Ann Phelan (Carlow-Kilkenny, Labour)
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Question 20: To ask the Minister for Finance in view of continued public protest against the effects on pensioners of the pensions levy and his assurances that the industry is not passing it on to pensioners if he will clarify the position; and if he will make a statement on the matter. [38369/11]

Michael Noonan (Limerick City, Fine Gael)
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A stamp duty levy of 0.6% applies to the market value, on the valuation date, of assets under management in pension funds and pension plans approved under Irish tax legislation. The levy is a charge for a temporary period on the significant assets of pension funds, much of which are represented by investments outside of Ireland, in order to fund the Jobs Initiative introduced earlier this year. The various measures in the Initiative represent the first steps by this Government towards improving the competitiveness of important sectors of the economy and facilitating the return to work of people currently unemployed. The levy is a reasonable and targeted tax measure being introduced to fund the various measures set out in the Jobs Initiative. The country is facing an economic and unemployment crisis and the Jobs Initiative will help tackle that crisis and applying a temporary levy to pension funds is less damaging economically than raising other taxes.

Individuals may be affected in different ways by the pension fund levy. I am not in a position to comment on what the precise impact of the levy will be in all cases on individuals or individual funds, schemes, members or retired members as this depends, for example, on whether and to what extent pension fund trustees and Life Offices decide to pass on the levy to individual members, given the particular circumstances of the pension funds or pension plans that they are responsible for. I can say that the Finance (No 2) Act 2011 provisions include certain safeguards in this area. The payment of the levy is treated as a necessary expense of a scheme and the trustees or insurer, as appropriate, will be entitled where needed to adjust current or prospective benefits payable under a scheme to take account of the levy. However, should the option of reducing scheme benefits be taken, it must essentially be applied in an equitable fashion across the different classes of scheme members that could include active, deferred and retired members. In no case may the reduction in an individual member's or class of member's benefits exceed the member's or class of member's share of the levy.

The Revenue Commissioners are afforded oversight authority to review, where they consider it appropriate, instances where benefits are adjusted as a result of the payment of the levy to ensure that any such adjustment is in keeping with the requirements of the levy legislation. In undertaking any such review Revenue may consult with appropriate experts as they see fit. However, before Revenue could act in that regard, instances of concern on foot of actual adjustments made would first have to be brought to their attention.

I believe that there is scope for the pension fund industry to absorb the impact of the temporary pension scheme levy by way of a reduction in the fees and charges made on those schemes. I have raised this issue at face-to-face meetings with representatives of pensions industry and in writing. The response from the industry has to date not been particularly positive in this respect. There have been calls to force the industry to absorb the levy through legislation but I do not consider that this approach, regardless of the circumstances from case to case, would be the most appropriate action at this time.

A group has been established to examine charges in the pensions industry. The group is chaired by the Department of Social Protection with representatives of the Central Bank and the Pensions Board. This study will provide an initial benchmark on the level of pension charges for different forms of funded supplementary pension arrangements and will provide information in relation to disclosure of charges. These data have not been available to date so the study will provide valuable information to inform policy. When this information on pension charges becomes available, I will consider how it may be used to advance the issue of the industry absorbing the impact of the pension fund levy.