Tuesday, 27 May 2014

Questions (19)

Clare Daly

Question:

19. Deputy Clare Daly asked the Minister for Finance if he will revise tax reliefs for pensions in order to encourage the investment of funds here. [22225/14]

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Written answers (Question to Finance)

I assume that the intention behind the question is that Irish pension funds should be encouraged through the tax system to invest in assets in the State. The position from a tax perspective is that the investment income and gains of pension schemes and pension saving arrangements approved by the Revenue Commissioners are generally exempt from taxation while they remain in the scheme or arrangement. This tax exempt treatment of investment growth together with the exemption from tax on ongoing contributions paid into pension funds are intended to encourage individuals to provide themselves with an adequate income in retirement.

It is not clear from the question what changes to the current tax relief arrangements the Deputy has in mind. She might note, however, that trustees of pension schemes have a duty under trust law, the Pensions Act 1990, as amended, and Investment Regulations made under that Act to be prudent in the management of pension scheme assets having regard to the liabilities that must be met by the schemes and to structure the investment of those assets, accordingly. In essence, this means that pension trustees, in particular, and those to whom they may delegate the responsibility for managing pension scheme assets or pension savings, generally, must invest solely in the best interests of the beneficiaries of the scheme. Moreover, the general tax exemption for pension fund investment returns which I have described does not distort or influence decisions as between investments and I have no plans to change the tax relief system in a manner that would. In addition, changes to tax relief arrangements that would favour pension fund investment in Ireland over such investment in other EU States could give rise to compliance issues under EU law.