Government urged to tackle those 'milking' pension funds

PENSION FUND administration costs should be investigated, Taoiseach Enda Kenny said, as Independent TD Shane Ross called for an inquiry into the “gold mine”, “gravy train” and “swamp” of pension fund management.

Mr Ross criticised the Government’s plan to impose a 0.6 per cent levy on pension funds for four years to generate €470 million a year for funding the jobs initiative.

Instead the Government should cap the fees that pension fund managers charge, and then impose a 50 per cent tax on those fees “in view of the fact that there is a whole industry looting pensions and benefiting from this”.

He said had the Government done that, it “would have certainly produced a figure very close to the €470 million which they’ve come up with as a jobs creation fund”.

Mr Kenny acknowledged there “may well be some merit” in the proposal, which he would refer to the Minister for Finance. However, he defended the Government’s approach.

“Contributors were well supported by tax concessions in the building up of these pension funds. This levy is on the funds,” he said, and would be temporary.

He said Mr Ross’s proposal could be dealt with by the Finance Committee and in the Dáil in the run-up to the 2012 budget.

The Independent TD described the pensions industry as a “gold mine, a gravy train for a large number of people”.

Yet “the Government has hit the contributors and the victims” of fund managers rather “than tackling those who are milking the pensions industry itself”.

Mr Ross described pension funds as “a swamp of hidden fees, upfront fees and riches for people who actually do not deliver to the people they’re milking” but who earn from €250 million to €500 million a year from Irish pensions.

The Taoiseach told Mr Ross: “You make a valid point about elements of swamps being associated with some of these industries, and I will transfer your request to the Minister for Finance. I do believe this is a matter that should be looked at.”

He said “the costs associated from an administration point of view by the pensions industry could certainly be reduced to something approaching those costs that apply in the UK, which are a fraction of what they are here”.

Earlier Fianna Fáil leader Micheál Martin called on Mr Kenny to disclose the “advice” the Government had received about the pension levy, warning that “a similar move in Britain ended up having a disastrous impact”.

The Taoiseach told him that “the advice is political judgment”.

He said “we could sit here and whinge and complain and wring our hands in desperation” but instead they had introduced a “very modest measure” that was “an expression of joined-up thinking about how to get our country moving”.

Sinn Féin leader Gerry Adams pointed to Fine Gael election claims it would create 100,000 jobs and 60,000 training places.

Mr Kenny said: “We are not in the business here of setting out boxes to say this will create 348 or 256 or 4,009 or whatever number of jobs”. It was “about confidence in a country and a Government that is demonstrating clear and decisive leadership”.