Jim O'Callaghan
Question:114. Deputy Jim O'Callaghan asked the Minister for Finance when the review of the standard fund threshold will be concluded; and if he will make a statement on the matter. [22749/24]
View answerTuesday, 21 May 2024
Questions (114)
Written answers
The Standard Fund Threshold (SFT) is the maximum allowable pension fund on retirement for tax purposes, taxable in the normal manner, which was introduced in Finance Act 2006. The regime achieves this by imposing an additional tax charge on the value of retirement benefits above set limits when they are drawn down.
The SFT limit was initially set at €5 million when it was first introduced. Following two initial increases on the basis of an earnings adjustment factor in 2007 and 2008, the SFT has been amended downwards twice. The first reduction took place in December 2010 as part of a package of measures to deliver significant savings in the broad pension area following agreement reached with the EU/IMF. The SFT was further reduced in Finance Act 2013 to €2 million, with effect from 1 January 2014.
Significant changes have taken place since 2014, both in terms of the supplementary pension landscape and the economy. Therefore, in December 2023 I announced an examination of the SFT regime which is currently underway. The review is considering a number of specific issues as outlined in the published terms of reference including the level of the SFT and the operation of the SFT regime.
A public consultation was carried out as part of the examination, which provided interested parties with the opportunity to share their views on the current regime and propose potential changes. This consultation closed on 11 February 2024 and the responses are feeding into the work of the examination.
Regarding the timescale of the examination, I anticipate that the report will be presented to me by summer 2024 for my consideration and I will consider these in the context of the annual Budget and Finance Bill process.