will largely be a "levy on the little people". Pensions advisers said there was little to stop pensions moving their funds to the likes of Malta.
The State is unable to impose the levy on funds that are transferred outside the country.
Maltese government officials who promote investment in that country have been here twice in the past few months visiting accountancy and pensions advisers promoting the merits of that country as a location for pension funds.
The Maltese were anticipating the introduction of the levy.
Pensions experts said the fact that large companies and wealthy individuals were likely to move their funds overseas meant that the new pensions levy would only apply to the ordinary workers.
The high costs of moving a pension fund abroad would rule out this option for ordinary workers. Legal and administrative costs would make moving pensions funds abroad expensive for all but wealthy individuals and bigger companies.
However, some companies may be unwilling to attract unwelcome PR from moving pension funds out of the State.
Someone who is still in work would only need to put their funds into a personal retirement savings account (PRSA) to benefit from an overseas arrangement, according to actuary Tony Gilhawley.
Alternatively, someone who has left a company scheme but is still entitled to benefit from it could transfer their funds abroad, Mr Gilhawley, of Technical Guidance, said.
The person with the pension would not need to move abroad, and could even continue to still have an Irish fund manager in charge of the scheme, Aidan McLoughlin of Independent Trustee Company said.
He said large companies, particularly multinationals that provide pensions for their staff, were likely to domicile their schemes outside of Ireland to avoid the new levy.
The levy of 0.6pc will mean a scheme with €50m in assets will have to pay €300,000 a year to the State, and the first payment will be backdated to January this year.