Written answers

Wednesday, 23 May 2012

10:00 pm

Photo of Willie O'DeaWillie O'Dea (Limerick City, Fianna Fail)
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Question 33: To ask the Minister for Finance if he has considered giving an exemption from the Pension Fund Levy to defined benefit funds which are in severe deficit and are unlikely to be able to fulfil their obligations to members; and if he will make a statement on the matter. [25606/12]

Photo of Michael NoonanMichael Noonan (Limerick City, Fine Gael)
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The pension fund levy is a temporary stamp duty charge on the assets of pension funds which will be in place for 4 years in order to fund the Jobs Initiative introduced last year. There are very few exemptions from the levy and this, in part, explains why it was possible to introduce it at a relatively low rate of 0.6%. For example, the levy does not apply where the trustees of a scheme have passed a resolution to wind up the scheme and where the business in respect of which the scheme was established is insolvent. The payment of the levy is treated as a necessary expense of a pension scheme and the trustees or insurer, as appropriate, who are chargeable in respect of the levy have the option under the legislation to adjust current or prospective benefits payable under a scheme to take account of the levy. Where this option is taken the funding position of the scheme would not be impacted on foot of the levy. There may also be other options open to scheme trustees for dealing with the impact of the levy such that the funding position of the pension scheme would not be affected. However, should the option of reducing scheme benefits be taken, 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.

I have no plans to amend the pension fund levy arrangements in the manner suggested by the Deputy. However, in common with other tax measures, its operation will be reviewed by me in the context of next year's Budget and Finance Bill.

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