The government needs to fully account for how the €1.9 billion raid of private pension savings was used after confirmation has been received from the Department of Finance that not all the money was used for the intended purpose, according to the Fianna Fáil Finance Spokesperson Michael McGrath TD.
Deputy McGrath commented: “In May 2011, the government announced that a 0.6% levy on private pension funds would be applied to fund the so called ‘Jobs Initiative’. The levy was to be collected for four years starting in 2011 and the proceeds were to be ring fenced to fund the measures in the ‘Jobs Initiative’.
“The imposition of the pension levy resulted in the pension benefits being cut for thousands of existing pensioners and the same fate awaits thousands more who have yet to reach pension age. The unprecedented raid of private pension savings was justified by government on the basis that all the money would go towards the ‘Jobs Initiative’.
“In response to a recent parliamentary I submitted, the numbers provided by the Minister for Finance indicated that €340m of the proceeds of the levy were not spent on jobs. Department officials are today acknowledging that somewhere between €200m and €240m of the pension levy proceeds have not been spent on jobs. This is simply not good enough. The government needs to provide a full account of how the pension levy proceeds have used.
“I am calling on the Minister for Finance to make a detailed statement accounting for how the €1.9bn pension levy has been used by government. Given that the government has broken its word on how the levy was to be used, all those affected by the levy will now want the Minister to confirm that the levy will end in 2014 as originally pledged.”
Please find below the response from Deputy McGrath’s parliamentary question and a summary of the numbers we have put together.
To ask the Minister for Finance if he will provide in tabular form, the costs incurred annually since 2011 for each aspect of the jobs initiative as announced; the revenue raised from measures to fund the scheme; and if he will make a statement on the matter.
– Michael McGrath.
* For WRITTEN answer on Tuesday, 24th September, 2013.
Ref No: 39556/13
Minister for Finance ( Mr Noonan) : The Jobs Initiative announced in 2011 included a range of Revenue and Expenditure Measures to support the protection of existing jobs and the creation of new ones.
Details of the revenue measures, as announced, are set out in the table below.
Yield/Cost € million
9% VAT rate
To support the tourism industry, a second reduced rate of VAT of 9% was introduced from 1st July 2011 under end December 2013
-120 in 2011
-350 in 2012 and 2013
-60 in 2014
Having the lower rate of PRSI until end-2013 on jobs that pay up to €356 per week.
-85 in 2011
-190 in 2012
-183 in 2013
-15 in 2014
Abolition of employer PRSI on share based remuneration
-9.5 in 2011
-17.7 per year thereafter
Pension Funds Levy
A levy of 0.6% on the market value of assets under management in pension funds and pension plans approved under Irish tax legislation.
+470 per year for 4 years
As a measure to fund the Jobs Initiative, a temporary 0.6% stamp duty levy on pension fund assets was introduced in the Finance (No.2) Act 2011. This was estimated to yield €470 million a year for 4 years. The Revenue Commissioners have advised me that receipts amounted to €463 million in 2011 and €483 million in 2012. This is broadly in line with the amounts anticipated to be collected in those years. There is no yield from the levy as yet in respect of 2013. The deadline date for payment of the levy in 2013 is 25 September next.
The Jobs Initiative also included a number of current and capital expenditure measures, among which there are a number of measures aimed at retraining the workforce. The details of the expenditure on these measures are a matter for my colleague the Minister for Public Reform and Expenditure, Brendan Howlin T.D.
The impact of the Jobs initiative can be seen by the increase in employment levels, particularly in the accommodation and food services sector. With regard to the training measures, my colleague the Minister for Social Protection, Joan Burton T.D., recently announced that the number of internships, originally planned at 5,000 has now exceeded 20,000.