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Pension Fund Levy - Frequently Asked Questions

1. What is the pension fund levy?

In May of this year the Government announced the introduction of a compulsory levy on certain types of pension schemes. The levy aims to raise about €470 million each year to pay for a new jobs initiative to promote job creation in Ireland. The levy is intended to be a temporary one, beginning in 2011 and ending in 2014.

2. How much is the pension fund levy?

The pension fund levy will be 0.6% of the market value of your fund as at 30 June each year for the next four years. The total amount you will have to pay will depend on the market value of your fund on 30 June every year from 2011 to 2014 inclusive.

3. What policies are affected?

Not all pension schemes are affected by the levy.

The pension fund levy will apply to:

  • Occupational pension schemes
  • Personal retirement bonds
  • PRSAs (except 'vested' PRSAs - see below)
  • Personal pensions
  • Self-directed pensions
  • Deferred annuities (an annuity contract where the payment of income instalments has been delayed or 'deferred').

The levy will not apply to:

  • Approved Retirement Funds (ARFs)
  • Approved Minimum Retirement Funds (AMRFs)
  • 'Vested' PRSAs (a PRSA contract where a lump sum has been paid at retirement)
  • Annuities purchased from an insurance company.

4. How do I pay the levy?

You do not have to do anything. Canada Life will automatically deduct the relevant amount from your pension fund and pay it directly to Revenue on your behalf.

5. Can I choose not to pay the levy?

No. Canada Life must comply with all relevant laws and regulations and as such is required to deduct the correct amount of levy from your pension fund and pay it to Revenue on your behalf every year by the payment deadline of 25 September. Canada Life will always deduct all taxes and levies due as required by law.

6. Is the pension fund levy different to the 1% levy on life assurance premiums?

Since 01 August 2009 a 1% levy has been applied to all premiums paid into life assurance savings, investment and protection policies. However, the 1% levy does not currently apply to pension premiums and is not connected to the new pension fund levy.

7. Where can I find more information on the pension fund levy?

For further updates on the pension fund levy, please continue to check our website. You can also find more information on the Revenue website at www.revenue.ie.

For more information on your policy, talk to your Financial Advisor or contact the Canada Life Customer Services Team by phone on 1850 203 203, by email at customerservices@canadalife.ie or online by visiting www.canadalife.ie/customer-services.

8. Why should I keep paying into a pension?

With around one quarter of your life spent in retirement you want to make sure that you will have enough money to fund your retirement years. Your pension is still an extremely tax-efficient way of saving money for your retirement. Whatever type of pension you have, you can get three generous tax breaks (subject to certain limits depending on your individual circumstances):

  • Tax relief on money paid into your pension - You can get tax relief at your highest rate of tax on contributions you make into your pension.
  • Tax-free growth on your money - Your pension fund will grow tax-free each year and will not be subject to life assurance exit tax which means that you get the maximum benefit from increases in the value of your savings.
  • Tax-free lump sum when you retire - With many pension plans you can take part of your pension fund as a tax-free lump sum when you retire.

Please note that tax rules are subject to change and tax liabilities will vary from person to person.

9. Will Canada Life write to me in relation to the levy?

Time is required to programme and document the 0.6% levy changes into Canada Life systems. Once this has been done, Canada Life will write to all affected pension policyholders to let them know the value of their policy as at 30 June 2011 and the value of the levy that has been deducted.

10. Why should I invest in a Canada Life pension?

Our pension plans are straightforward and flexible and are designed to meet your changing needs. And with our reputation for financial strength, stability and our consistently high financial ratings from the independent rating agencies, when you start a pension plan with Canada Life you know that you are investing with the strongest life assurance group in Ireland.