What Noonan is now saying about the Pensions Levy: 2014

L

LDFerguson

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I presume we all remember Minister Noonan's dishonest U-turn in relation to the Pensions Levy in 2014. For those that don't, he had promised to remove the levy in 2014 and then he did a U-turn on that promise, increased it in 2014 and extended it at a reduced rate into 2015. Then to add insult to injury he attempted to blame the pensions industry for his U-turn by alleging in public that the pensions industry had failed to meet the terms of some notional "deal". When pressed to elaborate on the nature of this "deal" he was forced to climb down as no such deal had ever been struck. But he still went ahead with increasing and extending the levy regardless.

Anyway, fast forward to 2014 and the Minister has been asked in May about any plans to extend the levy further, or make any other changes. His reply was...

"I announced in my Budget 2014 speech that the 0.6% Pension Fund Levy introduced to fund the Jobs Initiative in 2011 will be abolished from the 31st of December 2014. I introduced an additional levy at 0.15% which, as I also stated in the Budget speech, would apply within the existing legal framework to pension fund assets in 2014 and 2015. This was done to, among other things, continue to help fund the Jobs Initiative. I have no plans to make any further changes in this regard."
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I for one have seen no figures as to what job creation projects the Pensions Levy has been spent on, nor how many jobs have actually been created. Has anyone seen such figures?

Anyway, my main purpose in posting this is as a record of what has been said this year on the matter, in case Minister Noonan decides to perform another U-turn later.
 
Unfortunately politicians are borne to relate all levy and tax increases to general economic data (where it is improving) or else sate how much worse things would've been if such taxes hadn't been incurred. They would never be able to relate specific funds raised to specific goals/targets achieved. For example, the Minister sometimes seems to relate the pension levy to the lower standard VAT rate (one pays for the other) but the monies would be taken from somewhere else if this levy didn't exist and if they really wanted to keep lower VAT rates. Is it really fair to say one wouldn't have happened without the other? No, but that doesn’t make for good political pronouncements.

Given they've been drawing on the pension levy for the last couple of years; I would say it is unlikely the 2015 will be the last year of it. State coffers tend to get used to funds coming in from certain avenues fairly quickly (VRT post European common market or USC would be two examples) and it gets increasingly difficult to wean them off it again as each year goes by. I’ve actually delayed making an AVC until the second half of this year as I don’t want 0.75% of what I put in going directly to less disciplined public expenditure.
 
Ld.

This was no more than a cynical smash & grab.
I could maybe have seen some merit if it hit funds where it was obvious the funds put into pension had been enginered to avoid Tax.
I could also maybe see some merit hitting funds above a figure were it could be construed that funds that at retirement would give pension over circa k50 would be hit.

Most of us have small Pension Pots.
Most of us know these Pension Pots will not give a lot.
Most of these Pots have reduced in downturn.
Takes more of a Pot today to buy a Pension.
Most of us though look forward to having that bit more than State Pension to give us a few bob.

As per roboyle;
Generally accepted State coffers long-term will have problems funding pensions , yet people like roboyle are being put off doing AVC?

Madness + maddening what Fine Gael have done.
Cute though , in that unless you are close to Pension (like me) you sort of ignore!
 
Gerry Canning said:
Cute though , in that unless you are close to Pension (like me) you sort of ignore!
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It should have been the item that attracted the highest level of outrage. However, the irish mentality is one of thinking about right now - and rarely looking towards the future. Therefore, people generally didn't see how big a 'theft' this really was.
 
I wish he had been honest and said what it was really for which is to cover the governments liability for under funded defined benefit schemes. This is the real salt in the wound of this 'levy'.
 
This pension levy is an absolute disgrace.

As we all know, most defined benefit pension schemes are in massive deficit and simply cannot afford the tax. In order to pay it, the benefits payable to members is reduced. Of course, this doesn't effect public sector pensions as there is no pension fund to tax!

Liam is right, how many jobs has this tax created and what are they in? What does this tax generate each year? €500m? In 4 years, they'll have €2bn from people's pension funds. That should have created a lot of jobs.


Steven
www.bluewaterfp.ie
 
Hello,

Pension funds are easy targets ... hence we've not seen the last of this form of taxation, from either the current or future Governments, in my personal view.

Obviously, past experience coupled with the future risk of further "levies" being applied discourages people from saving via pensions for their retirements - hence hitting both the pension industry now and the population as they get older & by extension, the State because as people get older if they do not have sufficient provisions they become a burden on the State.

A very short sighted approach but the Government won't care as they will all have retired and will probably collect very nice pensions which tax payers continue to fund !

