IRELAND - A member of the Irish parliament has called for a 50% tax on asset management fees as an alternative to the recently unveiled pensions levy.

Speaking in the Dáil during Leaders' Questions, independent TD Shane Ross criticised that the pensions levy, estimated to raise €2bn over its lifetime, targeted the wrong part of the industry.

Ross argued the proposals hit those who contributed to a pension fund, rather than the groups "milking the industry", with Taoiseach Enda Kenny admitting the proposals had "merit".
 
"The pensions industry is a goldmine, a gravy train for a large number of people who perhaps ought to be taxed," Ross said.

"In view of the fact that a whole industry is looting pensioners and benefiting from their contributions, did the government consider putting a cap on pension fund fees - in other words, charges for managers - and then putting a 50% tax on them?"

The Taoiseach was quick to defend the proposed levy of 0.6%, which will only target private sector rather than public sector schemes, noting it would only amount to a "modest" 2.4% over its four years.

Kenny added that alternatives to the levy could be discussed in future and indicated that the government would look at reducing pension fund administration fees down to a level seen in the UK, thereby reducing the income generated for fund managers.

He conceded that there "may be some merit" in Deputy Shane Ross's point about an alternative levy.

The measure later received the backing of independent TD Thomas Pringle, who said the proposal was "fairer" than the pensions levy, with the potential to raise equal revenue.

Pringle added: "It will grate with the people who are constantly being told about the pensions time bomb and encouraged to contribute more and more to their pension funds to have the state levy these funds even at a rate as low as 2.5% for the lifetime of the tax."

The levy has been heavily criticised by the industry, with Mercer calling it a "smash-and-grab" approach likely to damage the industry.

Topics