Dáil Éireann Debate, Wednesday - 13 July 2022
143. Deputy Ged Nash asked the Minister for Finance the estimated savings to the Exchequer by abolishing the current tax-free lump sum that can be withdrawn from a pension pot upon retirement, by reducing the current tax-free lump sum that can be withdrawn from a pension pot upon retirement from €200,000 to €100,000 or €50,000 respectively in tabular form; and if he will make a statement on the matter. [38648/22]
View answer144. Deputy Ged Nash asked the Minister for Finance the estimated yield to the Exchequer by reducing the standard fund threshold from €2 million to €1 million; and if he will make a statement on the matter. [38649/22]
View answerI propose to take Questions Nos. 143 and 144 together.
I am advised by Revenue that there is no requirement for information to be included in tax returns in relation to lump sums of less than €200,000, which is the current life-time limit on tax-free retirement lump sums. Therefore, there is no data available that could be used as the basis for an estimate of the savings from the changes outlined by the Deputy.
The Standard Fund Threshold (SFT) is the maximum allowable pension fund on retirement for tax purposes, which was introduced in Finance Act 2006 to prevent over-funding of pensions through tax-relieved arrangements. The threshold was initially set at €5 million; it was subsequently reduced to €2.3 million with effect from 7 December 2010, and further reduced to €2 million with effect from 1 January 2014.
I am advised by Revenue that information on the numbers and values of individual pension funds or on individual accrued benefits are not generally required to be provided to Revenue by the administrators of pension schemes and personal pension arrangements. Therefore, there is no underlying data available to Revenue on which to base reliable estimates of the savings that would arise from the proposed change to the SFT threshold.
