Dáil Éireann Debate, Wednesday - 17 September 2014
69. Deputy Michael McGrath asked the Tánaiste and Minister for Social Protection the reason a holder of a personal retirement bond who was previously a member of a defined benefit scheme which was subsequently wound up is not entitled to invest in an approved retirement fund; and if she will make a statement on the matter. [33283/14]
View answerPersonal Retirement Bonds, otherwise known as Buy-out-Bonds (BoBs), are approved by the Revenue Commissioners on a generic basis under Chapter 1 of Part 30 of the Taxes Consolidation Act 1997. A BoB is a pension vehicle designed to receive transfer payments from occupational pension schemes as a consequence of a scheme member leaving service, the winding up of a scheme or of pension splitting in the context of a Pensions Adjustment Order. They are not savings vehicles in their own right. An individual with a BoB cannot make contributions to the BoB.
I understand that it has always been a condition of the approval of generic BoB policies that the benefits to be provided to an individual under such policies be subject to the same restrictions and conditions that applies to the occupational pension scheme from which the BoB originated. As you are aware the option of investing in an Approved Retirement Fund (ARF) is available to holders of a BoB where the originating scheme was a defined contribution scheme. Such an option is not available to holders of a BoB where the originating scheme was a defined benefit scheme.
There are fundamental differences between a defined contributions pension scheme and a defined benefit pension scheme. Any consideration of making the ARF option available to a holder of a Bob where the origination scheme was a defined benefit pension scheme would fundamentally change the defined benefit model and potentially impact both on the promised benefits to scheme members and on the funding standard. Such a proposal will be considered in the context of a review of personal pension vehicles with a view to rationalising provision in this area. I expect that this review will be undertaken in the near future.
