Levy on private pension funds to end in 2015

The levy on private sector pension funds will disappear at the end of next year. The Minister for Finance, Michael Noonan, said the levy would be imposed at 0.15 per cent next year as planned but would not continue into 2016.

The previous 0.6 per cent levy will end as scheduled this year.

The move was welcomed by industry sources which had criticised the Minister last year for introducing the additional two-year 0.15 per cent charge, after previously stating that the original measure would last only four years.

But Mr Noonan was unapologetic in his speech yesterday.

"Without the pension levy, there would have been no VAT reduction [to 9 per cent on tourism services]. This is a fact," he said, adding that thousands of jobs had been created as a result and thousands of others had not been jeopardised.

“As a result of the overall improvement in the country’s finances, I am now in a position to continue the VAT reduction but I am also ending the 0.6 per cent pension levy at the end of 2014. The additional 0.15 per cent pension levy I introduced for 2014 and 2015 will expire at the end of 2015.”

The charge has delivered over €2 billion to date to the exchequer, including in excess of €700 million this year. It is expected to raise a further €135 million in 2015. That compares to around €550 million yield expected from the local property tax in 2014 and €300 million through the water charge next year.

"Pension schemes can now start the recovery process from this damaging tax,", said Peter Fahy at Eversheds. "The Government has work to do to restore trust with Irish pension scheme members."

Mercer partner Joyce Brennan also welcomed the end of what she classed as an "unfair" charge of pensions, but said the improved economic environment outline din the Budget meant that "now is the time to implement an auto-enrolment system to improve pension coverage across Ireland".