Tuesday, 1 April 2014

Questions (168)

Michael Healy-Rae

Question:

168. Deputy Michael Healy-Rae asked the Minister for Finance his views on correspondence (details supplied) regarding private pensions; and if he will make a statement on the matter. [14964/14]

View answer

Written answers (Question to Finance)

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.  

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.