The Irish Insurance Federation (IIF) today denounced Government plans to fund the Jobs Initiative by hitting private pension schemes. The IIF expressed its outrage at the attack on private pension savers and criticised the Government’s lack of foresight in imposing a 0.6% levy on private pension funds, which will take money directly from the retirement savings of ordinary workers. 

Mike Kemp, Chief Executive, IIF said: “Recent changes made sure that pensions are no longer a tax-shelter for higher earners, so this levy does not penalise those that are well off, but ordinary middle income earners. The raiding of private pension savings goes against the advances that have been made in recent years to encourage people to save for their retirement. We urge the Government to support the efforts of the million plus ordinary workers who have been saving for retirement instead of imposing a levy that will discourage pension saving.  There has been a well- recognised shortfall in pension savings and given the established demographic trends, it is in the longer-term interest of the State itself, as well as of individual citizens, to encourage private occupational pension provision.”

In a letter sent to the Minister for Finance, IIF highlighted the disproportionate burden being placed on the industry by way of this onerous levy, in addition to additional restrictions on tax-efficient pension savings already imposed in the last Budget and the proposal to reduce tax relief further as part of the National Recovery Plan. 

Mr Kemp said: “We welcome the Jobs Initiative and acknowledge the need to make a contribution to economic recovery.  Our members – and indeed the wider pensions industry – accept the need for the State to make significant fiscal adjustments in co-operation with our international partners, and that our industry needs to play its part in realising the goals of the National Recovery Plan (NRP). However, as part of the NRP the industry has been asked to contribute almost €1bn of the €15bn savings to be raised. This places a huge strain on the pensions industry and its customers.  We have been discussing alternative ways of raising funds with the Department of Finance and we urge the Government to look at the wider picture and consider the long-term policy implications before imposing unaffordable cumulative charges on the sector.”

Mr Kemp welcomed the invitation by Minister Noonan to meet and said he is keen to discuss both the practical implementation of the levy and the Government’s long-term policy on pensions.