Michael McGrath (Cork South Central, Fianna Fail)

I wish to speak to amendments Nos. 31 and 34, which are tabled in my name. The levy on pension funds is deeply unfair and represents a direct attack on people's savings. This is not a tax on interest and neither is it a tax on income. It is, rather, a tax on people's savings and their capital. This may appear to be a clever political ploy because the money involved is beyond people's reach - they can neither see it nor touch it. What is proposed is similar to accessing people's savings and deposits. That is the principle the Government is introducing.

As the Minister of State is aware, IBEC recently carried out a survey of employers. The clear conclusions reached on foot of that survey are that as a result of the imposition of the levy pensions payable to members will be cut, that higher contributions will be required from workers and that some defined benefit schemes will close down. In addition, 46% of respondents anticipated that the levy will trigger a cut in benefits for current employees, some 29% forecast reductions in payments to existing pensioners and almost 25% anticipated that they will be obliged to wind up their defined benefit pension schemes completely. These are the views of employers who know something about the pension schemes involved.

It is quite incredible that the Government did not consult the Pensions Board prior to making the decision to introduce the levy. In a reply to a parliamentary question I tabled, the Minister for Finance indicated that the Pensions Board was consulted on the logistics of implementing the levy but not on the decision to impose the levy in the first instance. The Minister of State will be well aware of the regulatory role of the board. Among its functions is a requirement to protect the interests of pension scheme members. The board was established to ensure that defined benefit schemes are adequately funded. As the Minister of State knows, the vast majority of defined benefit pension schemes are already in the red and are not in a position to meet their obligations.

Employers and employees throughout the country have been negotiating in order to restructure or change defined benefit pension schemes. I would like the Minister of State to indicate why the Pensions Board was not even consulted with regard to the imposition of the levy. Why have a statutory pensions body in place if the Government can make a unilateral decision to introduce a levy of this nature without seeking the views of that body?

Will the Minister of State clarify the position regarding auto-enrolment into pension schemes? As he will be aware, this was included in the national pensions framework. The introduction of auto-enrolment could be viewed as a means of herding even more people into private sector pension schemes. The latter would, of course, be of benefit to the Government because it would increase its take from the pension levy. A later amendment in the name of Deputy Doherty deals with tax relief and we can speak to that matter when the amendment is moved.

It was disingenuous of the Government, when asked how the levy will impact on pensioners and members of pension schemes, to issue a statement to the effect that:

How the pension fund levy will be paid will be a matter for individual pension scheme trustees and administrators... It is open to the pensions industry to decide how and whether to pass on the levy.

Of course the pensions industry will pass on the levy. The Minister of State and everyone else present is aware of that fact. The Minister for Finance and others have referred on many occasions to the exorbitant fees imposed by the pensions industry. If that is the case and if that is what the Minister genuinely believes, then why is he not insisting that the industry should absorb the cost of the levy? Why is the industry not being prevented by law from passing on that cost to its members by way of reduced benefits? Amendments Nos. 31 and 34 in my name suggest that a provision to prohibit scheme administrators and trustees from passing on the cost of the levy to the members of pension schemes by way of reduced benefits be included in the Bill.

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