D-DAY FOR PENSION LEVY
Thursday is D-Day for anyone with a private pension because the overall value of pension funds will be announced, which in turn will determine the amount of money the government will expect to raise from its 0.6% levy.
The “temporary” levy is expected to raise around €470m a year over the next four years and the first payment is due on September 25. The Sunday Business Post reports the levy has turned the spotlight on the fees charged by pension funds and the government belief that the industry should be able to absorb at least some of the impact of the levy. Some firms are offering to pay the cost as a way of encouraging people to move their pensions to them.
One such company is SmartQuotes.ie, which is covering the cost of the levy for individuals who switch their business. Paddy Mahony, one of the founders of the company, is urging people to shop around for the best value when it comes to pension administration costs.
“People spend countless hours analysing the annual cost of their home and car insurance and may only save €50. However, by reviewing your pension, you could save hundreds and possibly thousands over the lifetime of your pension plan.”
However, the reality is that in most cases the levy will be paid by investors in private pension funds.
Meanwhile, any lingering hopes people may have had that the levy could be open to legal challenge, look to have been dashed, according to The Sunday Times.
Jerry Moriarty, the director of policy for the Irish Association of Pension Funds told the newspaper that while a formal decision had yet to be made; it was “very unlikely” an action would be pursued based on legal advice.
“We got legal advice but were told there didn’t seem to be a strong case,” he said. “The view was that it is hard to argue against the government’s ability to do anything it wants to raise taxes. There is a legal duty on trustees to pay the money, and if they don’t, they will rack up costs.”