Pensions Levy abolished as promised - then reintroduced

What a sadly predictable U-turn.

Pensions Levy abolished.

"I will, however, introduce an additional levy on penson funds at 0.15%."

This, despite an assurance in last year's Budget speech that this unfair levy would be abolished as promised.

So politicians lie. Why should I be surprised? :mad:

So they're only robbing a little bit now?

PaddyW said:

So they're only robbing a little bit now?

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Yup - I guess we're supposed to be grateful.

It's not just the unfair principle of this that galls me, it's the brazenness of the complete U-turn.

His exact words in December 2012 were "The Pension Levy announced as part of the Jobs Initiative will not be renewed after 2014."

I wonder do they have any idea of the effects of compounding? With 20 years to retirement, the last 4 years at 0.6% plus another 20 at 'only' (sure it's only teeny tiny...) 0.15% will talk 5.3% off fund value. So effectively a surcharge tax of 5.3% on retirement income.

I agree re the brazenness, it's sickening.

It was just too easy a target to give up on - and raises so much money with no 'current spending' impact.

In fact it has the double benefit of raising cash from the raid on pension funds plus discourages people from investing in pensions which makes them more likely to spend money today than save for the future.

And then upping DIRT in case you decide to save yourself rather than 'invest' into a pension

Note to Brendan/mods:

I think stating the levy is increasing to 0.75% for next year is incorrect (in announcements forum). Have to post this here as can't comment on other forum. It stays at 0.6% next year and will be 0.15% thereafter.

I agree with above comments...this is a terrible attack on hard pressed private sector workers whose pensions are already nowhere near adequate to provide for future retirement.

The question now is where the hell is the best place to save for your future? They're raiding our pension funds and the DIRT increase makes savings less viable. Where to now?

Michael McGrath calling it a "three card trick"

Pointing out that speech and the documentation conflict.

It is pretty shocking. They still haven't shown what jobs this levy has created.

from RTE's website:

"0.6% pensions levy increased to 0.75% and extended until end of 2014"

This is getting confusing!!

His speech does imply an overlap in 2014

"I wish to confirm that contributions to pension schemes will continue to attract income tax relief at the marginal rate of tax. I wish to confirm that the 0.6% Pension Levy introduced to fund the Jobs Initiative in 2011 will be abolished from the 31st of December 2014. I will however, introduce an additional levy on pension funds at 0.15%. I am doing this to continue to help fund the Jobs Initiative and to make provision for potential State liabilities which may emerge from pre-existing or future pension fund difficulties. The levy within the existing legal framework will apply to pension fund assets in 2014 and 2015."

So if the 0.6% ends on 31 December 2014 and the new levy applies 'to fund assets in 2014 and 2015", that does imply 0.75% in 2014. I hope that's not the intention.

orka said:

His speech does imply an overlap in 2014

"I wish to confirm that contributions to pension schemes will continue to attract income tax relief at the marginal rate of tax. I wish to confirm that the 0.6% Pension Levy introduced to fund the Jobs Initiative in 2011 will be abolished from the 31st of December 2014. I will however, introduce an additional levy on pension funds at 0.15%. I am doing this to continue to help fund the Jobs Initiative and to make provision for potential State liabilities which may emerge from pre-existing or future pension fund difficulties. The levy within the existing legal framework will apply to pension fund assets in 2014 and 2015."

So if the 0.6% ends on 31 December 2014 and the new levy applies 'to fund assets in 2014 and 2015", that does imply 0.75% in 2014. I hope that's not the intention.

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On reading it again, it does seem that way. I'm sickened by this. They want us to save for our pensions so as not to be a bigger burden on state finances. But then when you do try to be smart by saving for your future, they go and penalize you for doing it!

This is what the Annex says

Pension Fund Levy
The 0.6% stamp duty levy on pension fund assets is to increase to 0.75% for the year 2014. The levy will be reduced to 0.15% for 2015.

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Call it cancellation, Dicontinuation or whatever, but you will be paying 0.75% next year and, 0.15% in 2015. However, I would expect it to be increased again in 2015. Or maybe discontinued and replaced.

This is the most inequitable thing I can ever remember a government doing.

Aside from the theft of people's existing capital AND Noonan's bare-faced lying last December when he said it would be abolished after 2014, let's not forget that less than a month ago it was reported that the proceeds of the current smash and grab levy were not even fully spent.

I agree, Purple - this pilfering of private assets is plain wrong. It almost
sounds unconstitutional. From an optics view point, would they be
better off reducing the tax relief avaiable on pension contributions? That's not a rhetorical
question.

This new Pension Levy is just unfair. The 0.6% was bad enough and we were promised it would cease in 2014. But to bring in another 0.15% and to have a double hit in 2014 is scandalous.
Remember that this tax only applies to funded pension schemes. So the effect is to reduce the benefits of funded schemes. This tax will not impact members of unfunded Civil Service schemes. And remember that many funded Defined Benefit schemes are grossly underfunded. Therefore many members will not get their full expected benefit and now they will be hit further. Meanwhile Civil Service members (whose schemes are entirely unfunded) will get their full entitlement (because their pensions are simply a first charge against all Govt tax receipts).
And to make matters worse, the new multiplier applicable to Defined Benefit pensions (so as to calculate whether the capitalised value exceeds €2m) will only apply to benefits accrued after Jan 2014. So all the senior mandarins in the Dept of Finance (and other Depts) will still not be impacted by such a feeble attempt to reasonably value their gold plated pensions. So whilst the new €60,000 maximum will apply to all Defined Contribution schemes, in reality members of DB schemes (expected to retire in the coming few year) will still be able to accrue pensions of almost €90,000 without being hit with the fund cap tax. Grossly unfair.

New 41% rate
Sorry if a stupid question: but from RTE:

New 41% rate for DIRT and exit tax applying to life assurance policies and investment funds - was this zero? Do we lose 41% of payout?