Cantillon: Apathy allows Finance Minister to raid pension schemes
Until people take an interest, retirement funds will remain an easy target
Pensioners are expressing their wrath at James Reilly’s cuts but Michael Noonan has seen little reaction to his plans to raid pension funds yet again. Photograph: Eric Luke / THE IRISH TIMES
Pensions are a turn-off. It’s simple, really. In a world where most people are fully engaged in addressing the immediate issues that confront them on a day-to-day basis, it is a real struggle to consider something which will not impact them for up to 40 years.
But that apathy has served the Minister for Finance well. Minister for Health James Reilly feels the wrath of pensioners and others over medical card probity tests, tax on private health insurance and sharply increased prescription fees, but Mr Noonan has seen little reaction to his plans to raid pension funds yet again. As one seasoned political observer noted, while the industry raised its predictable hue and cry, there has been little or no political pressure inside or outside Leinster House to reconsider his surreptitious capital raising scheme tapping the retirement funds of private sector workers across the State.
And it’s not insignificant either. Figures provided by the Irish Association of Pension Funds (IAPF) show that, to date, the levy has brought in almost €1.5 billion for the Exchequer – €477 million in 2011, €485 million in 2012 and €517 million this year. The figures in the budget say the additional 0.15 per cent levy in 2014 will yield €135 million – on its own one of the largest single tax-raising measures in Budget 2014. On top of the 0.6 per cent levy already scheduled next year, the “tax” will yield €675 million.
“This is not a levy on the pensions industry - it’s a levy on people’s savings,” noted Jerry Moriarty, head of the IAPF.
And this smash and grab exercise is taking place at the very time that Minister for Social Protection Joan Burton is prioritising an examination of pension fund charges. Ironically, the Government’s measure will cost people far more than any charges – hidden or otherwise – imposed by fund managers.
The bottom line is that until people begin to take a personal interest in the money they are setting aside to fund their retirement, it will remain an easy target for Government. The Minister is betting that won’t happen and the evidence to date suggests he has little to fear.