To ask the Minister for Finance if he will confirm that the levy on defined contribution pensions, originally introduced to fund job creation measures, will not become a funding stream to subsidise defined benefit pensions in deficit in view of the fact that defined contribution schemes are in many cases comprised entirely of the savers personal savings; and if he will make a statement on the matter?
Reply
I announced in my recent Budget 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 am, however, introducing an additional levy on pension funds at 0.15%. This additional levy within the existing legal framework will apply to pension fund assets in 2014 and 2015. I am doing this to continue to help fund the Jobs Initiative, including the continuation of the reduced 9% VAT rate detailed below and to make provision for potential State liabilities which may emerge from pre-existing or future pension fund difficulties.
The revenues arising to the Exchequer from the levy are, in common with Exchequer revenues generally, not hypothecated or set aside to meet any particular item of expenditure or liability but have been used to help fund the various measures introduced by the Jobs Initiative. One of the very significant and successful measures introduced by the Jobs Initiative €“ the reduced VAT rate of 9% on tourism and certain other services €“ was due to end this year. In my Budget speech, I announced the continuation of the reduced 9% VAT rate. I also announced that the Air Travel Tax is being reduced to zero with effect from 1 April 2014. The combined cost of these initiatives is estimated at close to €400 million in a full year.
The extent of the potential State liabilities from the pre-existing or future pension fund difficulties is a matter primarily for my colleague the Minister for Social Protection. However, I can say that agreement has been secured for these liabilities to be met by the Exchequer, where they arise. As I have already indicated, however, the proceeds from the levy that accrue to the Exchequer are not set aside in the manner suggested in the question and expenditure decisions on the use of those and other funds will be made as they arise in the normal way.