Dáil Éireann Debate, Tuesday - 12 June 2018
207. Deputy Peter Burke asked the Minister for Finance his plans to revise the rules allowing retired persons withdrawing their remaining retirement fund but who are unable to do so due to the requirement to have additional income of €12,700; and if he will make a statement on the matter. [24602/18]
Amharc ar fhreagra208. Deputy Peter Burke asked the Minister for Finance if a retired person can be exempt on medical grounds from the rules precluding them from withdrawing in full their retirement fund due to the requirement placed on them to have €12,700 additional income; and if he will make a statement on the matter. [24603/18]
Amharc ar fhreagraI propose to take Questions Nos. 207 and 208 together.
I am advised by Revenue that, on retirement, an individual in a defined contribution pension savings arrangement has the option, after taking a tax free retirement 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 under section 784C of the Taxes Consolidation Act 1997 (TCA) 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.
While there is no exemption from this provision on medical grounds, the rules of an occupational pension scheme approved under section 772 of the TCA may permit commutation of a pension – that is, payment to an individual of her or his pension fund by way of lump sum – if the individual is suffering from a terminal illness at the time the pension becomes payable. Further details can be found in Paragraph 7.5 of Revenue’s Pensions Manual (https://www.revenue.ie/en/tax-professionals/tdm/pensions/chapter-07.pdf). Whether such a payment would be allowed depends on the rules of the specific pension scheme.
I do not currently have any plans to amend the existing provisions which relate to the transfer of funds into an AMRF or to allow for increased access to funds in an AMRF. However, these provisions, along with other taxation measures, are kept under review. The Deputy may be aware that the Government published A Roadmap for Pensions Reform 2018 – 2023 last February, which contains in Strand 3, “Improving Governance and Regulation”, a plan for a broad review of the utilisation and regulation of ARF products.
