Dáil Éireann Debate, Monday - 11 September 2023
455. Deputy Alan Dillon asked the Minister for Finance if he will consider allowing first-time home buyers to access a portion of their pension funds for use as a deposit on a home; and if he will make a statement on the matter. [38220/23]
View answerThe main purpose of a pension fund is to provide a secure income in retirement for the pension beneficiary. The purpose of providing tax relief for pension contributions is to encourage individuals to save for retirement, to meet a target level of supplementary pension coverage and an income replacement target, and to assist in preventing an over reliance on State support for people in later life.
As you may be aware, Ireland operates what is described as an “Exempt – Exempt – Taxed” or “EET” supplementary pension regime. Contributions to a pension fund are relieved from tax subject to age-related percentage and income limitations and growth in these funds are also accumulated on a tax-free basis. Payments out of the fund during retirement, after taking a tax-free lump sum are then subject to income tax, and USC and PRSI where applicable.
The taxation of payments from the fund after the tax-free lump sum is an important balance to the generous tax reliefs for contributions and growth of pension funds. Allowing early access to funds tax-free would not be in alignment with the goal of supporting savings for retirement. Therefore I currently have no plans to allow pension savers to access their funds tax free before retirement.
I would note that there are already a number of direct expenditure measures alongside tax based measures, such as Help To Buy, available to assist first time buyers.
