The Irish government has again argued that the cost of the €534m pensions levy should be absorbed by the industry by lowering management charges, despite accepting that its ability to do so is “very limited”.
Minister for finance Michael Noonan said he continued to believe the cost of his 0.6% levy on pension assets – overlapping during its last year with a further 0.15% charge introduced by the minister in the 2014 Budget – should be met by the industry itself, but he said he did not believe companies should be forced to shoulder the cost through legislation.
“I have pursued this issue with the representative bodies of these companies,” he said, “but the response has not been positive. I have been told it would be a matter for individual companies to decide on the question of absorbing the cost of the levy into their existing fees and charges, but that the scope for companies to do so is very limited.”
Due to the overlap between the existing and the new pensions levy, the Irish Exchequer expects to reap income of €675m from the stamp duty in 2014, up from the €534m in payments to the end of June 2013.
Last year, Noonan said a Department of Social Protection report on pension management fees would show the industry how the impact of the levy could be offset, a view he reiterated.
“Implementation of these recommendations aims to ensure compliance with regulatory requirements and enhance the transparency and understanding of pension charges amongst trustees, employers and scheme members with a view to supporting competitive pricing and ultimately limiting erosion to the value of the pension received by the member,” he said.
Speaking the same day as Noonan, minister for social protection Joan Burton noted that work was underway to implement all of the recommendations contained within her department’s report.
She reiterated that the new Pensions Council – the body soon to be charged with advising on pensions policy once the Pensions Board is reconfigured into the Pensions Authority in an effort to avoid regulatory capture – would help her oversee the implementation.
“The first task I will be giving the new Council is to monitor the implementation of the recommendations in the Report on Pension Charges and advise me if further actions are needed,” she said.
“Should this prove necessary, a further policy and regulatory response may be brought to government.”