Michael Noonan (Limerick City, Fine Gael)

I move amendment No. 8:

In page 5, lines 36 and 37, to delete "section 784" and substitute "section 784 or 785".

Section 4 deals with the pension levy and I wish to make some introductory remarks because I propose to make quite a number of amendments to it. I wish to provide Members with the overall information first, after which the amendments can be debated singularly as we go through them.

Before speaking on these amendments and given the number of official amendments included on the list that will be debated in various separate groups, for the benefit of the committee it might be useful for me to provide a brief outline of what the amendments are designed to achieve in their entirety, as compared with the proposed structure of the pension levy in the Bill as published. During the course of the committee's consideration of the amendments, it will be seen that some of my proposed changes are substantive. Some are technical in nature and are required to give greater clarity to certain provisions in the Bill as published, while others reflect minor consequential changes and drafting errors. The amendments reflect, to a large part, the useful discussion my officials, as well as officials from the Revenue Commissioners, have had with representatives of the pension industry since the publication of the Bill on the administrative and operational aspects of the levy. In this regard, I acknowledge the constructive engagement of the industry with the officials in seeking to make the levy work as efficiently as possible.

The key changes I propose to make through the amendments to the published provision are, for the most part, considered necessary to facilitate a more efficient implementation and collection process for the levy and to minimise the administrative cost burden on the industry while collecting the levy. I propose to summarise them. First, I am providing a single valuation date in respect of most pension funds' assets for each of the four years of the levy, as compared with the choice of valuation date provided for in the Bill as published. In addition, I propose to push back the valuation date to 30 June in each of the four years. Linked to these changes, there will be a single payment date of 25 September for all years, as opposed to the two payment dates in each year as originally envisaged. I also am providing for the delivery of both the levy statement and the levy payment by electronic means. In line with the proposed single payment date, the rate of the levy will be at 0.6% of the chargeable amount, as opposed to two payments of 0.3% each. I also am expanding the definition of contracts of assurance to make clear that it includes not only contracts of assurance linked to the pension business undertaken by pension schemes with life assurance companies but also encompasses policies or contracts of assurance linked to what is called investment-only business with such companies. This will mean that for the most part, the chargeable person in respect of contracts of assurance will be the insurer rather than the administrator of the scheme.

I also propose to strengthen the published provision and make it clearer as regards the rights of administrators to dispose of or appropriate assets of the pension scheme for the purposes of paying the levy and with a view to protecting them against any possible legal challenge in that regard. This reflects a concern that administrators with responsibility for calculating and deducting the levy could be placed in an untenable position if the trustees who engage them were to instruct them not to pay the levy. The amendments also will put beyond doubt that the chargeable persons and the trustees of the scheme are both jointly and severally liable for the payment of the levy.

Finally, I am providing greater clarification as to the circumstances and manner in which benefits payable under the scheme may be adjusted by insurers and trustees on foot of payment of the levy. In that regard, I also am giving the Revenue Commissioners authority to review any case in which assets are disposed of by the administrators or trustees to pay the levy in order to ensure that any such disposals are in keeping with or needed to pay the levy. In addition, Revenue will have an oversight authority to review instances in which the benefits are adjusted as a result of the payment of the levy to ensure that any such adjustment is made in accordance with the requirements of the levy legislation. In respect of the latter, Revenue will be able to consult whatever expert it deems necessary to assist it in that task.

I will now revert to amendments Nos. 8 and 16. The purpose of these amendments is simply to clarify a number of definitions in the provision as published. Amendment No. 8 makes clear in the definition of "administrator" that references in the provision to "administrator of a scheme" include, as regards retirement annuity contracts, insurers who provide annuity contracts in respect of death in service benefits under section 785 of the Taxes Consolidation Act 1997, as well as insurers who provide annuity contracts in respect of retirement benefits under section 784 of the aforementioned Act. Amendment No. 16 expands paragraph (b) of the definition of the scheme again to ensure that it includes annuity contracts or trust schemes provided by the Revenue Commissioners under section 785 of the Taxes Consolidation Act in respect of death in service benefits. There also are older deferred annuity contracts in which the annuity becomes payable automatically as part of the contract, as opposed to an open market purchase option that applies in more modern annuity contracts. The amendment clarifies that once an annuity is vested, which in most cases arises when the tax-free lump sum is taken, it no longer is subject to the levy. I commend both amendments Nos. 8 and 16 to the committee.

As I stated, these amendments arise from extensive consultations with the industry in order that what was intended will be done and that no undue consequence will occur.

See this speech in context