Parliamentary Question addressed to the Minister for Finance

 

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, applies to pension fund assets in 2014 and 2015.

 

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.

 

I am informed by the Revenue Commissioners that receipts to date in 2014 from the Stamp Duty levy on pension fund assets, introduced in the Finance (No. 2) Act 2011, amount to €697 million. The Deputy may wish to note that this includes an estimate of payments that have not yet been fully processed as a result of increased payment processing times due to the impact of SEPA in 2014. A finalised figure should be available later in the month.

 

The yield from the pension fund levy at the reduced rate of 0.15% in 2015 is estimated at €135 million.

 

Preparations for Budget 2015 and the consequent Finance Bill are ongoing. It would not be appropriate for me to comment on what changes, if any, are being considered in the pension fund levy or any other tax measure.