17 Samh 2011, 16:47
At a meeting of the Committee of Public Accounts today, the Pensions Board came in for strong criticism for failing to be more definitive in its advice to the Minister for Social Protection on the impact of 0.6% levy on private pension funds that was introduced this year. The levy will raise €470 million which is targeted at employment generating measures. The Committee heard that, in some cases, a reduction of up to 10% was being made to pension payments as a result of the levy but that the impact on actual payments was a matter for the trustees of individual schemes.
Chairman of the Committee, John McGuinness TD stated that it was important that the message went out to those who are drawing a pension from a defined contribution scheme that the full impact of the levy does not have to be absorbed in the current year.
“It is a matter for the Trustees of pension schemes as to how the 0.6% levy will affect pension payments but it does not automatically equate to a 10% reduction in the rate of pension. Trustees can spread out the cost of the levy by way of lower payments over a number of years and the full impact of the levy does not have to be absorbed in the proposed four years of the levy\"
“I would advise pensioners who are now being told that they face a significant reduction in their pension payments this year to get in contact with their Trustees or pension fund administrators so as to check out their options.”
The Chief Executive Officer of the Pensions Board Brendan Kennedy also admitted that the Irish pensions industry was in a poor state and that much needed to be done to lower charges and improve the returns on investments. The Pensions Ombudsman Paul Kenny highlighted how in one case he investigated, the pension fund administrator was charging 45% of the premium for the first two years in fees, which he described as excessive.
Chairman of the Committee John Mc Guinness TD highlighted how industry practices were not transparent to the citizens who wanted basic pension cover and who were to an extent being “ripped off” and that both the Pensions Board and the Pensions Ombudsman had to make greater efforts to combat these practices which have dominated the industry for too long.
ENDS /
For further information please contact:
Verona Ni Bhroinn, 087 2624132, 01-618 3881or Ciaran Brennan, 086-0496518, 01- 618 3903
Houses of the Oireachtas,
Communications Unit,
Leinster House,
Dublin 2
Committee of Public Accounts
Membership - Deputies
John McGuinness (Chairman)
Kieran O’Donnell (Vice Chairman)
Paul J Connaughton,
John Deasy,
Paschal Donohoe,
Anne Ferris,
Simon Harris,
Michael McCarthy,
Mary Lou McDonald,
Michael McGrath,
Eoghan Murphy,
Derek Nolan,
Shane Ross