Wednesday, 18 May 2011
Is €1.9bn pension levy the first step in pension fund grab?
Financial advisors have warned that the Government's target take of €470m a year from retirement funds would wipe out savings. The ICTU, pensions provider Irish Life and industry experts warned €1.9bn grab was an attack on average earners. The ICTU called for a small levy on top earners as a better prescription.
Latest CSO figures show that among occupational groups, ‘Clerical and secretarial’ (89%) workers were most likely to have an occupational pension and that they were more common among younger workers. Of those workers aged 25-34 who had a pension, 85% had an occupational pension, this compares with 64% of those aged 55-69.
Jerry Moriarty of the Irish Association of Pension Funds (IAPF) said the €1.9bn bill could see the start of bigger levies. "We just see it as a tax on working people saving - that's what pension funds are," he said. "The Government thinks that it is just a pot of money and that 0.6% is not a lot, but this is money that people have saved for retirement. It could be the start of something bigger. It's a wipeout, there's no question."
The IAPF said there are fears this is the first step in a line of additional levies on savings including credit union accounts. Mike Kemp, Irish Insurance Federation chief executive, said the levy was onerous, and added: "This levy does not penalise those that are well-off, but ordinary middle income earners."
New laws will be brought in to allow fund administrators to impose the tax, although the IAPF warned legislation may be open to challenge under laws on constitutional property rights.
As we pointed out in our last issue, Irish savers have about €75bn in private pension plans and €93bn in deposit accounts, both of which present the opportunity for a government smash and grab, in yet another move to appease the bond-holders and our masters in the EU/IMF.