Terence Flanagan (Dublin North East, Independent)
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336. To ask the Minister for Finance the position regarding private pensions (details supplied); and if he will make a statement on the matter. [22202/15]

Michael Noonan (Limerick City, Fine Gael)
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From the details supplied I take it the Deputy is referring to the Pension Fund Levy.

The Pension Fund Levy is a stamp duty levy which applies to the market value, on the valuation date, of assets under management in pension funds and pension plans approved under Irish tax legislation (occupational pension schemes, Retirement Annuity Contracts and Personal Retirement Savings Accounts). 

The chargeable persons for the pension fund levy are the trustees or other persons (including insurance companies) with responsibility 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 they decide to do so, 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. 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. Where a decision is taken by the trustees of a pension scheme to pass on the impact of the pension fund levy to scheme members as outlined  then the impact on the scheme in terms of  its solvency position would be neutral.

I announced in my Budget 2014 speech that the 0.6% Pension Fund Levy introduced to fund the Jobs Initiative in 2011 would be abolished from the 31st of December 2014. I did, however, introduce an additional levy on pension funds at 0.15% for 2014 and 2015. I did this to, among other things, continue to help fund the Jobs Initiative. I confirmed in my Budget 2015 speech that the additional 0.15% levy will expire at the end of 2015.

The reduced VAT rate of 9% on tourism and certain other services was one of the very significant and successful measures introduced by the Jobs Initiative. It was due to end in 2013. In my Budget 2014 speech I announced the continuation of the reduced 9% VAT rate. I also announced that the Air Travel Tax was being reduced to zero with effect from 1 April 2014. The 9% VAT rate has helped to create 15,000 new jobs as well as protecting existing jobs. Since the Budget announcement about the reduction in the Air Travel Tax, airlines have announced the opening up of new routes resulting in significant increases in passenger numbers with the associated increase in tourism activity and employment.

The pension fund levy does not apply to public service pension schemes because they are unfunded. However, the pensions of public servants have been subject to a public service pension reduction (PSPR) since 1 January 2011. The PSPR was introduced on 1 January 2011 under the Financial Emergency Measures in the Public Interest Act 2010. The PSPR is not a levy but is a pension cut affecting public service pensions.  On introduction, the PSPR was estimated as reducing public service pensions by 4% on average, with more severe effects experienced at higher pension levels due to the progressive multi-band structure of the reduction.

A change to the PSPR was made on 1 January 2012, when a 20% reduction rate (previously 12%) was imposed on pension amounts above €100,000. With effect from 1 July 2013, more changes were made to the PSPR to deliver on the Government's commitment to further reducing those public service pensions above €32,500 by between 2% and 5% in certain circumstances, including the pensions above that level of individuals who retired after end- February 2012.

While the pension fund levies have ceased and will be ceased as outlined, I have no plans to repay the pension fund levy tax collected as suggested in the details supplied. The value of the funds raised by way of the levy have been used to protect and create jobs and this has helped to create the improving financial and economic position of the State. Taxpayers to whom the impact of the levy may have been passed on by the chargeable persons for the levy will benefit from the changes which I began in Budget 2015 and which will continue in future Budgets to reduce the  tax burden on low and middle income earners.