€140m pension raid signals end of levy

The Government’s pension levy haul yesterday passed the €2.3bn mark as a further €140m was raided from private sector pension funds.

€140m pension raid signals end of levy

The final application of the controversial levy first introduced in 2011 is likely to be greeted with derision and relief in equal measure by pension holders across the country.

While the latest extraction of funds is a mere drop in the ocean in the overall context of the levy windfall, it is impact will continue to be felt for years to come, according to Irish Association of Pension Funds chief executive Jerry Moriarty.

“I think people will just be glad it’s over,” said Mr Moriarty. “Today’s €140m almost pales in significance to the €2.2bn total take. A lot of pensioners will see the impact of it for a long time to come.

“It was a very successful measure in that it garnered €2.2bn without much of an uproar, bar towards the end of the programme.”

The levy also damaged efforts to encourage workers to provide for their futures and eroded confidence, Mr Moriarty said, adding that a clear line needs to be established explicitly preventing similar levies going forward.

Finance Minister Michael Noonan introduced the charge as part of the Government’s jobs initiative and argued that it allowed him scope to lower the Vat rate applying to the hospitality sector, which has proven to be hugely successful.

Budget 2014 provided an unwelcome surprise for pension holders, however, as Mr Noonan reneged on a commitment to abolish the levy and added 0.15% to the existing 0.6% levy.

His budget, delivered last October, signalled the end of the levy with a reduced rate of 0.15% applying in the final year of its existence, 2015.

Given that the levy garnered significantly more than expected during 2014, allied with the fact that tax revenues in the opening half of the year were also ahead of schedule, Fianna Fáil finance spokesman Michael McGrath has labelled the imposition of the levy this year as unjustifiable.

“The levy on private pension funds took in €743m in 2014, €68m more than was anticipated at the start of the year,” said Mr McGrath.

“This brings the total raised from the levy in the last four years to over €2.2bn, a truly massive sum. The public finances generally have improved and the exchequer took in over €700m more in tax in the first five months of 2015 than predicted at budget time.

“Pension funds are already under considerable pressure to meet members’ expectations due to low bond yields and longer life expectancy. Taking a further €140m from pension savings will undoubtedly result in reduced benefits.”

More in this section

IE_180_logo
Price info

Subscribe to unlock unlimited digital access.
Cancel anytime.

Terms and conditions apply

The Business Hub
Newsletter

News and analysis on business, money and jobs from Munster and beyond by our expert team of business writers.

Sign up
Puzzles logo
IE-logo

Puzzles hub

Visit our brain gym where you will find simple and cryptic crosswords, sudoku puzzles and much more. Updated at midnight every day. PS ... We would love to hear your feedback on the section right HERE.

Lunchtime
News Wrap

A lunchtime summary of content highlights on the Irish Examiner website. Delivered at 1pm each day.

Sign up
Revoiced
Newsletter

Our Covid-free newsletter brings together some of the best bits from irishexaminer.com, as chosen by our editor, direct to your inbox every Monday.

Sign up