Taoiseach says he will look at costs in pensions industry

FUNDS LEVY: TAOISEACH ENDA Kenny has defended the imposition of the pension fund levy, but offered to examine alternative ways…

FUNDS LEVY:TAOISEACH ENDA Kenny has defended the imposition of the pension fund levy, but offered to examine alternative ways of raising the money by cutting costs in the pensions industry.

Mr Kenny pledged to refer the issue to Minister for Finance Michael Noonan and an Oireachtas committee in advance of the next budget.

He was speaking in the Dáil in reply to Dublin South TD Shane Ross, who described the pensions industry as “a goldmine, a gravy train for a large number of people who perhaps ought to be taxed”.

Mr Ross said what the Government had done was to hit the contributors to the pensions industry rather than tackling those who were milking the industry for their own benefit.

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He said rough estimates were that fund managers, who consistently underperformed the market, were receiving between €250 million and €500 million per annum.

The Taoiseach said in reply that the levy on pension funds and the pensions industry was modest at 2.4 per cent over four years.

He added that the levy was a temporary measure to raise revenue to be specifically directed at sectors where employment could be created.

“Alternatives to this levy, as raised by Deputy Shane Ross, are a matter that can be discussed at the Finance Committee and in the Dáil when the Comprehensive Expenditure Review is completed and preparations begin for the 2012 budget,” said the Taoiseach.

He added that the 2012 budgetary process would be very different to the past, and TDs would have an opportunity to give their views well in advance.

“There may be some merit in Deputy Shane Ross’s point about an alternative levy. The Government, however, took its decision in this case to impose the levy in this way for a temporary period,” he said.

The Taoiseach described Mr Ross’s suggestion as “constructive”, and pointed out that he had already emphasised the need to reduce the administrative costs in the pensions industry to the level applied in the UK.

“I will transfer the deputy’s request to the Minister for Finance. It is a matter which should be examined.

“The House has a duty to reflect on the current structures of the pension funds industry, to see if they can be improved and if they can be of better benefit to their contributors.

“Pension contributors were well supported by tax concessions in the building up of these funds. The Government’s levy is on the funds. There could be a reduction in the administrative costs associated with these funds and, consequently, the take by those in senior positions in the industry.”

Minister for Public Expenditure and Reform Brendan Howlin also defended the decision to impose the levy, but gave a commitment that it would not be increased or extended.

He said the Government was looking at ways to garner resources to create jobs with minimum impact on the real economy.

“People were able to put away significant sums of money in private pension pots with very generous tax breaks over the years,” said the Minister.

“It is reasonable that they be asked to make a contribution now to rebuilding our economy, and a modest contribution of 0.6 per cent.”