Tuesday, 28 June 2011
Department of Finance
Question 106: To ask the Minister for Finance his views that the proposed pension levy will lead to lower investments in pensions thus further exacerbating the pensions time-bomb; and if he will make a statement on the matter. [17312/11]
I propose to take Questions Nos. 105 and 106 together.
I cannot say what impact the pension fund levy will have on individual funds or schemes, as this depends on whether and to what extent pension fund trustees and Life Offices decide to pass on the levy to individual members, given the particular circumstances of the pension funds or pension plans that they are responsible for. In that regard, I take the view that there is scope for the pensions industry to absorb the impact of the levy from fee income and charges and I have written to them in that regard.
There are a number of factors influencing the decisions of individuals in relation to investments in pensions. Affordability would be among such considerations for some and the tax treatment of pension saving would be another. As regards the pension fund levy, I have consistently made the point that the 0.6% stamp duty on pension fund assets is a temporary measure to pay for the Jobs Initiative and will only be in place for the period of the Initiative.
Arguably, the tax relief on pension contributions is a more relevant consideration in terms of long-term saving for supplementary pension provision. I am sure the Deputy is aware, as I am, that the pension fund levy comes at a time when the gradual reduction from marginal to standard rate tax relief on pension contributions forms part of the fiscal consolidation measures in the agreement with the EU Commission, IMF and the ECB over the period 2011 to 2014. When introducing the Jobs Initiative on 10 May last, I gave a commitment to examine this issue.
The Government has initiated a Comprehensive Review of Expenditure in order to provide it with a set of decision options to meet the overall fiscal consolidation objectives and re-align spending with the Programme for Government priorities.
The Review is due to be completed by end September 2011. The Government will then examine the findings and, in consultation with the EU, IMF and ECB, will introduce fiscally neutral changes to the detail of the EU /IMF Programme of Financial Support for Ireland while maintaining the overall commitment to fiscal consolidation. I have undertaken to examine the scope for any change to the proposed standard rating of tax relief on pension contributions in that context.