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Pension levy in the longer run will erode confidence in saving for retirement and is therefore short-sighted given the demographic challenges that Ireland faces.
Mercer, pension and investment experts, expressed disappointment that the Government is going ahead with its proposal to impose a levy on pension funds. "There is cold comfort in the Minister for Finance's assurances that the levy will not be permanent. It is also wrong to portray pension funds as the recipients of massive tax reliefs. Tax relief is given on pension contributions, but members pay tax when they receive their benefits. Many of the people whose pensions will be lower as a result of the levy will also pay tax and universal social charges amounting to around half of those pensions" said Aisling Kennedy, Senior Consultant, Mercer.
Ms Kennedy noted that; "The key concern is that the levy is an extremely blunt instrument, that arbitrarily singles out pension savings as an easy target. Pension schemes and their members will be affected in very different ways depending on their circumstances. Of very serious concern is the implication for older members of defined contribution plans, whose pension funds are being plundered just as they approach retirement. In addition, defined benefit pension plans that are in deficit and whose long term survival is already in jeopardy are being penalised further". In the longer run, this measure will erode confidence in saving for retirement and is therefore short-sighted given the demographic challenges that Ireland faces.
Mercer is a leading global provider of consulting, outsourcing and investment services. Mercer works with clients to solve their most complex benefit and human capital issues, designing and helping manage health, retirement and other benefits. It is a leader in benefit outsourcing. Mercer’s investment services include investment consulting and investment management. Mercer’s 20,000 employees are based in more than 40 countries. The company is a wholly owned subsidiary of Marsh & McLennan Companies, Inc., which lists its stock (ticker symbol: MMC) on the New York, Chicago and London stock exchanges. For more information, visit www.mercer.com