Mr. Tim Duggan:

The treatment at drawdown will depend on a number of factors. The first is how big a fund the person has. The second factor is the various drawdown products that may or may not be available when they do it and the third is how that is dealt with in taxation terms. What is definitive, though, is that once a person's pot is crystallised on retirement there will be no charge on that pot for the national automatic enrolment retirement savings authority, NAERSA, or Tata Consultancy Services, TCS. NAERSA and TCS are paid from the administration charges that are applied every week on every contribution so there will be no charge on the pot when it is drawn down at retirement to pay for administration.

As I said to Senator Rabbitte, based on discussions with finance officials my understanding is that drawdown from My Future Fund will be taxed in the same way that PRSAs are taxed. The simple explanation for that is that a person will be able to draw down 25% of their pot as a tax-free lump sum and the rest will go into some kind of pension vehicle. That could be an annuity, an approved retirement fund, ARF, or it could be something new that is developed over the coming years. One of the jobs of NAERSA will be to look at options for drawdown products for participants in this scheme. It is not necessary to have them right now because anyone who is automatically enrolled in My Future Fund from January next year will be in it for at least six years before drawing anything down. There is time to look at options that are available and try to build something that is particularly useful for the participants in My Future Fund. There are no administration charges on the drawdown and the tax treatment is going to be the same as applies to PRSAs. If a person's fund is less than €30,000 when drawn down, the trivial pensions taxation arrangements apply, which means they can draw it all down as a lump sum. NAERSA will be looking at developing products and possibly engaging with the market to develop new products for drawdown that are particularly suited to participants of My Future Fund. An example of that might be a combination whereby it is not necessary to choose between an annuity or an ARF. A person might be able to draw down part as a lump sum, put some of it into an annuity to guarantee a particular level of income every week for the rest of his or her life, and put some of it into an investment vehicle so that it continues to grow over the period of retirement.

There is no such hybrid product on the market right now, but there is a possibility that could be designed over the coming years and made available through My Future Fund. That will be explored.