Dáil Éireann Debate, Tuesday - 5 February 2013
262. Deputy Regina Doherty asked the Minister for Finance if consideration is to be given to index link the standard fund threshold on the proposed cap to tax relief for pension contributions that deliver incomes over €60,000; and if he will make a statement on the matter. [5426/13]
View answerBudget and Finance Act 2006 introduced a limit on the total capital value of pension benefits that an individual can draw down in their life-time from tax-relieved products where those benefits came into payment for the first time on or after 7 December 2005. The limit was introduced at a level of €5 million and is referred to in the legislation as the Standard Fund Threshold (SFT). A higher limit on the capital value of pension benefits may apply in certain circumstances and this limit is called the Personal Fund Threshold (PFT). The legislation contains provisions for the indexation of the SFT and PFT in line with an earnings adjustment factor at the discretion of the Minister for Finance. The thresholds were increased in both 2007 and 2008 such that, for example, the SFT was increased from its original level of €5 million to just over €5.418 million for 2008. No adjustment was made for 2009 and Budget and Finance Act 2010 reduced the SFT to its current level of €2.3 million.
In Budget 2013, I announced that changes to the SFT and other possible changes to give effect to the commitment in the Programme for Government to cap taxpayers’ subsidies for pension schemes which deliver pension income of more than €60,000 will be put in place in 2014.
I also announced that consultation on the specific changes required to the existing pension regime will continue with, among others, the pensions sector and the Departments of Public Expenditure and Reform and Social Protection. The future indexation or otherwise of the SFT will be considered as part of this process.
