Parliamentary Question addressed to the Minister for Finance

29th January 2014 - Olivia Mitchell TD

To ask the Minister for Finance if he will consider making those with a pension fund of less than €300,000 a year which would have an approximate payment of €12,000 a year, similar to the non-contributory pension rate, exempt from paying the pension levy; and if he will make a statement on the matter?

Reply

I announced in my Budget 2014 speech that the 0.6% Pension Fund Levy introduced to fund the Jobs Initiative in 2011 will be abolished from the 31st of December 2014. I have however, introduced an additional levy on pension funds at 0.15% to, among other things, continue to help fund the Jobs Initiative. The additional levy, within the existing legal framework, will apply to pension fund assets in 2014 and 2015.

The chargeable persons for the pension fund levy are the trustees or other persons (including insurance companies) with responsibility for the management of the assets of the pension schemes or plans.

There are two exceptions to the requirement to pay the levy provided for in the governing legislation (section 125B of the Stamp Duties Consolidation Act 1999).

The first exception provides that the levy will not apply to the assets of occupational pension schemes in respect of employees whose employment is, or was, wholly exercised outside the State. In other words, the levy does not apply to the extent that a pension scheme is intended to provide retirement benefits to scheme members employed outside the State.

The second exception provides that the levy will not apply where the trustees of a scheme have passed a resolution to wind-up the scheme and where the business in respect of which the scheme was established is insolvent in accordance with the Protection of Employees (Employers’ Insolvency) Act 1984.

The fact that there are very limited situations where the levy does not have to be paid explains, in part at least, why it was possible to introduce it at a relatively low rate of 0.6% in the first place and to have a rate of additional levy as low as 0.15% for the years 2014 and 2015. Making an exception for pension funds with a value of less than €300,000 will inevitably give rise to demands for exceptions to be granted in other situations that would be viewed by those seeking them as being equally deserving. The inevitable result of this course of action would be a narrowing of the levy base which would result in a greater imposition on the non-exempt schemes and I am not prepared to go down that road.

Parliamentary Question addressed to the Minister for Finance

Related news

International Protection Bill 2015

Health Insurance (Amendment) Bill 2015

Parliamentary Question addressed to the Minister for Health