Pensions Levy

Dáil Éireann Debate, Tuesday - 3 December 2013

Tuesday, 3 December 2013

Questions (59)

Olivia Mitchell

Question:

59. Deputy Olivia Mitchell asked the Minister for Finance the situation affecting existing employees of Permanent TSB whose insolvent fund was wound up in May last, but who now find themselves part of a defined contribution scheme as a result of bank efforts to reduce its cost by 8% as requested by him, and consequently find their greatly depleted funds are liable for the pension levy, though the fund itself still has all the liabilities of a defined benefit pension for existing retirees; and if he will consider an exemption for those nearing retirement in view of the fact that they meet two of the three requirements for exemption to the tax under the Protection of Employees Employment Insolvency Act 1984. [51339/13]

Written answers

Minister for Finance

I announced in my Budget 2014 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% to, among other things, continue to help fund the Jobs Initiative. The additional levy, within the existing legal framework, will apply to pension fund assets in 2014 and 2015. The chargeable persons for the pension fund levy are the trustees or other persons (including insurance companies) with responsibility for the management of the assets of the pension schemes or plans.

There are two exceptions to the requirement to pay the levy provided for in the governing legislation (section 125B of the Stamp Duties Consolidation Act 1999).

The first exception provides that the levy will not apply to the assets of occupational pension schemes in respect of employees whose employment is, or was, wholly exercised outside the State. In other words, the levy does not apply to the extent that a pension scheme is intended to provide retirement benefits outside the State.

The second exception provides that the levy will not apply where the trustees of a scheme have passed a resolution to wind-up the scheme and where the business in respect of which the scheme was established is insolvent in accordance with the Protection of Employees (Employers’ Insolvency) Act 1984.

The fact that there are very limited situations where the levy does not have to be paid explains, in part at least, why it was possible to introduce it at a relatively low rate of 0.6% in the first place and to keep the rate of the additional levy as low as 0.15%. Making an exception for the Permanent TSB scheme, notwithstanding that it clearly does not meet all of the existing qualifying conditions for exception, will inevitably give rise to demands for exceptions to be granted in other situations that would be viewed by those seeking them as being equally deserving. The inevitable result of this course of action would be a narrowing of the levy base which would result in a greater imposition on the non-exempt schemes and I am not prepared to go down that road.