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What is the 0.15% pension levy being spent on?

Fianna Fáil aren’t happy with the Government’s answer.

Image: nest egg via Shutterstock / photastic

THE GOVERNMENT HAS come under fire for a lack of clarity on how the controversial 0.15% levy on pension funds has been spent.

This charged was originally set at 0.6% in 2011, and an additional 0.15% was added in Budget 2014, which in total would raise roughly €820 million.

The Finance Minister announced in October that it will now be abolished, being reduced next year before being abolished in 2016.

The intention of the levy was to fund  efforts to boost the economy such as the the Jobs Initiative and a 9% rate of VAT for the tourism industry.

It was also “to make provision for potential State liabilities emerging from pre-existing or future pension fund difficulties”.

But where does it go now?

“The yield from the additional levy in these years forms part of general tax revenue of the Central Fund and is not hypothecated to any particular or specific item of expenditure,” Michael Noonan recently said, a response branded by Fianna Fáil as a’failure to provide any meaningful information on how it plans to spend the additional funds’.

The party’s finance spokesperson Michael McGrath said the lack of clarity further added to the sense that the Government’s pensions policy has continued to ‘drift’:

Last year the Government was forced to admit that a considerable amount of the funds raised from the original pension levy had not be spent as intended as the plan to scrap the air travel tax was long fingered.

“It was only under sustained pressure from Fianna Fáil that the Government was forced to admit that there was a considerable underspend of the pension levy on the items it was supposed to fund,” he added, “We are now facing a similar lack of clarity on the additional 0.15% levy.”

McGrath said many people paying into private pension funds would be eager to see where this money is spent, to ensure it “does not merely shore up the general government finances”.

Read: Good news if you have a private pension – the levy is on its way out >

Opinion: The pension levy has met its objectives… so why are we keeping it? >

About the author:

Nicky Ryan

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