Contributions to supplementary private pension savings are tax-relieved, within limits, at an individual's marginal rate of income tax while the accrued income and gains on those savings are exempt from taxation. These arrangements apply on the basis that the pension benefits when taken at retirement will be subject to tax. In an arrangement of long standing, an individual can, on retirement at normal retirement age (usually between 60 and 65), draw down a retirement lump sum up to a maximum of 25% of the value of his or her pension fund or 1.5 times final salary, depending on the type of pension scheme, the options available and the individual's particular circumstances. The retirement lump sum is tax-free up to an overall life-time tax-free limit of €200,000.
My understanding of the question is that the Deputy is requesting an increase in the amount of retirement benefits that may be taken as a retirement lump sum. I have no plans at this time to increase the levels of retirement benefits that may be taken in this fashion. On the issue of flexibility, provisions in Finance Act 1999 introduced a considerable degree of flexibility and personal choice to certain categories of individuals in relation to the drawing down of benefits from their pension plans. These choices include the options to purchase an annuity, to receive the balance of the pension fund in cash (subject to tax, as appropriate), to invest in an approved retirement fund (ARF) or an Approved Minimum Retirement Fund (AMRF), subject to certain conditions.
Access to these flexible options was extended to all main benefits from retirement benefit schemes (other than Defined Benefit arrangements) in Budget and Finance Act 2011. The changes made in 2011 have particular relevance for ordinary members of occupational Defined Contribution pension schemes, as up to the passing of Finance Act 2011, the only option available to such individuals in respect of their main scheme benefits had been the purchase of a retirement annuity after taking the retirement lump sum. Subject to meeting the conditions, these individuals now have the choices referred to above. It should be borne in mind, however, that the option to invest in an ARF or AMRF as opposed to purchasing an annuity may not be appropriate for everyone.