IRELAND - The Irish Association of Pension Funds (IAPF) is waiting to hear back from the government over its criticisms of a proposal to hit pension schemes with an annual levy of 0.5-0.6%.
IAPF director of policy Jerry Moriarty, who described the levy as a stealth tax, said: “Since the news broke yesterday, there has been a fair bit of anger. This is people’s savings we’re talking about.”
The levy - which would cream €2bn off pension funds over the next four years - is intended to fund a jobs initiative to be unveiled next week.
It will apply to private sector but not public sector schemes - an omission criticised as unfair by, among others, pensions provider Standard Life.
“They have to find the money from somewhere, but this isn’t the way to do it,” said Moriarty.
Alternatives to the levy proposed by the association include an infrastructure fund pension funds could be forced to invest in, bonds and a tax on pensioners wishing to leave schemes early.
A proposal for something resembling the levy appeared earlier this year in pre-election statements by Fine Gael, the coalition government’s senior partner.
Back in February, now-finance minister Michael Noonan described the levy as “agreed with the pensions industry as a fairer alternative to the halving of income tax relief on new pension contributions”.
Moriarty said: “We wrote to them at the time to tell them we didn’t think it was a good idea. We heard no more about it, so people assumed it had gone away.”
Despite the IAPF’s alternative proposals, Moriarty said the government did not appear to be listening.
“We thought the government would see sense - but they don’t seem to have engaged with anyone,” he said.