IRELAND - The Irish government has revealed pension funds will be expected to pay its new pensions levy in twice-yearly instalments, as the industry continued its criticism of the measures.
Industry figures also voiced concern that the legislation, while only listing payment dates until 2014, did not conclusively state this would also be its end date.
In Finance (No 2) Bill, published yesterday, it was confirmed that schemes would be expected to pay the 0.6% levy in two instalments of 0.3% a year over a four-year period. Official estimates place the annual haul at €470m, which will be used by the government to stimulate the country's employment market.
However, Fionán O'Sullivan, director at IFG Corporate Pensions, worried that the announced 2014 end for the levy would not be retained, as an explicit end date was not stated in the legislation. Instead the Bill only outlines that collections would be made over the next four years.
"Our fear is that the levy will be retained beyond four years," he said. "The fact is they're dipping in now and they'll have a stream of revenue coming in, so what's to stop them carrying on with it? It should be written into the legislation - and the statement suggested it would be - but there's nothing to stop them changing it after four years."
He pointed to the pensions levy introduced in the 1980s, which was originally intended for only four years that remained in place for twice as long.
With the Irish Association of Pensions Funds (IAPF) strenuously opposing the new legislation, O'Sullivan believed the government has significantly underestimated opposition to a move IFG claims could cost pension funds more than 20% of their assets over a 40-year period.
He added that implementation of the legislation had not been sufficiently thought out. "They seem to have little idea of how it will be managed, regulated and collected. We've had members telling us under no circumstances to the transfer the levy to the government and threatening legal action against us if we do."
The IAPF's director of policy Jerry Moriarty was keen to reiterate the organization's disappointment at the measures and criticised that the industry body had not yet been given the chance to engage in a dialogue with the Department of Finance. He told IPE that the IAPF would be meeting with minister of finance Michael Noonan next week.
The Irish government yesterday appeared defiant. Describing the levy as "reasonable and measured", the finance ministry appeared to suggest it included a penalty for Irish pension schemes failing to support the economy by investing in domestic assets.
"The levy is a relatively small charge on the significant assets of pension funds, much of which are represented by investments outside of Ireland," it said.
It also suggested schemes themselves would be responsible for any costs passed on to individual members, with the suggestion that "it is up open to the pensions industry to decide how and whether to pass on the levy".