Dáil Éireann Debate, Thursday - 11 April 2024
106. Deputy Richard Bruton asked the Minister for Finance if he has considered relaxing the rules on pension drawdown to permit drawdown for certain purposes which might contribute to positive ageing, such as home adaptations, installation of technology, or caring support; and if he will make a statement on the matter. [15929/24]
View answerThe well-established policy objective for tax relief on pension contributions is to encourage individuals to save for retirement; to help meet a targeted level of supplementary pension coverage and income replacement; and to assist in preventing an over-reliance on State support for citizens in later life, particularly given emerging demographic developments.
Accordingly, pensions have special treatment within the tax system to encourage these preparations. Ireland operates an Exempt, Exempt, Tax (EET) system where contributions to pensions (within certain limits) are exempted from income tax; pension fund gains are exempted from income tax; and income from pension drawdown, other than a tax free lump sum, is subject to tax. This is intended to encourage individuals to save appropriately for retirement.
This favourable tax relief regime plays an important role in incentivising retirement savings and encouraging citizens to provide for their retirement, which is an issue that will only become increasingly important as our population continues to age.
Currently, aside from cases of ill health pensions cannot be drawn down early. The introduction of a scheme to allow early access to funds would not be in alignment with the goal of supporting savings for retirement though beneficial tax treatment. Therefore, I do not currently have any plans to allow pension savers to access their funds tax free before retirement.
