Ireland’s government will let its current 0.15% pensions levy lapse, bringing to an end a disputed tax that cost the industry billions.
Giving his Budget address in the Dáil, minister for finance Michael Noonan said he lowered the level of VAT in 2011 – a measure funded by the income from the pensions levy – as part of the government’s attempts to stimulate economic growth.
“The pension fund levy has done its job and is no longer needed to fund the 9% VAT rate because it is more than made up by increased activity and employment,” he said.
“So I can confirm the remaining pension fund levy of 0.15% introduced for 2014 and 2015 will end this year and not apply in 2016. The original 0.6% levy ended in 2014.”
First introduced in 2011 as a 0.6% charge on both defined benefit (DB) and defined contribution pension assets, the levy was meant to end in 2014.
However, the second, two-year 0.15% levy was announced in 2013 and overlapped with the 0.6% charge for its final year.
The new levy, criticised as “outrageous” by the Irish Association of Pension Funds (IAPF), was at the time justified as a means of pre-funding potential state liabilities stemming from the Waterford Crystal case, which late last year saw the government settle a €180m court case brought by the employees of the manufacturer in the wake of the insolvency of Waterford Crystal and its DB pension fund.
Noonan told the Dáil last year income from both levies had exceeded €2bn, as income from 2014 – when both the 0.6% and 0.15% levies applied – was estimated to exceed €675m.
According to data from the IAPF, Irish pension assets in 2014 exceeded €107bn.