Government accused on pension levy

Fianna Fáil has accused the Government of raiding private pensions to boost State coffers and put a “gloss” on the exchequer figures.

According to yesterday’s exchequer returns, the Government’s controversial pension levy, introduced in May, generated €457 million, all of which was collected last month.

However, Fianna Fáil’s finance spokesman Michael McGrath claimed the Government was using the levy to make the exchequer figures look better to the tune of over €200 million.

He claimed the extra cost of the various measures contained in the Government’s job initiative was substantially less than the amount announced by Minister for Finance Michael Noonan back in May.

In particular, he claimed €124 million of the €164 million earmarked for a series of measures including the Government’s labour activation scheme and its retrofit energy programme was coming from budget reallocations, and that only an extra €40 million was actually being spent on the measures.

Mr McGrath said the actual cost of the additional measures in the jobs initiative would only amount €255 million.

“With the pension levy bringing in €457 million, the levy is improving the appearance of the exchequer figures by over €200 million in 2011,” he claimed.

However the Department of Finance disputed Mr McGrath claims, saying the Government clearly set out that the levy on pension funds was intended to raise €470 million in 2011 and each year until the end of 2014.

A spokeswoman said the jobs initiative document also stated that the measures to stimulate economic activity would cost €260 million in 2011 but higher in later years.

She said that over the four-year period, the revenue raised for the initiative and the costs of the initiative would balance as the stimulus measures cost more in a full year than the levy raises in a full year.

But Mr McGrath claimed the pension levy was "a grossly unfair imposition" on the savings of current and future pensioners.

“In addition, it is now clear the Government is using the pension levy to put a more positive gloss on tax revenue figures for 2011 by not spending all the money raised on the jobs initiative,” he added.