Q1. What are the principal features of the proposed pension fund levy scheme?• A stamp duty levy of 0.6% will be applied to the market value of assets under management in pension funds and pension plans approved under Irish tax legislation (occupational pension schemes, Retirement Annuity Contracts and Personal Retirement Savings Accounts).
• The value of the assets would be determined as at 1 January 2011, or on the last date of the accounting period ending in the twelve months preceding that date.
• The scheme will operate for a period of 4 years (2011 to 2014) with a view to raising yields of c. €470 million each year.
• The levy will not apply to the assets of pension funds in respect of the provision of retirement benefits to non-resident members.
• The levy will not apply to pension funds where the trustees have already passed a resolution (before 10 May 2011) to wind-up the fund and where the employer sponsors are insolvent and no longer in business.
• Legislative provision will have to be made to allow pension scheme trustees or administrators the option to adjust the benefits payable under pension schemes or plans.
• The chargeable persons for the levy will be the trustees or other persons (including insurance companies) having the management of the assets of the pension schemes or plans.
• The levy will be administered by the Revenue Commissioners. The levy will be payable in two tranches for each of the four years of its operation, including 2011.
Q.2 What pension products will be covered by the Pension Fund levy?• A stamp duty levy of 0.6% will be applied to the market value of assets under management in pension funds and pension plans approved under Irish tax legislation (occupational pension schemes, Retirement Annuity Contracts and Personal Retirement Savings Accounts).
• Full details of the pension fund levy will be included in the Finance (No. 2) Bill which is being published on Thursday 19th May 2011.
Q.3 Why is the Government introducing this levy?• This is a reasonable and targeted tax measure being introduced to fund the various measures set out in the Jobs Initiative. The country is facing an economic and unemployment crisis and the Jobs Initiative will help tackle that crisis.
• The levy is a relatively small charge on the significant assets of pension funds much of which are represented by investments outside of Ireland.
• The levy is for a temporary period only and pension funds are being asked to make a contribution to encourage economic growth in that period.
Q.4 How will this affect my pension and will it put an additional cost on employers?• How the pension fund levy will affect individual pensions will be a matter for individual pension scheme trustees and administrators.
• It is up to the trustees and administrators to decide whether and how the levy should be passed on and who should be impacted and to what extent, given the particular circumstances of the pension funds or pension plans for which they are responsible.
• How the pension fund levy will be paid will be a matter for individual pension scheme trustees and administrators. It is open to the pensions industry to decide how and whether to pass on the levy.
Q. 5 Are there any exclusions from the pension fund levy?• The levy will not apply to the assets of pension funds in respect of the provision of retirement benefits to non-resident members.
• The levy will not apply to pension funds that have already passed a resolution (before 10 May 2011) to wind-up a pension scheme and where the employer sponsors are insolvent and no longer in business.