Article in Irish Independent: 1% PRSA Levy

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stuffit

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There's an article in today's Irish Independent by Charlie Weston

http://www.independent.ie/business/...ell-end--for-private--provisions-1707439.html


Pension levy will spell end for private provisions

" ... In the Budget it was decided to impose a 1pc levy on contributions to all life assurance products. The provision was passed by the Oireachtas last Tuesday night.
As PRSAs (Personal Retirement Savings Accounts) and AVCs (additional voluntary contributions) and defined contribution schemes are all issued by life companies, people who contribute to these pension products will now be penalised.

The new levy, which is set to be imposed from June 1, will mean contributions will now have 6pc deducted for a combination of charges and the new levy.
The levy will also be applied retrospectively, meaning that it will impact existing PRSAs, not just those taken out after the Budget. "



Can anyone confirm if this is correct?
 
At present it is correct. Lobby groups are trying to get the government to change stance on pension policies and only apply the levy to life assurance products rather than all products sold by life assurance companies.

Hopefully there will be a backtrack before it is implemented.
 
Strange - a few hours after the Budget speech, New Ireland issued a summary, saying...

"It would appear that the 1% levy will apply to all premiums received in respect of protection, savings, investment, pension term assurances, group risk schemes and PHI policies, but not to premiums received in respect of pension policies."

I've no idea as to whether New Ireland or Charlie Weston is wrong on this. I would have thought that the 1% levy wouldn't apply to pensions, as the speech separately suggested that there would be no changes to pensions until the Commission on Taxation had reported back.
 
Im beginning to wonder if there is any point at all in having a pension.
The government seem to want to screw us everywhere.

Used to be that pension contributions were the smartest thing you could do, but im convinced now that they will tax your pension so much that you might as well just keep your money now and take the state pension only.
 
PaddyBloggit said:
Does this affect Cornmarket's AVC product StevieC?
Click to expand...

Not sure 100% on this product. My guess is that it does though. But I think that the government will qualify it that pensions are not included.

Only sense it makes to have it is if the government want to use it as leverage with public service unions to show private sector taking a hit in their pensions too.
 
LDFerguson said:
Strange - a few hours after the Budget speech, New Ireland issued a summary, saying...

"It would appear that the 1% levy will apply to all premiums received in respect of protection, savings, investment, pension term assurances, group risk schemes and PHI policies, but not to premiums received in respect of pension policies."

I've no idea as to whether New Ireland or Charlie Weston is wrong on this. I would have thought that the 1% levy wouldn't apply to pensions, as the speech separately suggested that there would be no changes to pensions until the Commission on Taxation had reported back.
Click to expand...

I think the problem Liam is the way they worded it. They said products sold by life assurance providers without qualifying it, therefore implying pensions are included.

I agree with you though, I dont think they meant pensions and hopefully it will be clarified shortly. With the changes due June 1st, they have to give life offices enough time to change admin systems to reflect the changes so I would hazzard a guess that the life companies have been tipped off that pensions are not being included and hence New Irelands statement.
 
Just an update on this. Hibernian confirmed today that the 1% will be applied to pensions as things stand and that various lobby groups like the IIF are looking for it to be reconsidered.
 
So as things stand, if you're one of these people that pay a lump sum into a pension scheme each year, there's an argument in favour of paying it now rather than waiting until June 1st, to save yourself the 1% levy.
 
StevieC said:
Hibernian confirmed today that the 1% will be applied to pensions as things stand..
Click to expand...

Personally, I wouldn't pay too much attention to what Hibernian say. :(

This just doesn't add up. I would guess that the Minister meant to limit it to life asurance and gave no thought to the implications for pensions issued by life assurance companies. Of all the product that it might appy to, I think that a Standard PRSA would escape.

Otherwise, the Pensions Board will have to redefine what is meant by charges being capped and not being increased above the upper limits throughout the lifetime of a PRSA.
 
As things stand it applies to RAC's, annuity business and basically everything bar investment only segregated group pension business.

The result is the immediate worsening of the funding level for private sector DB plans (as annuities are instantly 1% more expensive)

Anyone transferring out of a pension plan will likely get hit so it will be a major transactional tax which will be a huge disincentive to people to get better value for money and keep deals competitive.

All this and people can hardly afford to contribute to their pension plans as things stand.

Also since there are a few non insured PRSAs they will have a major tax arbitrage advantage.


Clearly so badly thought through that it would be better for them to admit that they just made it up on the way into the Dail chamber.

FF govt = LOL
 
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