WHILE MEASURES in yesterday’s second Finance Bill were largely as expected, the imposition of the pension levy was again the subject of opposition and the enhancement of the RD tax credit regime was considered by some to have not gone far enough.

Munro O’Dwyer, a director in PwC’s Pension Solutions Group, said the measure to allow assets to be valued on either May 19th or January 1st, for 2011, was a plus, given that it enables pension administrators to choose the day with the lowest value in order to reduce the levy. However, he added that it had its own complications.

“It sounds like a good idea, but it’s quite an administrative effort,” he said, adding that making such deductions can be “significantly onerous”, particularly given the tight time-frame.

The first payment, of 0.3 per cent, must be made by July 25th of this year.

Michael Madden, a partner at Mercer, said it was unfortunate that the levy will discourage people from saving for their retirement.

Given that the levy is based on the market value of the pension fund – so in effect the more you put in, the more you will have to pay – it might dissuade people from saving into their pension over the next four years

“You might be better off waiting until the levy has run its course,” he said.

However, Patrick Cosgrave, a director with Deloitte Total Reward and Benefits, noted that some of the costs associated with the levy for pension scheme administrators may be balanced out by VAT changes at EU level, which could see VAT benefits backdated by up to four years.

“For a typical pension scheme, obtaining a four-year VAT rebate on management charges may well be sufficient to cover the cost of the levy for a year,” he said.

On the RD side, the move to make the tax-credit regime more flexible was welcomed.

“In the main this is a positive move for all companies as it has increased the maximum amount of cash refunds available to companies who cannot fully utilise the RD tax credit against their corporate tax,” said Ken Hardy, RD tax credit partner with KPMG, yesterday.

However, he expressed disappointment that the Bill did not introduce measures to make the regime more accessible to SMEs, adding that a move to a volume-based approach, and the acceleration of the refund period from three years to one year, would have been welcome.