After showing improved figures following the battering pensions took at the hands of the stock market pension funds are under a new attack in the form of an Irish Government levy.
The new levy, which is being used to pay for the new jobs initiative, will see the National Pensions Reserve Fund raided and is leaving those approaching retirement a little uncomfortable.
The levy will see a 0.6% cut on pension fund assets, but such a cut translates to a 9% cut in pension income for the 66,000 individual members of the defined benefit schemes in existence.
Defined benefit schemes continue to pay workers pensions from the fund until their death, whilst defined contribution schemes work differently as they secure their workers retirement by purchasing annuities upon their retirement, guaranteeing their income for life.
Defined benefit schemes are likely to suffer even more as they have already had to reduce workers benefits, and increase their contributions in an attempt to make up the funding deficits caused by the stock market crash.
The levy also hits the income of pensioners, who are already receiving the payments, which will now reduce, and is being labelled us unfair as they simply have no way of topping up their income.
Eamon Timmins from Age Action Ireland claims that the move will cause “huge financial uncertainty for retired people who up to now had made financial plans based on defined, fixed income”.
Shockingly the government has responded by claiming they are only taking a little bit back, and added that it was ok as it was only a very small proportion of the tax relief they gained from pension contributions over the years.
By that logic, it would seem they could claim 1000 Euros off everyone in the country tomorrow, on the grounds that it’s only a fraction of the amount it cost to put Irish people through schooling, despite the fact these were advertised as free at the time. Worrying times indeed.
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