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Pension Provisions

Dáil Éireann Debate, Tuesday - 1 July 2014

Tuesday, 1 July 2014

Questions (138)

Robert Dowds

Question:

138. Deputy Robert Dowds asked the Minister for Finance if he will consider allowing a person to close their private pension account and use it to pay the outstanding balance on a mortgage; and if he will make a statement on the matter. [28263/14]

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Written answers

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.

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.

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. The measure is, however, 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 various reasons, I have no plans to extend pre-retirement access to pension savings beyond what is provided for in relation to AVCs.

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