Willie O'Dea (Limerick City, Fianna Fail)
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51. To ask the Minister for Finance his views on whether the assertion of the Pensions Ombudsman to the Joint Oireachtas Committee on Finance and Public Expenditure that the imposition of a 0.6% levy on private sector pension schemes in 2011 was legal but not necessarily fair; and that Government statements at the time of the levy’s introduction, to the effect that employers could be requested or required by trustees to meet the costs of the charge, were never going to be right; and if he will make a statement on the matter. [5062/15]

Micheál Martin (Cork South Central, Fianna Fail)
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54. To ask the Minister for Finance his response to the statement of the Pensions Ombudsman given to the Joint Oireachtas Committee on Finance and Public Expenditure that the imposition of a 0.6% levy on private sector pension schemes in 2011 was legal but not necessarily fair; and that Government statements at the time of the levy’s introduction, to the effect that employers could be requested or required by trustees to meet the costs of the charge, were never going to be right; that most trustees of pension funds felt that they had no choice but to reduce the pensions already in payment to pensioners as, otherwise, the full brunt of the levy would be borne by future pensioners, either active members or those with deferred or preserved benefits, and that in most cases, the effect of the reduction in payment would last for the lifetime of the pensioner; and if he will make a statement on the matter. [5061/15]

Michael Noonan (Limerick City, Fine Gael)
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I propose to take Questions Nos. 51 and 54 together.

The pension fund levy is not a levy on pensions but is a stamp duty charge that 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 was introduced in 2011 to fund the Jobs Initiative and has applied at a rate of 0.6% for the years 2011 to 2013, at an aggregate rate of 0.75% for 2014 and will apply at a reduced rate of 0.15% for this year. In accordance with the provisions in section 125B of the Stamp Duties Consolidation Act 1999 (SDCA), the stamp duty levy on pension fund assets will end after 2015.

The chargeable persons for the levy are the trustees or other persons (including insurance companies) responsible for the management of the assets of the pension schemes or plans. The payment of the levy is treated as a necessary expense of a pension scheme and the trustees or insurer, as appropriate, are entitled where needed to adjust current or prospective benefits payable under a scheme to take account of the levy. It is up to the trustees to decide whether and how the levy should be passed on and who should be impacted and to what extent, given the particular circumstances of the pension schemes for which they are responsible.

While I would expect that, in carrying out their responsibilities in this matter, pension scheme trustees would examine all the options open to them regarding how to deal with the impact of the levy, including an approach to the employer sponsors of the scheme, neither I or the Government made any statement to the effect that employers would be required to meet the cost of the levy.

 I have no detailed information on the decisions made by pension fund trustees or others in relation to the passing on of the full or a partial impact of the levy to the current, deferred or former (retired) members of pension schemes. I am aware, however, that in certain cases where trustees have made the decision to pass on the impact or part of the impact of the levy to pensioners, that a smaller reduction in pension payments over the lifetime of the pension have been made in preference to a larger reduction over a shorter period.

The pension fund legislation includes safeguards aimed at ensuring that benefits payable, either currently or prospectively to any member, are adjusted in such a way that the reduction in value of those benefits shall not exceed the relevant percentage (0.6%, 0.75% or 0.15%, as appropriate) of the market value of the assets accounting for the scheme's liabilities to that member.

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 would first have to be brought formally to its attention.

Finally, while I am very conscious of the sacrifices that Irish taxpayers, generally, have been required to make over the past number of years, the fact is that without the pension fund levy there would not have been the Job Initiative measures such as the reduced VAT rate of 9% and other measures which have been very successful in helping to create employment and protect employment in this economy.