IRELAND - The Irish pensions levy has resulted in lower earnings for Irish Life & Permanent (IL&P), as the company confirmed the tax on pension assets would lead to reduced management fees.
The admission comes in the group's half-yearly report, as it revealed an operating loss for the first half of 2011 of €4m, down from a profit of more than €30m at the same time last year.
However, IL&P said it recorded growth in sales across both life assurance and the fund management business, with sales up from the same time last year.
"The reduction in earnings in the first half of 2011 over the first half of 2010 reflected, on the one hand, the impact of the pension levy and adverse investment market and economic conditions in 2011 and, on the other, the exceptionally positive risk experience recorded in the H1 2010 result," it said, announcing results for the six months to end of June.
The report added: "It is expected that the cost to the life assurance business in lost management fee income over future periods will total €13m."
The 0.6% levy, introduced as part of the government's job initiative, has been heavily criticised by many within the pensions industry, but it is seen as a way of raising nearly €2bn over four years to encourage employment.
At the beginning of the month, the Department of Finance revealed that payments of just over €100m had already been made at the end of June.
IL&P further revealed that it would not be covering the cost of the levy to its six defined benefit schemes, resulting in a reduction of €7.1m in scheme assets to €1.2bn.
However, the fall in assets coincided with a reduction in scheme liabilities, meaning the company's deficit fell by €42m to €107m overall.
The reduction in deficits was also witnessed at retail company Grafton Group, which saw a €2.8m deficit reduction to €12.7m.
In its half-yearly report, the company said: "An increase in the rate used to discount liabilities in line with changes in corporate bond yields and cash contributions in excess of service costs contributed to the reduction in the deficit."
Plan assets of €188m now funded 93% of employee benefits, a 1 percentage point rise over the end of last year, when assets of €191m only addressed 92% of all liabilities.
Grafton noted that the figures for its pension scheme already took into account the impact of the pensions levy, but it did not disclose the level of any payments made.
No comments yet