The private sector pension levy is dangerously divisive and is fuelling a growing rift between the public and private sectors. I have heard no good reason why it cannot be applied to both sectors in a fair manner.
There are major differences that have to be considered. Private sector pensions are paid from funds that have an actual value and contain real assets, while public sector pensions are paid from taxes. However, a notional value can be attributed to public sector funds. This was done recently to check if they exceed the new €2.3m limit introduced in this year's Finance Act.
Of course, public servants could not be expected to actually pay the levy amount, but the Exchequer could still receive equivalent value by reducing the notional value of its future public sector pension liability.
Politicians argue that the levy is tiny, at 0.6pc per year. Don't be fooled by this knavery. It has a huge impact on people that are approaching retirement. If you earn €50,000 a year and you and/or your employer put 10pc of your salary into a pension fund every year, you would be fortunate indeed if after 40 years of saving you have €200,000 in your fund now. This is because your contributions in earlier years were 10pc of a much lower salary and whatever fund you had built up by 2007 was probably devastated in the stock-market crash. The 0.6pc levy on a €200,000 fund is €1,200, which is 24pc of your current contributions.
The Government has made some nasty cuts to the poorest members of society because of the recession. Only one group has made no contribution ... retired politicians and public servants.
Marino, Dublin 3