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Perspectives

Finance (No.2) Bill 2013

Pensions

The Finance Bill confirms the budget announcement of an additional Pension Levy of 0.15% for both 2014 and 2015. This is on top of the existing Pension Levy of 0.6% for 2014.

The increase and time extension of the pension levy sends a negative signal for pension savers at a time where public policy has in most other respects been to broaden supplementary pension coverage. Pensions are taxable for the most part when they are ultimately paid out, so the levy results in a form of double taxation that adversely affects those prudent enough to have pension arrangements.

The levy is a tax that only impacts private sector pension savers and is a retrospective tax that has most impact on those closest to retirement who have built up larger pension entitlements over their working lifetimes. It is a tax on capital that bears no relation to income earned or unearned in the current tax year.

Notwithstanding the adverse nature of the pension levy, it must be still stressed that pension saving up to the levels allowable under the Standard Fund Threshold remains a particularly attractive means of long term saving, particularly when considered against the increased DIRT rates and the addition of PRSI liabilities on all unearned income for those under state pension age.

People

Shane McInerney

Senior Manager - Pensions

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