A 1% Government levy on life assurance payments was introduced as part of the 2009 Finance Act. As a result, Irish Life must collect 1% of payments to customer’s savings plans from 01 February 2010 and investment plans from 01 March 2010.
This levy is collected by Irish Life and passed directly to the Revenue Commissioners. As an Irish Life customer you do not need to take any action, and the levy does not affect your entitlements under your plan.
1. What is the premium levy
The Minister for Finance announced the introduction of a 1% levy on life assurance payments as part of his budget speech in April 2009. Under the Finance Act 2009, life assurance payments paid into both new and existing plans on or after 01 August 2009 are subject to a 1% levy.
2. What types of plans does the Government levy apply to?
The levy applies to all the main policy types:
- protection (including group risk)
Irish Life implemented the Government levy for protection plans on the 01 August 2009. Protection plans include life cover, mortgage protection plans and plans which pay an amount on disability or the diagnosis of a specified illness.
As outlined above this levy was also introduced on Savings plans from the 01 February and on new investment plans from 22 March 2010.
There is already a premium levy on general insurance plans, e.g. car and home insurance. This was increased from 2% to 3% in the 2009 Finance Act.
3. How is the levy calculated?
The Government levy is calculated as 1% of the plan payment. It is important to note that the amount you pay is made up of two parts: (i) the plan payment, and (ii) the Government levy.
For example, if your current monthly savings or protection payment is €200 then an additional €2 will be collected, as follows:
|Current monthly payment:||€200|
|Government Levy: 1%:||€2|
|Total amount to be paid:||€202|
If you open a new investment plan, or wanted to top-up an existing investment plan, the amount you will need to pay must include both the payment amount and the 1% levy. There are two choices here:
If you know the total you want to pay, including the levy: Your total payment will be split into two parts, (i) the plan payment, and (ii) the levy.
|Total you want to pay:||€10,000|
|Plan payment= €10,000 / 1.01:||€9,900.99|
|Government Levy= €9,900.99 / 100:||€99.01|
If you know the amount you want to go towards your investment plan, excluding the levy: In this case, the levy will need to be added to your plan payment.
|Government Levy: 1%:||€100|
|Total amount to be paid:||€10,100|
In all cases, only the 'Plan payment' will go towards the plan and it is this amount which will appear in all your plan documentation.
4. How are Irish Life protection customers affected by the premium levy?
Irish Life has applied the 1% levy to all protection plans since 01 August 2009 and all savings plans from the 01 February 2010. The levy is also be applied on new investment payments and top-ups of existing investment plans from 01 March 2010.
If you want to know any more about the premium levy, please email firstname.lastname@example.org, contact your Financial Adviser or call our customer service team on 01 704 1010 and we will be happy to assist you.