Pearse Doherty (Donegal South West, Sinn Fein)

Like Deputy Healy, I have stated previously that I am opposed to funding the jobs initiative through the pension levy and I share some of the concerns expressed by Deputy Broughan. Previously, Members have argued about linking the pension levy to the jobs initiatives that have been announced and the measures giving effect to them that are being enacted in this Bill. Putting this to one side, a valid issue requires clarification, namely, the Taoiseach's continual insistence that this was an either-or option. I watched him state, in a live studio appearance on the six o'clock news, that faced with the option of imposing a levy or reducing tax reliefs, the Government opted for the former. As the Minister has made a statement on these matters, I seek clarification. Is it still the Government's intention, as it was of its predecessor, to reduce tax reliefs on private pensions? The original proposal was for a 7% reduction each year over the next three years until the rate of 20% has been reached. I am aware of other proposals to not reduce the tax relief rate to 20% but of having a rate of perhaps 30% instead. Is the reduction of tax reliefs on the Government's agenda and will this happen? Is it the case, as the Taoiseach suggested, that this is an either-or option? Alternatively, was he simply referring to this point in time and that the tax relief issue will be tackled in December? I seek clarification on this issue.

I believe the reduction of tax reliefs is the best way to proceed in this regard. While all Members are aware of the issue of incentivising people to invest in pensions for the future, the reliefs were overly generous and came at great cost to the State. Based on figures presented by the Department of Finance, the standardisation of private pension tax relief would yield the State approximately €1.1 billion. Moreover, the ESRI report produced in 2009 on the private pension industry and the breakdown of tax relief found that €616 million of tax reliefs went to the top 10% of earners. If I recall correctly, 82% of all tax reliefs went to the top 20% of earners. Consequently, one can clearly discern who benefits from these tax reliefs.

Deputy Healy's amendment has merit. If I may be so presumptuous as to second-guess the Government's desired outcome, I believe that in common with all Members, it would like this levy to be absorbed by the industry itself and that nothing would be passed on. However, this Bill offers the scope to realise that intention. The Minister might argue and might have figures to hand following his consultation with the industry that there is not enough fat to absorb the levy, despite all the observations from this side of the House. I believe the Bill should contain such a provision, which could be reviewed subsequently if a need to so do arose.

After a short absence, the Minister has returned to the Chamber and has made a statement with regard to approved retirement funds, ARFs. While it is welcome that he has gone further than he did this morning, I still believe such a provision should be included in this legislation. As I stated, Members probably will be debating another finance Bill within two weeks and at the least, such a provision should be included in that legislation. I acknowledge that not all approved retirement funds are for the super-wealthy. I note a number of them have appeared in the past on the Members' register of interests in these Houses and I am sure that people who are prudent have also invested in them. However, the Minister has argued in respect of a limit whereby the new measures would not apply to those in a lower income bracket and who have such approved retirement funds. Why is a similar model not being considered for the levy the Minister is imposing on private pensions? One problem associated with the proposed levy on the pensions is that a low, modest or middle-income earner who has invested in his or her future is being hit by the same rate as is a high earner who has invested in a similar type of pension. In other words, the 0.6% rate is indiscriminate in respect of a person's income.

If I understood the Minister correctly regarding the proposal on approved retirement funds he intends to bring forward, he will make sure it will not discriminate against people at different levels. Consequently, why is this not being done for this levy? Few if any people with approved retirement funds are of low or middle income as they generally have higher incomes. The explanation for this, which pertains to being unable to tap into the funds at a certain given time, has already been recited in the Chamber. Consequently, why is it not possible to ensure that at the least, the levy would not be passed on to some of those whose pension funds are below a certain value and that the industry would at least be obliged to absorb that part of it?

However, I wholeheartedly support the amendments tabled by Deputy Healy, the acceptance of which would go a long way towards dealing with the real concerns expressed by those who have invested in pensions. I am sure that each Member of the House has been lobbied by people who genuinely are worried about their future. Enough stuff is coming down the track and enough stuff already has been imposed. Deputy Ross noted that the value of such pensions has collapsed dramatically in recent years and people are genuinely worried. They had been looking forward to their pensions in the knowledge that the pension pot was in place and this Government raid on that pot is not right. If there is fat, as I believe the Minister has acknowledged, measures should be included in this Finance (No. 2) Bill to ensure the impact of these measures is absorbed by the industry and not by the individuals themselves.

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