Wednesday, 6 November 2013
Department of Finance
Pensions Levy Issues
50. To ask the Minister for Finance further to Parliamentary Question No. 81 of 11 January 2012, if he has considered the way the report on pension charges in Ireland 2012 may be used to advance the issue of the pension industry absorbing the impact of the pension fund levy; and if he will make a statement on the matter. [47374/13]
I propose to take Questions Nos. 50 and 51 together.
The Report on Pension Charges 2012 was undertaken by the Department of Social Protection, working with the Central Bank and the Pensions Board, and with support from PWC. The launch of the Report on Pension Charges report in October 2012 was followed by a three month consultation with stakeholders. Following the consultation, it was agreed by Government in April 2013 that the recommendations contained in the report will be implemented, and this work has commenced. Implementation of these recommendations aims to ensure compliance with regulatory requirements and enhance the transparency and understanding of pension charges amongst trustees, employers and scheme members with a view to supporting competitive pricing and ultimately limiting erosion to the value of the pension received by the member.
On the matter of the pension fund levy, I have held the view since the introduction of the levy that the companies who manage and administer the assets of the pension funds and schemes should generally be in a position to absorb the impact of the levy by reducing the charges and fees which they apply. I have pursued this issue with the representative bodies of these companies but the response has not been positive. I have been told that it would be a matter for individual companies to decide on the question of absorbing the cost of the levy into their existing fees and charges but that the scope for companies to do so is very limited. There have been calls to force the companies through legislation to absorb the levy but I do not consider that this approach, which would ignore the circumstances from case to case, would be appropriate.
The levy applies to the market value, on the valuation date (generally 30 June each year), of assets under management in pension funds and pension plans approved under Irish tax legislation, including funded Defined Benefit and Defined Contribution occupational pension schemes. However, the levy does not apply where the trustees of an occupational pension scheme have passed a resolution to wind up the scheme and where the business in respect of which the scheme was established is insolvent.