Proposed reforms to the second-pillar pension system in Ireland are unlikely to gain support – unless the Irish government abolishes the 0.15% pensions levy, according to the Irish Association of Pension Funds (IAPF).

In its submission to the Department of Finance ahead of next month's Budget, the IAPF said that more than €2bn had been taken from private sector pension funds since the introduction of the 0.6% levy in 2011.

A second levy of 0.15% was introduced last year, which was intended to pre-fund the state's liability with company insolvencies requiring cash injections into underfunded schemes, but the IAPF says the funds have yet to be specifically earmarked for such payments.

An excerpt from the IAPF submission says: "It is completely unfair to ask those with defined contribution retirement savings to make a contribution to state liabilities in defined benefit schemes."

Jerry Moriarty, chief executive of the IAPF, also pointed out exemption for the unfunded public pension schemes, which enjoy a greater level of protection with state-backing.

The consultation also raised questions about the Government's ability to roll out a new compulsory or semi-compulsory supplementary scheme, highlighted by minister for social protection Joan Burton as a way of increasing second-pillar coverage, as long as the current levy remains in place.

It said: "It will be extremely difficult to persuade people of the benefits of pension savings if the Government does not discontinue the levy. People need to know their savings are secure. The experience of the levy and the fate of the National Pensions Reserve Fund do not indicate that pension savings in Ireland are secure."

The association also urged the Government to set up a working group of government and industry representatives to discuss how the pension system's tax and regulatory arrangements could be simplified. It said the "many anomalies" currently in place needed to be addressed.

Jerry Moriarty added that he was also uncertain whether the proposed Pensions Council – the body set the advise the Department of Social Protection on regulatory issues – could take on some of these tasks.

Membership has yet to be announced and Moriarty said he was unsure whether it should be seen as part of its role.

"If we are going to add another layer to it, we really need to sort out any anomalies there at the beginning, rather than complicate it further," he said.

First published: 02.10.14

lindsay.sharman@wilmington.co.uk