Fianna Fáil Spokesperson on Finance Michael McGrath has described the raiding of private pension funds for €140m today as a glaring example of the Government’s record of broken promises. This is the fifth year in which the Minister for Finance has dipped in to the pensions of tens of thousands of Irish citizens, bringing to over €2.3bn the amount taken from private pension funds.

Deputy McGrath commented: “The raid on private pensions will add to the difficulties of many pension schemes already struggling to pay the benefits pensioners are entitled to. Pension schemes, such as the Aer Lingus pension fund, whose members have already have their benefits slashed, will see their assets further depleted.

“There are 3 reasons I believe that the pension fund levy cannot be justified. Firstly, the extension of the pension fund levy into 2015 is a betrayal of the government’s consistent claim that it would a temporary four year levy to fund job creation and would expire at the end of 2014. It joins a long list of broken promises from preserving child benefit to not raising third level fees.

“Secondly, the levy on private pension funds took in €743m in 2014, €68m more than was anticipated at the start of the year. This brings the total raised from the levy in the last four years to over €2.2bn, a truly massive sum. The public finances generally have improved and the exchequer took in over €700m more in tax in the first five months of 2015 than predicted at budget time.

“Finally, pension funds are already under considerable pressure to meet members’ expectations due to low bond yields and longer life expectancy. The recent market volatility, related to uncertainties about Greece, has only added to the difficulties faced by pension trustees. Taking a further €140m from pension savings will undoubtedly result in reduced benefits in the years ahead. There will be no refund of the levy to schemes if markets fall in the months ahead.

“It is important to recognise that private pensions are not a luxury. They are the savings that hard-working individuals have carefully put away over the years so they can look after themselves in their old age rather than rely solely on the State. The government have been particularly harsh in their treatment of older citizens, by savaging the household benefits package, multiplying prescription charges and increasing DIRT tax. Given the manner in which State benefits for the elderly have been systematically eroded by this Government, there has never been a greater need than now for such a safety net. The levy on private pension funds is directly contrary to this aim.

“When the Minister for Finance performed his U-turn and decided to extend the levy, he claimed it would “make provision for potential State liabilities which may emerge from pre-existing or future pension fund difficulties”.  However, the levy is applied to both Defined Benefit and Defined Contribution schemes. This underlines its unfairness as it will also hit defined contribution pension funds even though, by their nature, they cannot benefit from such a scheme. The Minister has also failed to state if any such liabilities have emerged.”