Vol. 455 No. 5
60 Mr. N. Ahern asked the Minister for Finance if he will make a statement on the practice of some employers with occupational pension schemes who deduct the social welfare retirement old age pension equivalent from their pension payments quoting the Finance Act, 1972, as authority; if the Act has been interpreted in the manner expected; if it has ever been tested in a court of law; and if the Social Partners have requested its removal. [12483/95]
As the Deputy is aware there is no legal obligation on employers to provide pension benefits for employees under an occupational pension scheme. An occupational pension scheme is a voluntary arrangement organised by an employer to provide pensions and/or other benefits to employees on retirement or to their surviving dependants on death. Recognising that employees have an entitlement to the social welfare old age (contributory) pension many occupational pension schemes, when being set up by employers, are integrated with the old age (contributory) pension where allowance is made for the basic social insurance pension payable to a fully qualified single contributor in setting the level of benefits provided under the occupational pension schemes. Such occupational pension schemes are established and funded on that basis. It is for the employer when setting up an occupational pension scheme to determine the level of benefits to be provided under the scheme.
In relation to the Finance Act, 1972, it is the appropriate legislation in respect of the tax treatment of occupational pension schemes set up by employers for their employees. Section 15 of the Act sets out the various conditions which must be satisfied before a scheme will receive Revenue approval for contributions to be tax deductible. One of the conditions is the maximum level of benefits that can be paid under an occupational pension scheme.
I am, however, informed by the Revenue Commissioners that pensioners can receive the maximum level of benefits allowable under Finance Act, 1972, from an occupational pension scheme, if the scheme provides such a level of benefits, and in addition receive the social welfare old age (contributory) pension, if the necessary social welfare contribution requirements are satisfied. Indeed, the Finance Act, 1972, makes no reference to taking social welfare pensions into account in determining the level of benefit payable under occupational pension schemes. Consequently, as the practice outlined in the question is not governed by the Finance Act, 1972, the remainder of the question is not relevant.
