Dáil Éireann Debate, Tuesday - 30 January 2018
88. Deputy Clare Daly asked the Minister for Finance his plans to introduce measures to restore pension benefits in the semi-State sectors to levels that would have been established but for the introduction of the pension levy in 2011; and if he will make a statement on the matter. [4236/18]
Amharc ar fhreagra89. Deputy Clare Daly asked the Minister for Finance the steps he is taking to end the lifetime reduction in pension benefits for persons in the private and commercial sector as a result of the pension levy that was introduced in 2011 in view of the fact that equitable reductions are harder on lower paid pensioners. [4235/18]
Amharc ar fhreagraI propose to take Questions Nos. 88 and 89 together.
The levy on pension schemes was introduced in the wake of the financial crash and at a time when the economy was in very serious difficulties. Something had to be done to preserve and boost jobs and it is an unavoidable fact that difficult economic situations require hard and very often unpopular decisions. All sectors of the economy had to contribute to the recovery plan and the levy was designed to claw back a small amount of the very generous tax reliefs that those contributing to pension arrangements had benefitted from over many years.
The original 0.6% stamp duty levy on pension fund assets ended in 2014. The additional levy of 0.15% which my predecessor introduced for 2014 and 2015, mainly to help continue to fund Jobs Initiative, also ended in 2015.
The position is that the equivalent value of all of the money raised from the stamp duty levy has been used to fund the wide range of measures introduced in the Jobs Initiative to protect existing jobs and to help create new jobs and the Initiative has been a success in this regard. The measures introduced include expenditure measures such as the JobBridge and Springboard schemes, as well as a number of tax and PRSI incentives such as the reduction in the VAT rate from 13.5% to 9% for the tourism and hospitality sectors and the temporary halving of the lower employer PRSI rate.
Under the legislation, 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 needed to adjust current or prospective benefits payable under a scheme to take account of the levy. It is up to the trustees or insurer to decide whether, when and how the levy should be passed on and to what extent, given the particular circumstances of the pension schemes for which they are responsible. However, the legislation also includes safeguards aimed at ensuring that should the option of reducing scheme benefits be taken, it must be applied in an equitable fashion across the different classes of scheme members that could include active, deferred and retired members. 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. Where pension scheme trustees or an insurer took the decision to treat the levy as an expense of the pension scheme, they would have adjusted current or prospective benefits payable to members under that scheme. The consequence of this treatment by the trustees or insurer could be a permanent reduction in members' benefits.
The value of the funds raised by way of the levy has been used to protect and create jobs and this has helped to create the improving financial and economic position of the State. Taxpayers to whom the impact of the levy may have been passed on by the chargeable persons responsible for the payment of the levy (the pension scheme trustees, etc.) are benefitting from the changes which my predecessor began in Budget 2015 and which have continued in subsequent Budgets to reduce the tax burden on low and middle income earners.
