Unacceptable breach of faith - Pension betrayal on the cards?

There can be few phrases in the political lexicon that provoke as much disbelief and cynicism as “temporary levy”.

That cynicism, it seems, is about to be justified yet again if suggestions that the private sector pension levy is to be made permanent, albeit at a lower rate of 0.15% rather than the current 0.6%, prove to be true. If that proves to be the case when Budget 2015 is announced then the Government will be guilty of a profound breach of faith.

The initial levy, a raid on private pension savings with no comparable imposition in the public sector, was tolerable because we were told it was temporary and the country was in dire straits but, as is so often the case, it proved so very lucrative that Government could not resist making it permanent.

The levy is expected to raise over €700m this year alone and since 2011, when it was introduced as a temporary measure, it pumped an estimated €2.32bn into Government coffers. The levy raises more than the property tax.

As we have said so many times before the levy is unfair because it only applies to a relatively small cohort of workers many of whom are members of defined benefits schemes struggling with solvency and probably unable to pay the pensions anticipated by employees. This Government’s credibility is already an open question. If the levy is made permanent that would no longer be the case.