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Pension Provisions

Dáil Éireann Debate, Thursday - 22 March 2018

Thursday, 22 March 2018

Ceisteanna (58)

Mary Butler

Ceist:

58. Deputy Mary Butler asked the Minister for Finance his plans to amend the criteria in respect of benefits payable on retirement from approved minimum retirement funds, AMRFs, in particular, the imposition of tax in respect of one withdrawal per year of up to a maximum of 4% of the value of the AMRF and the rule prohibiting cashing in the fund until the person reaches 75 years of age; the reason household income is not included for the purposes of calculating minimum income of €12,700 if converting an AMRF to an ARF; and if he will make a statement on the matter. [13484/18]

Amharc ar fhreagra

Freagraí scríofa

I am advised by Revenue that, on retirement, an individual in a defined contribution pension savings arrangement has the option, after taking any lump sum, of either using the funds remaining to purchase an annuity or transferring those funds into an Approved Retirement Fund (ARF).

Where such an individual is under the age of 75 at the time of exercising the option and does not have a minimum guaranteed income of €12,700 per annum, she or he is required to set aside an amount of €63,500 (or the entire fund if less than €63,500) in an Approved Minimum Retirement Fund (AMRF) or use that amount to purchase an annuity. The minimum income requirement is to ensure the individual has an adequate and secure source of guaranteed retirement income for her or his remaining years. As general household income would not meet these criteria it is not included in the minimum income calculation.

An AMRF owner can draw down up to 4% of the value of the fund assets on one occasion annually, subject to income tax at the owner’s marginal rate, until she or he either meets the guaranteed pension income requirement or attains the age of 75 years, at which point the AMRF automatically becomes an ARF and any remaining funds can be drawn down at the owner’s discretion. The payments into the pension would have attracted tax relief so withdrawals from the fund, including any annual drawdown, are subject to tax.

I do not currently have any plans to remove the requirements which apply before a person can have increased access to the funds in an AMRF or transfer them to an ARF. However, these provisions, along with other taxation measures, are kept under review. The Deputy may be aware that the Government has recently published A Roadmap for Pensions Reform 2018 – 2023, which contains in Strand 3, “Improving Governance and Regulation”, a plan for a broad review of the utilisation and regulation of ARF products.

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