Dáil Éireann díospóireacht -
Tuesday, 11 Dec 1990

Vol. 403 No. 8

Written Answers. - Tax Relief on Pensions.

Jim O'Keeffe

Ceist:

98 Mr. J. O'Keeffe asked the Minister for Finance if he will outline the categories of taxpayers who get tax relief on their pension contributions which will entitle them to a pension of two-thirds salary on the date of retirement.

Minister for Finance (Mr. A. Reynolds)

Tax relief is granted to employees in respect of their contributions to occupational pension schemes approved by the Revenue Commissioners for the purposes of Section 6 of the Finance Act, 1972, and is also granted in respect of employee contributions to pension schemes established under public statute. Approved schemes may or may not require the members to make contributions towards the costs involved in providing the scheme benefits. Schemes may include provision for members to make voluntary contributions to increase their benefits within permitted limits. The maximum benefit that may be paid to a member of an approved scheme at normal retirement date is a pension of two-thirds of final remuneration.

Where a member contributes personally, the tax relief granted in any year in respect of the contributions is limited to 15 per cent of the remuneration for that year of the office or employment being pensioned. The 15 per cent limit is inclusive of all member contributions, whether voluntary or otherwise, and the 15 per cent limit applies whether or not the member's benefits under the scheme will be up to the maximum permitted, namely pension of two-thirds of final remuneration.

Employees who are not members of occupational pension schemes may effect retirement annuity contracts approved under section 35 of the Income Tax Act, 1967 — commonly referred to as personal pension schemes. Retirement annuity contracts are also available to the self-employed as a means of providing for pension benefits in retirement. Retirement annuity contracts are marketed by authorised life assurance companies and the maximum tax relief in any tax year in respect of an individual's contributions under such a contract is limited to 15 per cent of net relevant earnings. The legislation does not impose a ceiling on the benefits of such a contract — this is determined by the contributions actually paid in and the investment return on such contributions.