Fund will act as important mechanism for future security of the movement
The Minister for Finance, Paschal Donohoe T.D., has signed into law the Credit Union Fund (Stabilisation) Levy regulations earlier this month.
Under the Regulations credit unions will be required to pay a stabilisation levy contribution in 2020. This stabilisation levy is an annual levy that will be used to build up a Stabilisation Fund for credit unions.
The size of the Stabilisation Fund and the length of time it will take to build it up is reviewed every three years, with the first of these reviews having taken place in October 2017. The outcome of the review was to reduce the rate of the levy (from 0.022% to 0.017%) while still meeting the original target of €30 million over a ten year period due to growth in assets for the sector. However, given the continued growth in credit union assets the Minister for Finance has now decided to reduce the levy rate from 0.017% to 0.0164% of total assets, for the levy period 1 October 2019 to 30 September 2020. The levy will continue to raise circa €3 million per annum and ultimately continue to build the fund to €30 million over the ten year period. The Minister for Finance has committed to a further review of the stabilisation levy next year before the introduction of the 2021 levy.
Minister Donohoe said: ‘The introduction of the Stabilisation scheme was one of the recommendations of the Commission on Credit Unions which also recommended that the scheme be funded by mandatory contributions from credit unions’.
“The target size for the Stabilisation Fund is €30 million to be built up over ten years. The size of the Fund and the length of time it will take to build it up will be reviewed every three years. On the basis of the results of these reviews any necessary adjustments can be made to the target size of the Fund and the number of years over which it should be built up.
“This Fund will act as an important stabilisation mechanism in times of need and it’s passing into law is to be welcomed as part of the future security of the credit union movement.”
The Credit Union Fund (Stabilisation) Levy Regulations, along with a Q&A are published on the Department of Finance website.
The Minister has made the Regulations under Section 59(3) of the Credit Union and Co-operation with Overseas Regulators Act 2012.
To be eligible for consideration for Stabilisation support, a credit union must have a regulatory reserve ratio equal to or greater than 7.5% of the credit union’s total assets and less than 10%, and must in the opinion of the Central Bank be viable as a credit union.
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