IRELAND - The Irish pensions industry has welcomed a government admission that it is to make "sizeable" payments to the country's exchequer in 2012, as the minister of finance unveiled next year's austerity budget.
The coalition government's first budget since it came to power earlier this year was split over two days, with many initially concerned it would further burden pension saving with changes to pension tax relief - in addition to a previously enacted 0.6% pensions levy estimated to cost schemes €470m a year.
The Irish Association of Pension Funds had previously warned that any further changes risked "tipping the whole system over", with its director of policy estimating tax changes and levy charges had amounted to €850m in payments flowing to the exchequer this year.
Speaking in the Dáil yesterday afternoon, minister for finance Michael Noonan said: "Due to the changes in pension tax relief adopted in last year's Budget and Finance Act 2011 and the pension fund levy required to fund the Jobs Initiative, the pensions sector is making a sizeable contribution of about €750m in 2012."
The Fine Gael politician added that, while the terms of the European Union/IMF bailout committed them to shift to a standard rate of tax relief on pension contributions, he would not enact any such changes for the time being.
However, Noonan acknowledged that changes were planned for 2012, with the incentive regime for supplementary pension provision due to be reviewed next year in an effort to make it "sustainable and more equitable".
"This will include consultation on whether and to what degree pension funds might invest more in Ireland, rather than abroad," he added.
In a statement, the IAPF said it welcomed the minister's acknowledgement of the €750m schemes would be paying to the exchequer next year, while consultancy LCP said it was "pleased" by the statement.
The IAPF added: "We also welcome [the minister's] commitment to continue to work with pension stakeholders over the coming year and to make the system sustainable and more equitable over the long term.
"In our pre-budget negotiations, we strongly argued that the current pension system is at a very delicate stage and that a number of significant changes have been made to pensions over the last year.
"We highlighted that further changes threaten to significantly damage the sustainability of private pension provision."
The statement added that, while savings required from pension funds by the National Recovery Plan had been achieved for 2012, it would continue to work with the government to meet these targets through other means in 2013.
LCP, however, said there were likely to be changes to tax relief in next year's budget.
No comments yet