Fianna Fáil Spokesperson on Finance Michael McGrath has warned that the government may break their promise for the second time to abolish the levy on private pension funds in next week’s budget.
Deputy McGrath stated, “In the summer of 2011, the government introduced the 0.6% levy on private pension funds and promised that the levy would last for four years and be abolished at the end of 2014. In last October’s budget, Minister Noonan broke that pledge. He actually increased the levy to 0.75% for 2014 and said it would be retained at a rate of 0.15% in 2015. As things stand, the levy is due to expire at the end of 2015. My sense is that the government sees the pension levy as a soft source of money and may well decide to keep it, despite the serious long term damage it is doing to people’s financial future.
“By the end of next year, the government will have taken a staggering €2.3 billion from the private pension savings of individuals. The government has taken this money from pension schemes already under the water without any regard for the impact on the scheme members relying on that money for their retirement. Let’s be clear – members of pension schemes will enjoy less pension benefits directly as a result of the levy. The government has calculated that because people don’t have access to their pension savings now, they are largely oblivious to this tax. The pension levy has been the most daring financial smash and grab by any government in the history of the State.
“In 2014 alone, the government has taken almost €700m from people’s private pension savings. If the government had taken this money from people’s bank accounts, there would understandably be uproar and marches on the street. The fear now is that government will decide to keep the levy in place, placing the financial future of thousands of pension scheme members at risk. This will be done so that the government can further its short-term political agenda and fulfil expectations it has itself built up as it moves into election mode.
“Just eight days away from the Budget, it seems to me the government may well decide that the political benefit from the proceeds of the pension levy outweigh the long term damage it is doing to people’s financial wellbeing. The thousands of families who are and will be affected by the pension levy need to make their views known to Fine Gael and Labour TDs over the next few days if they are to have any hope of influencing the government’s decision.”