Enda Kenny (Mayo, Fine Gael)

The pensions industry proposed that a pension levy of 0.5% should be introduced as against a reduction in tax relief. The Government decided on a levy of 0.6% on the pensions industry which forms a major part of the jobs initiative announced within the constraints of the IMF-EU deal to stimulate a measure of confidence and growth in the indigenous economy. I am not sure what information the Deputy is seeking or whether he has a list of specific questions he wants answered in respect of elements of the pensions industry. I will try to supply the detailed information if he sends me a list of questions.

Budget 2011 increased the annual notional distribution from 3% to 5%, which means that in respect of, for example, approved retirement funds, ARFs, where a pensioner takes nothing from an ARF, he or she ends up paying income tax and the universal social charge on 5% of the capital value. This means that at least €2,400 must be paid in tax on a sum of €100,000 in an ARF. By comparison, the levy being applied to private pension funds is only 0.6% and is a temporary change, unlike the position on ARFs, as the Minister for Finance made perfectly clear in his announcement on the jobs initiative.

The pensions industry has projected forward that in the full lifetime of a pension fund there would be an impact in respect of a levy such as this. However, this levy will be in place for a four year period, is temporary in nature and being used following an initiative taken by the pensions industry in order that, instead of reducing tax relief, a charge or levy will be applied in this way. Obviously, as Deputy Shane Ross pointed out, there are charges in the management of the pension funds that could be reduced as a consequence of the introduction of the levy, which would have a significant impact. I have undertaken, arising from Deputy Ross' question two weeks ago, to have the Minister for Finance follow up on his constructive comments.

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