Dáil Éireann Debate, Wednesday - 28 March 2018
142. Deputy Michael McGrath asked the Minister for Finance the tax rules surrounding the early extraction of pension funds, specifically if a person wishes to extract funds from their pension and invest it directly in sovereign bonds; if such a transaction is taxed; if the person wishes to transfer the funds to another registered pension fund if it would be subject to exit tax; and if he will make a statement on the matter. [14370/18]
Amharc ar fhreagraI am advised by Revenue that approval of occupational pension schemes under the Taxes Consolidation Act 1997 is given on the basis that retirement benefits are generally paid at normal retirement age which cannot fall before age 60. Approval may also provide, however, for early retirement from age 50 where scheme rules allow and with the employer's consent. In such situations benefits are restricted. In the case of approval of personal pension arrangements such as retirement annuity contracts (RACs) and Personal Retirement Savings Accounts (PRSAs) benefits can be taken from age 60, with early retirement permitted in certain circumstances. In relation to all of these pension arrangements, benefits can be taken at any stage where retirement is due to serious ill-health or incapacity. I am also advised that access by an individual to his or her pension funds prior to retirement, either generally or for the purpose of investing directly in sovereign bonds, is not permitted under the rules governing the approval of pension arrangements for tax purposes.
Under the conditions of approval for occupational pension schemes, an individual’s entitlements under a scheme may be transferred to another such scheme, an approved buy-out bond or a PRSA. A transfer from an occupational scheme to a PRSA is permitted only if the individual has been a member of the scheme or of any other scheme related to that individual’s employment with, or with any person connected with, the employer for less than 15 years. In the case of personal pension arrangements, an individual’s entitlements may be transferred from a RAC to a PRSA and from a PRSA to another PRSA or an occupational pension scheme. A transfer of entitlements from an approved pension arrangement to another such arrangement is not subject to tax where the transfer is made in accordance with conditions applying to the approval of the arrangements in question.
