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Irish Pension Group Attacks Fund Levy

August 2011 - Tax & Private Client. Legal Developments by Hassans.

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The Irish government's introduction of a pension fund levy could see pensioners facing a 10% cut in their annual payments, according to a trustee board campaigning against the tax.

The Trustees of the Tara Mines Pension Fund have sent 267 Tara Mines pensioners letters explaining the cost implications of the levy. The 0.6% tax, to be charged on all assets under management of funded pension schemes and personal pension plans established in Ireland, was introduced in May as part of the government's Jobs Initiative. It will fund measures such as changes to the pay-related social insurance system and value-added tax reductions targeted at the tourism sector. The levy will apply for four years, commencing this year, and raise a projected EUR470m (USD675m) annually.

The Tara pensioners have now been told that two options are available as a means for absorbing the costs. Either their pension payments will be slashed by 10% over the next four years, or they will face a permanent reduction of 2.5%, applicable for the remainder of their lives.

Commenting on the figures, Tara spokesman Tom Kelly said the levy was tantamount to the pillaging of pension funds. He argued that it will not create jobs, and that, were even a small proportion of Irish pension funds to be invested within Ireland itself, rather than abroad, a greater number of local jobs could be generated. Kelly even suggested an exemption from the levy for those funds investing around 5% of their capital in Ireland.

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