THE Government is to take €2,000 from hundreds of thousands of workers’ private pensions over the next four years under a new levy.
Under legislation that will be passed next week, more than 750,000 private pension holders will be hit with the annual levy of 0.5%-0.6%, which will cost them an average of €500 per year for at least the next four years.
The levy, which will not apply to public service pensions, is expected to bring an extra €2 billion into the Exchequer between now and 2014.
The Irish Association of Pension Funds (IAPF) has warned that the levy — which is being imposed to help fund the Government’s proposed jobs initiative — could push some pension holders over the edge.
Fine Gael Finance Minister Michael Noonan has said the move is necessary to ensure the financial stability of the country.
However, in an attempt to prevent the legislation from being passed next Tuesday, the IAPF said the proposed law will put already vulnerable pensioners at further risk and could also force younger workers into canceling their pension plans altogether.
“While the Cabinet has insulated itself from this new stealth tax, more than 750,000 private sector workers are expected to pay this money out of their pension savings,” warned the IAPF’s director of policy, Jerry Moriarty.
“This is an attack on the savings of ordinary pensioners and workers while protecting politicians and public sector workers who already have the best pension benefits.
“Pension schemes are already in crisis, and many defined benefit pension schemes are in a precarious position with employees having already taken a cut.
“The levy will undoubtedly result in further reductions in benefits for pension savers and, indeed, is likely to precipitate the closure of some schemes.”
The comments have been echoed by both the Irish Brokers Association (IBA) and financial firm IFG Ireland.
The latter group’s chief executive, Gary Owens, noted that even before the levy the average public-sector pension is between four and five times higher than those for private workers.
“Pension cuts should not start with private sector earners but with TDs, ministerial and county councillors who bestow overly generous benefits to themselves,” he said.
“The new Government programme appears intent on applying special taxes to the pension funds of private sector workers while leaving the gold-plated pension benefits of ministers and their public sector colleagues untouched.”
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