Dáil Éireann Debate, Tuesday - 6 November 2012
187. Deputy Terence Flanagan asked the Minister for Finance if he will intervene to stop the pensions levy being charged on retired members (details supplied) of the Electric Supply Board pension fund; and if he will make a statement on the matter. [48625/12]
View answerThe pension fund levy applies at a rate of 0.6% per annum to the market value, on the valuation date, of assets under management in pension funds and pension plans approved under Irish tax legislation. The levy will operate for a period of four years only (2011 to 2014) and the legislative provisions giving effect to the levy (section 4 of Finance (No 2) Act 2011) were specifically drafted to reflect this.
The moneys raised from the pension fund levy are being used to pay for the Government’s Jobs Initiative introduced in May 2011. The measures introduced as part of the Jobs Initiative include a new 9% VAT rate on certain activities, the halving of the lower rate of PRSI and small amounts of additional current and capital expenditure.
The implementation of a jobs and growth strategy is a key priority of the Government. The measures announced in the Jobs Initiative are aimed at assisting in employment generation – providing opportunities for those who are out of work, to restore public morale and confidence in the economy and encourage spending by consumers.
The chargeable persons for the levy are the trustees or other persons (including insurance companies) with responsibility for the management of the assets of the pension schemes or plans. The payment of the levy is treated as a necessary expense of a pension scheme and the trustees or insurer, as appropriate, are entitled, where they decide to do so, to adjust current or prospective benefits payable under a scheme to take account of the levy. It is up to the trustees to decide whether and how the levy should be passed on and who should be impacted and to what extent, given the particular circumstances of the pension schemes for which they are responsible. I cannot intervene in this process in respect of the ESB pension fund or other pension funds.
However, the legislation also includes safeguards aimed at ensuring that benefits payable, either currently or prospectively to any member, are adjusted in such a way that the reduction in value of those benefits shall not exceed 0.6% of the market value of the assets accounting for the scheme’s liabilities to that member.
I am conscious of the concerns of pension scheme members about the impact of a levy in circumstances where the pensions sector, in common with other sectors in our economy and society, is finding the current economic and financial environment very challenging. However, much of the value of pension funds is attributable to the rolled up value of generous tax reliefs that pension savings have historically been granted and continue to receive. The imposition of the levy is for a relatively short period and its purpose is to improve the economic environment by providing the means to encourage job creation in areas of our economy most likely to deliver that employment quickly.
