Policy Change Essay. Critical Thinking Ca2 - Pension Fund Levy Ireland

Policy Change Essay. Critical Thinking CA2

Pension Fund Levy

A look at a policy change implemented by the government in order to raise funds for the jobs initiative. Issues for and against are discussed and also a personal insight into the policy.

In the present unstable and uncertain economy the current governments focus is on cutting costs and raising funds without majorly affecting taxes and social welfare payments. One of its commitments was the establishment of the jobs initiatives. The plan is part of an overall strategy of job creation, sustainable employment and the stimulation of the economy. However due to the current economic climate in our country the funding of such a programme was questionable until the suggestion and the now implementation of a policy change with regard the pension fund levy. A policy change is an action made by government on an issue that affects the public. The implementation of a policy to levy the private pension fund of Ireland in order to subsequently fund the jobs initiative will be discussed throughout this essay. The definition of the policy, who it affects and the opposition's opinion on the matter will all be looked at. Also the alternatives to this policy will be discussed as well as my own opinion. The reality of whether or not it could be a success will be dealt with.

The pension fund levy was signed into law on the 22 June 2011. The scheme will apply a 0.6% stamp duty or levy on the market value of assets in pension fund and pension plans. These include occupational pension schemes, retirement annuity contracts and personal retirement savings accounts. (www.revenue.ie). The scheme will continue for a four year period from 2011 to 2014. However it will not apply to non-residents or to funds that are in the process of being wound up. It is planned that this scheme will raise €470 million a year totalling €1.88 billion over the four year period.

The reasoning behind this scheme is to raise funds for the government's jobs initiative. It is believed that the jobs initiative will help Ireland return to economic growth. The pension fund levy is thought to provide much needed funding for the initiative. The government sees it as a means to raise funds without imposing further taxes on every citizen in the country. To implement tax hikes could act as a deterrent for those on a low wage to continue working. As it is the brainchild of the current government the major groups opposed to this policy are indeed the opposition and the trade unions. In favour of the scheme the government claims that it will fund the creation of jobs in Ireland during the economic crisis. It emphasises that it is only a part time measure of just four years. In the eyes of the government it is only a small charge and it means that everyone is paying