JOAN BURTON’S PENSION LEVY WARNING
Joan Burton, the minister for social protection, warned minister for finance Michael Noonan the pension levy introduced to fund the government’s Jobs Initiative could “incentivise or force” some pension schemes to wind up in deficit, The Sunday Business Post reports.
Burton’s warning in a letter to Noonan obtained under the Freedom of Information Act was echoed by senior officials in the Department of Finance, who pointed to the funding deficits of up to €15 billion being faced by defined benefit schemes. She said the levy would have “long-term implications” for pensions’ policy and would be a disincentive to saving.
“This would ultimately increase state responsibility and lead to demands for greater state pension increases,” Burton advised.
She also queried the fairness of imposing the levy solely on private sector pensions, many of which faced serious funding deficits – a concern also raised by senior civil servants. Officials also correctly forecast the backlash from the pensions industry and private sector workers.
“Employers and employees do not have the resources to make additional contributions on the scale required to fund existing deficits,” a Department of Finance memo stated.
Noonan said he would take these concerns into account when drawing up the December budget.