'Zero evidence' of higher Irish fees

PENSION PROVIDERS:PENSION PROVIDERS have dismissed suggestions that the Government should target industry fees rather than levying private pension funds.

Gerry Hassett of Irish Life said comments by Independent TD Shane Ross about the “swamp” of hidden fees charged by providers was an attempt to “shift the blame” to the industry.

“It’s a red herring,” he said.

“The idea that there is [a] sort of shelter or cocoon here is completely wrong,” he added. “Ireland is a very competitive market.” There was “zero evidence” to support assertions that pension fees in the UK are substantially lower than in Ireland.

The 0.6 per cent pension levy announced by the Government on Tuesday is expected to raise €470 million a year. Mr Hassett said this is “many multiples” of the total profit earned by the pensions industry each year. The idea that the industry could absorb that “pain” instead of workers is disingenuous.

Nigel Dunne, chief executive of Standard Life in Ireland, said the cost of pensions in Ireland and the UK are “extremely similar”. He added that since 2007, sales in the Irish pension industry have more than halved and continue to contract. “Our industry is being squeezed hard and it is highly unlikely to be able to absorb this levy.”

Frank O’Dwyer of the Irish Association of Investment Managers said he does not believe any of his members, which manage large institutional funds, are receiving annual fees that approach the 0.6 per cent levy.

One industry expert said it was difficult to say what the average pension charges are “across the board” because they differ significantly depending on the individual and the kind of scheme that they’re in.

“Large pension funds have the ability to keep charges really low purely because of the amount of money they’re investing,” he said. However, at an individual level, particularly for self-employed individuals, charges can be higher.

A number of people in the industry noted that a ceiling already applies to charges on standard Personal Retirement Savings Accounts. The annual management charge on these pension products cannot exceed 1 per cent, while the charge on contributions is capped at 5 per cent.

Tony Gilhawley, director of Technical Guidance, said the private pensions sector had already delivered annual savings of €333 million to the exchequer through previous reductions in tax relief.