As Minister for Finance, my Department's role in relation to pensions policy primarily relates to the use of tax policy to incentivise retirement savings. In addition, I have responsibility for overall macroeconomic policy and fiscal sustainability. I think it's important to point out that individuals are incentivised to save for retirement through tax policy measures. The Taxes Consolidation Act 1997 provides that the investment income and gains of pension schemes and pension saving arrangements, approved by the Revenue Commissioners, are generally exempt from taxation while they remain in the scheme or arrangement. This tax exempt treatment of investment growth together with the exemption from tax on ongoing contributions paid into pension funds are intended to encourage individuals to provide themselves with an adequate income in retirement.
In relation to the transposition of the Directive (EU) 2016/2341, on the activities and supervision of institutions for occupational retirement provision (IORPs), also known as IORP II, the Deputy is probably aware that this matter is a policy matter for the Minister for Employment Affairs and Social Protection and her Department.
Many of the provisions being implemented by IORP II will support positive reform of the Irish occupational pension sector with aims to ensure good governance, the provision of information to scheme members and the transparency and safety of occupational retirement provision. Given the level of incentives available and the importance of individuals having sufficient savings to adequately provide for their retirement, I believe it's imperative that all pension schemes are subject to sound protections for pensions and consumers, to ensure that money saved for pension purposes is properly protected.
I am aware on implementation of IORP II, that single member schemes, including Small Self-Administered Pension Schemes (SSAPS), previously outside of the scope of the investment and borrowing IORP I provisions, will be subject to IORP II provisions. I have been informed by DEASP that the application of the Directive is not retrospective, but prospective, so those changes will not affect existing investments and borrowings by schemes. However, from transposition onwards, single member schemes will no longer be permitted to enter into new borrowing agreements, except for short term and liquidity purposes, and all future investments will have to be carried out in accordance with the Directive rules.
Finally, I am supportive of the principle of improved regulation and consumer protection for pension savers as reflected in IORP II. Also, given that the State incentivises pension savings, I believe it is appropriate that limits are placed on the nature and riskiness of assets held by pension savers.