Levy will cause ‘huge uncertainty’ for retired people

THE Taoiseach has defended the new private pension levy as Age Action warns that it will cause “huge financial uncertainty for retired people who had made plans based on a defined income”.

The 0.6% levy was introduced to fund Tuesday’s Jobs Initiative and will be deducted from private pensions twice a year for the next four years. It is not being applied to public sector pensions.

Speaking in the Dáil, Enda Kenny said: “The pensions referred to here were built up with massive tax reliefs over years and most of them are involved in overseas assets,” he said.

“What’s involved here is bringing back a very small percentage of this.”

Age Action Ireland Head of Advocacy, Eamon Timmons said that the levy, which will raise up to €1.9 billion, will impact pensioners as well as future pensioners.

“We are concerned in particular about pensioners on very low pensions, and about the disincentive which the new charge for anyone considering investing in a pension,” Mr Timmins said. “Anything which discourages people from making financial provision for the years when they will not be working is shoring up problems in the future for a country with an ageing population.”

Galway West TD, Derek Nolan insisted pension fund managers should take the biggest hit when the private pension levy is introduced.

“Administrators who manage the day-to-day affairs of a retirement fund can absorb the new 0.6% levy — instead of passing it on to contributors,” he said.

Defending the move last night, Minister for Finance Michael Noonan accused the pension industry of reacting in a “quasi-hysterical” manner to the levy, saying the Government was “pulling back a very small proportion” of the tax relief enjoyed by the industry over the years.