Written Answers. - Social Welfare Benefits.
John V. Farrelly
Question:
362
Mr. Farrelly
asked the
Minister for Social, Community and Family Affairs
the reason a person working in another European country is not allowed to continue paying into a pension scheme in Ireland; if his attention has been drawn to the fact that the insurance companies dealing in these schemes are offering refunds to the individuals concerned which leaves them with no pension cover after a number of years; if he is in favour of allowing Irish people working in Europe to continue paying into a pension scheme in any country of their choice; and if he will make a statement on the matter.
[12203/98]
Generally membership of an occupational pension scheme is linked to a person's employment. Accordingly, if a person leaves his or her employment in Ireland to work in another European country he or she would not be entitled to pay into that scheme while working abroad. However if the person is posted to work for that company in another European country he/she may be allowed to continue accuring benefits under the Irish scheme subject to the rules of the particular scheme and to satisfying the requirements of the Revenue Commissioners.
Under the provisions of the Pensions Act, preservation of benefits related to service subsequent to 1 January 1991 is compulsory, subject to the member having completed at least five years qualifying service, at least two of which fall after 1 January 1991. Where there is mandatory preservation of benefits, refunds of contribution may only apply in respect of payments made prior to 1 January 1991. Payment of such refunds would also be subject to the rules of the particular scheme. Persons with personal pension policies, which relate to those in self employment or in non pensionable employment, are prohibited from paying premiums while abroad because they are obliged to have a source of income chargeable to Irish tax. The only refunds that could be payable to those persons would be in respect of premiums mistakenly made when abroad.
Generally, in relation to Irish people working both in Ireland itself and in Europe, I am in favour of maximum flexibility with regard to their occupational pensions, subject of course, to adequate safeguards being in place. In that regard I would specifically draw the Deputy's attention to two ongoing initiatives. First, there is a proposal at European Union level for a Council directive on safeguarding the supplementary pension rights of employed and self-employed persons moving within the European Union. This would,inter alia, provide for preservation of benefits, disclosure of information and payment of occupational pensions across borders for workers who move from one member state to another in relation to their occupational pension; it also provides for posted workers to be allowed stay in their occupational schemes at home and to be exempt from joining such a scheme in the country to which they are posted.
Second, there are the proposals in ‘Securing Retirement Income'. The report relating to the National Pensions Policy Initiative recently presented to me by the Pensions Board. Among the many recommendations the board makes is the introduction of a personal retirement savings account — PRSA — which they consider would facilitate a major simplification of the regulatory and legal structures that exist at present. This PRSA would not be directly linked to employment either at home or abroad and could deal with the situation referred to by the Deputy. The Government has accepted, in principle, the board's proposals regarding a PRSA and will give consideration to the proposals in this regard as part of its next legislative cycle. If the Deputy has a specific case in mind I would be happy to have the matter investigated if he would forward me the details.