The pension industry should be a very strong, powerful and influential lobby group so why they have alllowed this situation to exist so long is a mystery to me. They could easily rally support from the public at large and apply pressure on the Government so why not act - I just don't understand this ?
 
At the time of the introduction of the levy, the threat was to reduce tax relief on pension contributions to 20% which would have destroyed the pensions market...as well as putting a lot of people out of work and making the pensions crises that is waiting us down the road even bigger.

The fact is, this current government are doing their damnest to stop people saving and get them to spend. It is an extremely short sighted and unbalanced approach to getting this country back on its feet.

The fact is, they are only looking to the next election and they couldn't care less what happens after that. They are all at the end of their careers anyway and they have their pensions (Enda having a teachers pension too despite not teaching for 39 years - that's another thing that he should have been hammered on).


Steven
www.bluewaterfp.ie
 
A very short sighted approach but the Government won't care as they will all have retired and will probably collect very nice pensions which tax payers continue to fund !
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I think this is beyond just government. Add senior civil servants who probably pushed for it and the current old boys in Senate and Dail. Irish solution etc.
 
Not good when all the thread posters are singing off the one sheet!

Any views on what can be done?

What I am doing is mailing my local Fine Gael TD , Joe Mc Hugh and asking him to read AAM,s thread.
 
Beat you to it Gerry. I got on to Olivia Mitchell and Shane Ross yesterday. Olivia got back to me today (I don't expect a response from Ross, he never does).

She had put a Dail question to the Minister which I have pasted below:


DÁIL QUESTION

To ask the Minister for Finance if he will confirm that the levy on defined contribution pensions, originally introduced to fund job creation measures, will not become a funding stream to subsidise defined benefit pensions in deficit in view of the fact that defined contribution schemes are in many cases comprised entirely of the savers personal savings; and if he will make a statement on the matter.

* For WRITTEN answer on Tuesday, 26th November, 2013.

Ref No: 50555/13

REPLY

Minister for Finance ( Mr Noonan) : I announced in my recent Budget speech that the 0.6% Pension Fund Levy introduced to fund the Jobs Initiative in 2011 will be abolished from the 31st of December 2014. I am, however, introducing an additional levy on pension funds at 0.15%. This additional levy within the existing legal framework will apply to pension fund assets in 2014 and 2015. I am doing this to continue to help fund the Jobs Initiative, including the continuation of the reduced 9% VAT rate detailed below and to make provision for potential State liabilities which may emerge from pre-existing or future pension fund difficulties.

The revenues arising to the Exchequer from the levy are, in common with Exchequer revenues generally, not hypothecated or set aside to meet any particular item of expenditure or liability but have been used to help fund the various measures introduced by the Jobs Initiative. One of the very significant and successful measures introduced by the Jobs Initiative – the reduced VAT rate of 9% on tourism and certain other services – was due to end this year. In my Budget speech, I announced the continuation of the reduced 9% VAT
rate. I also announced that the Air Travel Tax is being reduced to zero with effect from 1 April 2014. The combined cost of these initiatives is estimated at close to €400 million in a full year.

The extent of the potential State liabilities from the pre-existing or future pension fund difficulties is a matter primarily for my colleague the Minister for Social Protection. However, I can say that agreement has been secured for these liabilities to be met by the Exchequer, where they arise. As I have already indicated, however, the proceeds from the levy that accrue to the Exchequer are not set aside in the manner suggested in the question
and expenditure decisions on the use of those and other funds will be made as they arise in the normal way.

______________________________________________________

In order words, we are pumping €400m into these "job initiatives" each year but we are not monitoring how successful they are. What kind of clowns have we got in charge that will spend that kind of money and not monitor whether it is a success or not? Every penny I spend on marketing is recorded as is the return that I get from it. If it is not successful, I bin it and spend it on other methods.

Even without results, the reduction in VAT is geared towards retail and hospitality sectors; low paid jobs. Is this the route they want to take in getting Ireland back on its feet? The tax would be more palatable if they announced that they were spending the money on training people in IT or R&D, areas that create highly skilled, well paid jobs that will attract foreign investment into the country.


Steven
www.bluewaterfp.ie
 
Expropriation of personal property, the abuse of the citizen for the glorification of the state. What oppressive regime does that remind me of ?
 
SBarrett said:
______________________________________________________

In order words, we are pumping €400m into these "job initiatives" each year but we are not monitoring how successful they are. What kind of clowns have we got in charge that will spend that kind of money and not monitor whether it is a success or not? Every penny I spend on marketing is recorded as is the return that I get from it. If it is not successful, I bin it and spend it on other methods.

Even without results, the reduction in VAT is geared towards retail and hospitality sectors; low paid jobs. Is this the route they want to take in getting Ireland back on its feet? The tax would be more palatable if they announced that they were spending the money on training people in IT or R&D, areas that create highly skilled, well paid jobs that will attract foreign investment into the country.


