Dáil Éireann Debate, Wednesday - 2 December 2015
61. Deputy Pearse Doherty asked the Minister for Finance if he has given any consideration to allowing Irish persons who have emigrated for economic reasons to transfer their pensions, up to a certain threshold, to their country of residence, including to outside the European Union, without penal taxes being applied; and if he will make a statement on the matter. [43134/15]
View answerThe transfer of an occupational pension scheme member's pension fund benefits or a Personal Retirement Savings Accounts (PRSAs) contributor's PRSA assets to an overseas pension arrangement is permitted, subject to the transfer complying with the Occupational Pension Schemes and Personal Retirement Savings Accounts (Overseas Transfer Payments) Regulations, 2003 (the Regulations) and Revenue requirements. The Regulations are under the remit of the Minister for Social Protection and prescribe the conditions for transfers to arrangements established outside the State. These are as follows:
- the trustees or PRSA provider have satisfied themselves that the retirement benefits to be provided under the overseas arrangement are relevant benefits by obtaining written confirmation to that effect from the trustees, custodians, managers or administrators of an overseas arrangement to which the transfer is to be made, and
- the trustees or PRSA provider have satisfied themselves that the overseas arrangement has been approved by an appropriate regulatory authority for the country concerned, and
- the trustees or PRSA provider have received from the member of the scheme or the PRSA contributor such information in such form as may for the time being be approved by the Pensions Authority.
I am advised by the Revenue Commissioners that moving pension funds overseas in an effort to circumvent the requirements of Irish tax legislation may fall foul of the conditions under which the pension scheme was approved by Revenue as an exempt approved scheme or the conditions under which a PRSA product received Revenue approval. For this reason Revenue has additional requirements to ensure that such transfers are used to provide pension benefits. Prior to making any overseas transfer payments, the trustees or PRSA provider must be satisfied that:
(a) the member has requested a transfer,
(b) the overseas arrangement provides relevant benefits as defined by Section 770(1) of the Taxes Consolidation Act, 1997, and
(c) the overseas arrangement has been approved by the appropriate regulatory authority in the country concerned.
In practice, the trustees or PRSA provider are required to obtain written confirmation to that effect from the administrator of the overseas arrangement to which the transfer is to be made.
If the transfer is to another EU Member State, the overseas scheme must be operated or managed by an Institution for Occupational Retirement Provision (IORP), within the meaning of the EU Pensions Directive, and must be established in a Member State of the European Communities which has implemented the Directive in its national law. The scheme administrator must be resident in an EU Member State. A transfer which complies with the above requirements may be made without prior reference to Revenue. A transfer to a scheme which is not operated by an IORPS must be referred to Revenue in advance of the transfer taking place.
If the transfer is to a country outside the EU, a transfer may not be made to a country other than the one in which the member is currently employed.
All transfer payments to an arrangement for the provision of retirement benefits outside the State made from an approved occupational pension scheme or PRSA under the provisions of the Overseas Transfer Payments Regulations may be made to facilitate bona fide transactions only. A member of an Occupational Pension Scheme or a PRSA contributor who directs the trustees/PRSA provider to transfer assets to an overseas arrangement must sign a declaration to the effect that the transfer conforms to the requirements of the Regulations and Revenue transfer rules, is for bona fide reasons and is not primarily for the purpose of circumventing pension tax legislation and Revenue rules.
No tax charge applies in respect of the actual transfer of occupational pension funds, and, providing the transfer complies with the Regulations and Revenue rules as set out above, the transfer may be made without further tax consequences.
Section 787G (1) Taxes Consolidation Act (TCA) 1997 provides that a tax charge arises where the value of any assets in a PRSA is paid by the PRSA administrator to the PRSA holder or to any other persons. Exceptions to the application of this tax charge are contained in section 787G (3) TCA 1997. However, where a PRSA fund is transferred to an overseas arrangement, such a transfer is not covered by any of the exceptions listed under section 787G (3) TCA 1997.
It is recognised that some conditions (such as the tax charge applying to PRSA transfers as outlined above) may be impacting on fund transfers being undertaken for legitimate reasons, particularly in the case of emigrants. These conditions are being reviewed. The ideal would be to ensure that overseas transfers of pension funds which are undertaken for legitimate reasons are facilitated as much as possible while also guarding against abuse of the arrangements. This is not always an easy balance to achieve. Nevertheless, it is hoped that some progress can be made in this area in the near future.
