The key points to note in relation to the pension levy are:
a levy of 0.6% of the value of pension scheme assets (excluding contingent assets) will have to be paid on or before 25 September 2011 and annually thereafter for a further three years; insurance companies are responsible for the payment where the assets are held in an insurance contract and have the power to reduce benefits as if the levy were an expense; trustees/investment managers are jointly responsible for the levy in respect of assets which are not held in an insurance contract; trustees will seek reimbursement from the employer in most cases and it is likely the employer will request the trustee to reduce benefits in proportion to the levy in most cases - the outcome will depend on the circumstances of the scheme and the employer. Introduction
The Finance (No. 2) Act (the "Act") was signed into law on 22 June 2011 and introduces a four-year annual levy on private pension funds. The Government aims to raise approximately €470 million each year as part of its Jobs Initiative from a 0.6% levy on the assets of occupational pension schemes, Retirement Annuity Contracts and Personal Retirements Savings Accounts (except where under the RAC/PRSA the retirement lump sum has been paid and the annuity purchase deferred in which case the levy does not apply). The levy does not affect assets in insured annuities in payment, Approved Retirement Funds (ARFs) and Approved Minimum Retirement Funds (AMRFs) as they are not pension schemes for the purposes of the Act.
The levy is designed as a stamp duty on an asset statement which certain "chargeable persons" are required to deliver to the Revenue on an annual basis in each of 2011, 2012, 2013, and 2014. The amount of the stamp duty is 0.6% of the value of the assets (which includes debts i.e. outstanding contributions due but not contingent assets) held for the purposes of the scheme by the chargeable person.
The value of the assets is determined on 30 June in each year where the assets comprise an insurance contract and the chargeable person is the insurer (not the trustees).
For non-insurance contract assets the value of the assets is determined on 30 June or at the end of the previous scheme year ending in the 12 months immediately preceding 30 June for that year.
There is a degree of uncertainty in the legislation about responsibility for payment as it appears that each chargeable person must submit a statement (although...