Steven
www.bluewaterfp.ie
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Unfortunately value for money is one of the areas the the public service seem unable to do along with transparency and accountability.
 
SBarrett said:
In order words, we are pumping €400m into these "job initiatives" each year but we are not monitoring how successful they are. What kind of clowns have we got in charge that will spend that kind of money and not monitor whether it is a success or not? Every penny I spend on marketing is recorded as is the return that I get from it. If it is not successful, I bin it and spend it on other methods.

Steven
www.bluewaterfp.ie
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How hard did you look?
[broken link removed]

bstop said:
Expropriation of personal property, the abuse of the citizen for the glorification of the state. What oppressive regime does that remind me of ?
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Oooh, maybe the infamously oppressive Swiss? Or the damned oppressive Norwegians? Or possibly the arrogant and dismissively oppressive French?

http://en.wikipedia.org/wiki/Wealth_tax#Existing_net_wealth.2Fworth_taxes
TRS30 said:
Unfortunately value for money is one of the areas the the public service seem unable to do along with transparency and accountability.
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Yawn......
 
SBarrett said:
When I got that response from the Minister for Finance I didn't see a need for further research.

In that document, does it say how many jobs were created directly from the jobs initiative?
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So perhaps your "What kind of clowns have we got in charge that will spend that kind of money and not monitor whether it is a success or not? " was just a tad unjustified so?

SBarrett said:
In that document, does it say how many jobs were created directly from the jobs initiative?
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Dunno, haven't read it - it's your issue, not my issue.
 
RainyDay said:
So perhaps your "What kind of clowns have we got in charge that will spend that kind of money and not monitor whether it is a success or not? " was just a tad unjustified so?



Dunno, haven't read it - it's your issue, not my issue.
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Maybe you should read it!

It is nothing more than a marketing brochure saying nothing; here's all the things that we said we are going to do to create jobs and which ones we have completed. Nothing about how much has been spent or how many jobs have been created. Unless.

If this is you evidence of monitoring of €400million and cost benefit analysis to defend the public service then Yawn indeed.......
 
TRS30 said:
Maybe you should read it!

It is nothing more than a marketing brochure saying nothing; here's all the things that we said we are going to do to create jobs and which ones we have completed. Nothing about how much has been spent or how many jobs have been created. Unless.

If this is you evidence of monitoring of €400million and cost benefit analysis to defend the public service then Yawn indeed.......
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Like I said, it's not my issue. You may well be right on your conclusions about this paper.

But interestingly enough, your conclusion (and SBarrett's initial conclusion) that this proves that there is no monitoring/evaluation is just slightly flawed. If you want to know what kind of evaluation/monitoring is happening, try speaking to someone who knows. Maybe someone in that Dept, or maybe someone in Richard Bruton's office. I know it's easier to rush into the usual AAM public sector bashing, but in all fairness, make a phone call before you rush to judgement.

It is interesting to see the faux outrage at the idea of wealth taxes or asset taxes, particularly on assets that were built up largely through tax relief. If the pensions industry continues to offer value for money to clients, it will continue to prosper. If the main value of the industry is to harness tax relief, then it is on a slippery slope.
 
RainyDay said:
It is interesting to see the faux outrage at the idea of wealth taxes or asset taxes, particularly on assets that were built up largely through tax relief. If the pensions industry continues to offer value for money to clients, it will continue to prosper. If the main value of the industry is to harness tax relief, then it is on a slippery slope.
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Why on earth are you comparing this levy to a wealth tax? Lets take France and their so called wealth tax. First off, France like I think every other country in Europe allow tax relief on pension contributions. It is in fact EU policy to encourage people to save for their furture to meet future demographic issues. Secondly, France like the majority of Countries do not tax pension fund investment gains. I think one or two Countries might but not sure of the details. France like Ireland does not tax the fund at the end but will tax annuities arrising out of the funds as income.
This wealth tax that you are talking about excludes pension funds except in a minority of cases. It also doesn't apply if your wealth is less than €1.3m or something. They also allow you to write your mortgage outstanding off against your property so as you can see this wealth tax does not impact on the vast majority of French citizens.

You seem to have a big bee in your bonnet about tax relief and pensions. If the Government felt the same way, they should have changed the tax relief on it. They didn't. They didn't even say we are putting a levy on contributions made since people are benefiting from tax relief on those contributions. They instead put a levy on the entire value of the fund. Therefore they are not just taxing the element of the contribution that came from tax relief, they are taxing the contribution made out of my own pocket and they are also taxing any investment gains made by the fund. That is grossly unfair.
 
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