Michael McGrath (Cork South Central, Fianna Fail)
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Question 65: To ask the Minister for Finance his views on the extent to which private pension provision, particularly additional voluntary contributions, has been discouraged by the introduction of the pension fund levy; and if he will make a statement on the matter. [40231/11]

Michael Noonan (Limerick City, Fine Gael)
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Pension industry sources have indicated to my Department that contributions to pension savings arrangements, generally, have fallen since the beginning of 2010. The economic downturn will clearly have impacted on the confidence and ability of individuals to invest in pension savings. I cannot say whether and to what extent individuals would be influenced in this regard by the pension fund levy. I would very much hope that individuals already saving for their retirement and those considering doing so would not be unduly influenced in a negative way by the levy. 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. The Finance (No.2) Act 2011 legislation which gives effect to the pension fund levy provisions makes clear that it is to apply for a four year period only.

The moneys raised from the pension fund levy are being used to pay for the tax reductions and the additional expenditure measures announced in the Jobs Initiative in May last. The various measures in the Initiative represented the first steps by the 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 introduced to fund the various measures set out in the Jobs Initiative.

In my Budget speech last week, I acknowledged the significant contribution being made by the pensions sector towards resolving our current difficulties. I also made the point that I did not propose to move to standard rating tax relief on pension contributions. Such contributions, including additional voluntary contributions, remain tax-relieved at the individual's marginal rate of income tax, subject to limits. However, changes are still required to the incentive regime for pension saving in order to make the system sustainable and more equitable over the long term. I believe that the various stakeholders in the pensions sector share that view and my Department and the Revenue Commissioners will work with those stakeholders over the coming year to develop workable solutions to that end.