Irish government says lower management fees could offset pensions levy
IRELAND - Pension funds are expected to see losses incurred from the pensions levy offset through reduced asset management charges, the country's minister for finance said.
Addressing the Dáil, Michael Noonan said the outcome of a review of asset management fees would lead to an overall reduction in costs for schemes, with the report being presented to minister for social protection Joan Burton next month.
"This study will provide an initial benchmark on the level of charges for different forms of funded supplementary pension arrangements and will provide information in relation to the disclosure of charges," Noonan said.
He added that, once Burton had received the report, "appropriate decisions" would be made on the level of fees and how changes could offset "the impact of the pension fund levy through reductions in fees".
Noonan's comments echo Burton in September last year, who said pension providers seeking to reduce the impact of the 0.6% pensions levy - reported to have resulted in benefits cuts among scheme members - could do so by recouping some of the impact by lowering asset management and administration costs.
At the time, she said the study would seek to compare pension charges in Ireland with other countries, hoping it would lead to an "informed" debate on fees.
A previous report by consultancy LCP had warned that Irish schemes risked losing any benefit of actively managed mandates, due to the high fees "cancelling out" returns.