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| Michael Noonan, finance minister. |
We have in the past highlighted how Michael Noonan, finance minister, due as
a former teacher turned politician to benefit from 3 public pensions linked to
current earnings, had targeted private pensions for a heist at a time when companies were
phasing out defined benefit (guaranteed payout) schemes.
We have also reported that
more than half of the private sector workforce has no occupational pension.
Last week, Standard Life, the life and pensions
company, said the recent Finance Bill pensions levy increase "is very
unfair on hard-pressed savers as the government reneges on its promise to
abolish it." The government announced an increase in the levy on private pension
savings from 0.6% in 2013 to 0.75% in 2014 in this year’s Finance Bill and a
further 0.15% levy in 2015.
“The taking of 0.6% of ordinary people’s hard earned pension pots for the past
three years has been bad enough, without rubbing salt into their wounds and
reneging on a promise,” said Jim Connolly, head of pensions, Standard Life.
Michael Noonan said in Budget 2012 and again at a
public forum earlier in 2013 to reiterate that he was going to abolish the 0.6%
levy at the end of 2013. “Ordinary savers would welcome certainty on pensions,
encouragement to save and the re-assurance of their continued tax efficiency,”
said Connolly
Standard Life noted that the government has deducted almost €1.5bn from private
pension savers in the last three years and now plans to deduct a further €675m
next year.
“It is unrealistic to think private pension savers who have already stumped up
over a billion in the past three years will pick up the tab for the failure of
private and public sector schemes. We think this is unfair and should finish in
2014 as promised,” said Connolly. “Pensions are still the most tax-efficient way
to save for your retirement,“ he said.
Eddie Hobbs, the financial consultant,
said on Friday in response to the Standard Life comment: "In 2011 the
pensions industry sat idly by, including its professional representatives on
very large remuneration packages and put their thumbs in their mouths. The
so-called Jobs Initiative funded by appropriating capital was announced. The
industry and life offices did nothing. I don’t mind saying it but I was the only
voice calling for action. That action, radio and print reviews, which was
specifically resisted by RTE current affairs, told consumers to instruct
Trustees that they’d no permission to pay the levy. Still the industry stood by.
When the Government reacted by threatening trustees with daily fines,
unprecedented in economic and legal history, the industry stood idly by.
When, outflanked consumers, wrote to the president to demand that the bill be
referred to the Supreme Court because it was not a taxing bill but an
appropriation of capital, the industry stood idly by. Instead the pensions
industry, fearful of the many ills it hides including high costs, lousy
management and slow service preferred to engage in the background.
Over the crisis years, the establishment has created an apartheid pensions
model. Its pricing of accrued benefits in PS pension schemes using a 20 times
factor was a plain old-fashioned corrupt self-enrichment. Still you said
nothing.
The result now is that the Government and the Department of Finance sees private
pensions as a honey pot to be raided when tackling real issues becomes
difficult.
This is a pathetic circular, three years after the industry surrendered. The
Department of Finance will treat it with all the seriousness of being attacked
by a Telly Tubby."
Aileen Power of Standard Life directed the
media to two statements in pensions that the company had issued in 2011:
http://library.standardlife.ie/Press/2011/20111010GovCantJustifyCuttngRelief.pdf
http://library.standardlife.ie/Press/2011/2011_07_05_taxrelief.pdf
Finfacts, Nov 2012:
Irish
Economy: Pension fund charges are taking 17.4% of retirement savings in
occupational schemes
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