Pearse Doherty
Question:52. Deputy Pearse Doherty asked the Minister for Finance the plans for the Newbridge Credit Union building; and the way in which its contents will be valued. [49661/13]
View answerCredit Unions
Questions (52)
Written answers
It is expected that the freehold title of Newbridge Credit Union Limited’s premises will be sold to a third party in due course, with the benefit of all immovable fixtures and fittings. The sale proceeds generated, net of expenses, will be paid to the Resolution Fund given the Resolution Fund is the only remaining creditor of Newbridge Credit Union Limited following the transfer. The remaining movable fixtures and fittings of the premises have been transferred with all the other assets and liabilities, excluding the premises, to Permanent TSB.
Pension Provisions
Questions (53, 54, 55)
Terence Flanagan
Question:53. Deputy Terence Flanagan asked the Minister for Finance the reason early access to AVCs incurs a tax of 41% regardless of the tax circumstances of the recipient; and if he will make a statement on the matter. [49669/13]
View answerTerence Flanagan
Question:54. Deputy Terence Flanagan asked the Minister for Finance the reason he is limiting early access to pension funds to those with AVCs; if he has considered extending limited access to other funded pension savings so that those persons who own the money invested may have help in the present economic climate in a similar way where access is allowed for certain health and other reasons; his views on whether limiting access to a person’s own money is unconstitutional; and if he will make a statement on the matter. [49670/13]
View answerTerence Flanagan
Question:55. Deputy Terence Flanagan asked the Minister for Finance if his attention has been drawn to the fact that the Irish Brokers Association representing 70% of all pension contributions here, the Irish Association of Pension Funds, and IBEC are supportive of providing limited early access to all pension funds, not just to AVCs; and if he will make a statement on the matter. [49671/13]
View answerWritten answers
I propose to take Questions Nos. 53 to 55, inclusive, together.
These questions all relate to early or pre-retirement access to pension savings.
I am advised by the Revenue Commissioners that section 782A of the Taxes Consolidation Act 1997 provides members of occupational pension schemes with a once-off opportunity to access their Additional Voluntary Contributions (AVCs), pre-retirement. The option is available for a three year period from 27 March 2013, the date that the Finance Act 2013 was passed into law.
I am further advised by the Commissioners that payments under the AVC access provision are taxable at the individual’s marginal rate. In that regard, however, under the legislation the administrator is obliged to deduct tax at the higher rate of 41%, unless the administrator has received from Revenue a tax credit certificate in respect of the individual. It is advisable, therefore, that if an individual is not using up any, or all, of his or her tax rate band and tax credits (for example if the individual is unemployed or in low paying employment) that he or she arranges to have a tax credit certificate issued to the administrator before draw down of the AVC payment, as this will ensure that the amount of tax deducted more accurately reflects the individual’s circumstances. A tax credit certificate may be obtained from the individual’s local Revenue office and will indicate the tax rate band and tax credits, if any, appropriate to the AVC access payment.
Where an individual considers that too much tax has been deducted from an AVC access payment, the overpayment of tax will be refunded on review.
There are a number of reasons why, under existing policies, pre-retirement access to the main benefits from pension plans or schemes is not permitted, the principal one being that these arrangements (and the associated tax reliefs on contributions and pension fund growth) are designed to be long term savings vehicles based on the principle that the benefits will be “locked away” to help fund an adequate income in retirement.
The pre-retirement access to a portion of AVCs which I introduced in Budget and Finance Act 2013 is allowed on a tax-neutral basis – the contributions were tax-relieved at the individual’s marginal rate on the way in and are taxed at the individual’s marginal rate on withdrawal. The take-up of the measure to date has not been particularly significant. I would remind the Deputy, however, that this is a measure which was designed to enable rather than incentivise individuals to access part of their pension savings beyond their regular or compulsory pension contributions. It is important that individuals continue to provide for their retirement and, it would appear, most individuals with AVCs have to date decided to preserve their AVC pension savings. For these reasons, I have no plans to extend the measure beyond AVCs.
The broadening of the early access to AVCs provisions did not emerge as a significant issue in the various pre-Budget submissions that I received during my preparations for Budget 2014.
National Pensions Reserve Fund Administration
Questions (56)
Terence Flanagan
Question:56. Deputy Terence Flanagan asked the Minister for Finance the reason it is appropriate for the National Pensions Reserve Fund to be used as a source of current Government spending when persons are either denied or given very limited access to their pension fund arrangements; and if he will make a statement on the matter. [49673/13]
View answerWritten answers
The National Pensions Reserve Fund (NPRF) was established on 2 April 2001 under the National Pensions Reserve Fund Act 2000 for the purpose of meeting as much as possible of the cost to the Exchequer of social welfare pensions and public service pensions to be paid from the year 2025 until the year 2055, or such other year as may be specified by order.
The Government has decided to establish the Ireland Strategic Investment Fund (ISIF) which will absorb the NPRF. The discretionary fund of the NPRF, worth some €6.6 billion at end September 2013, will be channelled towards productive investment on commercial terms in the Irish economy.
It is envisaged that the ISIF will seek to leverage and maximise its resources by attracting private sector co-investment. I am conscious that it is important that a level of independence is maintained in order to attract that private sector co-investment. To do this, the fund will need to demonstrate clearly that it acts on a commercial basis, so that the very fact that it is prepared to finance a proposal will reassure other potential investors that the project is sound.
While the need for the State to provide for social welfare and public service pensions obligations has not abated, fostering economic activity and employment is currently a greater priority and this will in turn put the State in a better position to meet its pension obligations in the longer term.
Property Taxation Administration
Questions (57)
Patrick O'Donovan
Question:57. Deputy Patrick O'Donovan asked the Minister for Finance if a home owner with a mortgage under the repairs in lieu of rehousing scheme from the local authority should have been informed of their liability under the local property tax; if these owners have an exemption to the LPT; and if he will make a statement on the matter. [49689/13]
View answerWritten answers
The Finance (Local Property Tax) Act 2012 (as amended) provides that liability for Local Property Tax (LPT) will arise where a person owns a residential property on the liability date, which was 1 May 2013 for 2013 and for subsequent years 1 November in the preceding year. The liability date for 2014 is 1 November 2013.
I assume that the Deputy is referring to the “Improvement Works in Lieu of Local Authority Housing Scheme” which allows a local authority to improve or extend a privately owned house as an alternative to providing local authority housing. I am advised by the Revenue Commissioners that while the Act provides for a number of specific exemptions from the charge to LPT, there is no provision for an exemption for privately owned residential properties that have been improved or extended under this local authority scheme. These properties are therefore subject to LPT and the liable person in these instances is the owner of the property.
As I have previously indicated to the House, liable persons who did not receive a LPT1 Return from Revenue earlier this year must still self-assess the amount of LPT due, complete and file their LPT1 Return and pay the tax due. As the due date for filing a LPT1 Return for 2013 was 7 May 2013, the Commissioners recommend that liable persons who did not receive correspondence from Revenue should contact the LPT helpline on 1890 200 255 (mobile phone users can contact the helpline on 01 702 3049) to file a Return online. I would strongly encourage anyone who has not yet complied with their LPT obligations to contact the LPT Helpline and regularise their affairs as a matter of urgency.