Michael Noonan (Limerick City, Fine Gael)

The Government's top priority is to safeguard the security of savings. It would not wish to consider any step that would have a negative impact on such confidence. Other savings or investment products have not benefited from the generous tax reliefs that pension savings have historically been granted and continue to receive. Deposit accounts and savings products have already been subjected to additional taxation in recent budgets. I refer to the increase in the rate of DIRT and exit taxes, neither of which affected pension funds.

I am conscious of the concerns of the pensions industry about the impact of a levy in circumstances where the pensions sector, in common with other sectors in our economy and society, is finding the current economic and financial environment challenging. The levy is being imposed for a relatively short period. Its purpose is to improve the economic and financial environment by providing the means to encourage job creation in those areas of the economy that are most likely to deliver employment quickly. The levy is being confined to pension funds because the alternatives for increases in taxation elsewhere would damage the economy at this time. My officials are consulting the pensions industry and other interested stakeholders on the legislative provisions in this section with a view to minimising, where possible, any unnecessary difficulties to which this measure may give rise.

I am aware that the pensions sector is also concerned, given the temporary levy, about the commitment in our agreement with the EU and the IMF to reduce tax relief on pension contributions from next year. I will examine this issue in the context of the results of the comprehensive review of expenditure being undertaken by the Minister for Public Expenditure and Reform. I will consider any resulting scope for fiscally neutral changes to the EU-IMF agreement. I have outlined the four measures in this Bill. There are two further sections. Section 5 relates to the care and management of taxes and duties and section 6 refers to the Short Title and construction of the Bill. These are standard provisions or entries. A small number of matters are still under consideration for inclusion in the Finance Bill. I may bring such proposals forward on Committee or Report Stages. I will also give consideration to any constructive suggestions made by Members during this debate.

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