Dáil Éireann Debate, Tuesday - 5 November 2013
196. Deputy Terence Flanagan asked the Minister for Finance the number of pensioners who have had their pension incomes reduced as a result of the levy on private sector pension savings; if an impact analysis was carried out to ensure that these pensioners would not endure undue hardship as a result of their pensions being reduced again; and if he will make a statement on the matter. [46418/13]
View answer197. Deputy Terence Flanagan asked the Minister for Finance the amount collected in each year since the levy on private sector pension savings was introduced; and if he will make a statement on the matter. [46420/13]
View answer198. Deputy Terence Flanagan asked the Minister for Finance the amount he expects to receive in 2014 from the increased 0.75% levy on private sector pension savings; and if he will make a statement on the matter. [46421/13]
View answer199. Deputy Terence Flanagan asked the Minister for Finance the amount of the additional levy of 0.15% on private sector pension savings is going towards making provisions for potential State liabilities which may emerge form pre-existing or future pension fund difficulties due to double insolvency; his estimate of the the extent of these potential liabilities; if those funds will be specifically ring-fenced for that purpose; and if he will make a statement on the matter. [46422/13]
View answerI propose to take Questions Nos. 196 to 199, inclusive, together.
I announced in my recent Budget speech that the 0.6% Pension Fund Levy introduced to fund the Jobs Initiative in 2011 will be abolished from the 31st of December 2014. I will however, introduce an additional levy on pension funds at 0.15%. I am doing this to continue to help fund the Jobs Initiative, including the continuation of the reduced 9% VAT rate detailed below and to make provision for potential State liabilities which may emerge from pre-existing or future pension fund difficulties. The additional levy within the existing legal framework will apply to pension fund assets in 2014 and 2015.
The pension fund levy imposes an annual stamp duty on the market value of assets under management in pension schemes approved by the Revenue Commissioners under Irish tax legislation.
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.
Individuals may be affected in different ways by the pension fund levy. I am not in a position to comment on what the precise impact of the levy will be in all cases on individuals or individual funds, schemes, members or retired members as this depends, for example, on whether and to what extent pension fund trustees and Life Offices decide to pass on the levy to individual members, given the particular circumstances of the pension funds or pension plans that they are responsible for.
However, should the option of reducing scheme benefits be taken, in no case may the reduction in an individual member’s or class of member’s benefits exceed the member’s or class of member’s share of the levy.
I am informed by the Revenue Commissioners that receipts to date from the 0.6% stamp duty levy on pension fund assets introduced in the Finance (No. 2) Act 2011 amounted to €463 million in 2011 and €483 million in 2012.
The yield so far in 2013 is €534 million. The deadline date for payment of the levy for 2013 was 25 September 2013. It is not clear at this stage if there will be any further payments received in 2013.
The yield from the pension fund levy in 2014 is estimated at €675 million. The yield from the pension fund levy at the reduced rate of 0.15% in 2015 is estimated at €135 million.
The revenues arising to the Exchequer from the levy are, in common with Exchequer revenues generally, not hypothecated to any particular item of expenditure or liability but have been used to help fund the various measures introduced by the Jobs Initiative. One of the very significant and successful measures introduced by the Jobs Initiative – the reduced VAT rate of 9% on tourism and certain other services – was due to end this year. In my Budget speech, I announced the continuation of the reduced 9% VAT rate. I also announced that the Air Travel Tax is being reduced to zero with effect from 1 April 2014. The combined cost of these initiatives is estimated at close to €400 million in a full year.
The Jobs Initiative also included a number of current and capital expenditure measures. While the details of the expenditure on these measures are a matter for my colleagues in Cabinet, I would ask the Deputy to note that the Jobs Initiative originally provided for 5,000 places under Jobbridge, the National Internship scheme and 5,900 places under the Springboard scheme. Numbers who have participated in Jobbridge have now exceeded 20,000 with an evaluation by Indecon Economic Consultants finding that 61.4% of survey respondents were in employment within 5 months of finishing their internships. The Springboard scheme, now in its third iteration, has expanded to over 16,500 places. The expansion of these schemes, reflective of their success, will require further funding from the Exchequer.
The extent of the potential State liabilities from the pre-existing or future pension fund difficulties is a matter currently under examination by my colleague the Minister for Social Protection. As I have already indicated, however, the proceeds from the levy that accrue to the Exchequer are not set aside in the manner suggested in the question and expenditure decisions on the use of those and other funds will be made as they arise in the normal way.
