Pearse Doherty (Donegal South West, Sinn Fein) | Oireachtas source

I stress that I used gardaí as an example. This is a way of making profit for individuals. If one has enough money to invest in an AVC, particularly at the latter end where one can invest something like 40% of one's income in respect of this year, this is how one basically avoids tax. When we develop a tax code, there will always be people who perhaps will not avoid tax but will benefit from the taxation system. The incentivisation of pensions is about making sure people have enough money set aside for their retirement. It was never intended to allow people to invest in pensions at the later stages of their working lives so that they would get a relief of 41% at that point in time. As cases involving the gardaí and many other people have shown, they know that if it is the only source of income they have when they are drawing that down, it will fall into the 20% bracket resulting in a 21% profit. This needs to be dealt with in the future, particularly the huge rush to invest money at that later point solely for that reason.

Perhaps the word "incentivise" is the wrong one because anybody with an AVC who decides to tap into it at this point is under financial pressure of one kind or another. Many of them could have lost their jobs. There is no doubt that too many people have lost their jobs. There must be equal treatment in terms of people who have paid into the pension. If I retire next year, have an AVC and do not fall into the category allowed by this section, it is unfair that I must pay income tax at whatever my rate is plus 7% or 4% USC when the person who is able to tap in this year to 30% of his or her AVC does not have to pay the USC. There is an issue of fairness here. We are basically giving up on tax by the State. We should not be encouraging people to tap into their AVCs. I do not object to the section given that there are constraints. It will not incentivise them but there should be fairness here. The USC should also be applied because that is the system that applies across the board and that should apply for AVCs so we can genuinely say there is no incentive to tap into one's AVC at this point.