Dáil Éireann debate -
Tuesday, 14 Mar 1995

Vol. 450 No. 6

Written Answers. - Occupational Prison Schemes.

Derek McDowell

Question:

60 Mr. D. McDowell asked the Minister for Finance if he has satisfied himself with the taxation regime which applies to pension funds; the nature of the consultation with representatives of such funds; the proposals, if any, he has to initiate further consultation or changes; and if he will make a statement on the matter. [5360/95]

Minister for Finance (Mr. Quinn)

In general the tax regime applying to funded occupational pension schemes in Ireland provides for (i) tax deductibility of pension contributions at both employer and employee level, (ii) no charge to tax on the investment income or capital gains of pensions funds, and (ii) a charge to tax on pension benefits paid.

I am satisfied that these tax arrangements have strongly influenced the development of occupational pension schemes over the years.

The objectives of these tax arrangements are threefold: first, they promote arrangements for the provision of income to employees in their retirement and protect their dependents in the event of their death, second, by encouraging the development of funded occupational pension schemes, they reduce the pressure on the Exchequer to provide retirement incomes, and thirdly, they encourage savings.

As regards consultations with the pension funds, the most recent series of consultations took place in the context of the initiative launched by my predecessor in the 1993 budget and now coming to fruition, to encourage pension funds to invest a small part of the resources under their control in venture and development capital. I have been informed that the previous Minister met with the pension funds' representative body, the Irish Association of Pension Funds, in the context of his initiative and that this was followed by a number of meetings between the Association and officials of my Department as the initiative was developed.

As regards the issue of further consultations or changes, more recently, preliminary consultations have taken place between officials of my Department and the Irish Association of Pension Funds on the matter of increasing the level of pension fund investment generally in the Irish economy. In this regard, I would say to the Deputy that while I welcome the success of the initiative on venture capital, I would like to see the pension fund sector develop its views on how this small start can be built upon so as to promote a greater level of investment here. It is my intention to pursue this matter with the pension funds over the next twelve months.