Exaggerated reaction by industry to levy: Noonan

FINANCE Minister Michael Noonan called on the pensions industry to reduce their own fees and insisted their reaction to a new levy on fund holders was “quasi-hysterical” and “exaggerated”.

Mr Noonan also last night hinted that a cut on Ireland’s bailout interest rate was unlikely to be agreed at a meeting of EU finance ministers next week.

Hitting back at criticism of the announcement of the jobs initiative, Mr Noonan claimed the Government had been given a mandate for the €470m annual levy by voters in the election.

“The reaction has been quasi-hysterical by the pension industry. I’m prepared to sit down and talk because they’re totally exaggerating the effect of it,” he said.

Mr Noonan said fees charged here for running pension funds were substantially larger than in Britain.

Most funds here were invested abroad and they had grown into generous pension pots in recent years through tax relief, he added.

Earlier, Taoiseach Enda Kenny also called on the pensions industry to reduce their own administrative costs which in turn could lead to discounts for fund holders.

Mr Noonan said exemptions for the 0.6% levy would apply to non-residents with funds here as well as employers who could already not afford to pay pension schemes.

Public Expenditure Minister Brendan Howlin defended the private sector pension fund levy pointing out that public sector workers were already paying an average 7% levy on their pensions.

The two ministers agreed that the jobs initiative would provide an estimated 6,000 new jobs with work coming through the departments of Education, Energy and Transport.

This is separate from the proposed near 21,000 placement and internship positions promised.

Funding the jobs through the temporary four-year pension levy was “totally justified,” said Mr Noonan.

Meanwhile, a cut on the 5.8% interest rate on Ireland’s bailout fund looks unlikely to be agreed by EU finance ministers next week.

Mr Noonan said with all eyes on the bailouts for Greece and Portugal that “it may not be possible to engage our colleagues”.

He said Ireland’s interest rate would “not be one of the priority issues”.

Debate among other EU member states had also shifted from diluting Ireland’s corporation tax to addressing the common tax base for businesses here, he said.

Agreement on cutting Ireland’s bailout interest rate was agreed among most member states, he said, but the Government was prepared to wait.

“It doesn’t make or break us,” he insisted.

Minister Howlin last night also revealed for the first time that low paid public sector workers were unlikely to see any restoration of their pay, as proposed under the Croke Park agreement.

“I think there is a realisation that that’s not going to happen in the short term.”


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