Michael Noonan (Limerick City, Fine Gael)
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It began in April, so it is €19.5 million for six months. Anecdotal evidence suggests there was a spurt in draw-downs before Christmas. I do not know whether the Revenue Commissioners have the same anecdotal evidence that I got.

The purpose of the Deputy’s proposed amendment is to extend section 782A of the Taxes Consolidation Act 1997, which allows for temporary pre-retirement access by individuals to a proportion of their additional voluntary contributions, AVCs, to pension savings generally in all defined contribution pension arrangements, subject to certain qualifying conditions.

The pre-retirement access to additional voluntary contributions, AVCs, which I introduced in the budget and the Finance Act 2013 is allowed on a tax-neutral basis. In general, the contributions were tax-relieved at the individual’s marginal rate on the way in and are taxed at the individual’s marginal rate on withdrawal. This is part of the design of a measure which is intended to enable rather than incentivise individuals to access part of their pension savings beyond their core pension provision. The take-up of the measure to date has not been particularly significant. It is important individuals continue to provide for their retirement and, it would appear based on experience to date, that most individuals with AVCs have decided to preserve their AVC pension savings for the purpose intended.

As to the criteria to be satisfied by individuals under the Deputy’s proposed amendment, I do not expect people buying their first home, most probably younger people, would have significant pension savings at that early stage in their lives in any event. As to access to pension savings on redundancy or ill-health grounds, while Revenue approval of retirement benefit schemes is given on the basis that retirement benefits may, generally, be paid at normal retirement age, which for most schemes would be 65, the approval may also provide for voluntary 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 personal pensions such as retirement annuity contracts, RACs, and personal retirement savings accounts, PRSAs, benefits can be taken from age 60 with no retirement condition. With all of these pension arrangements, benefits can be taken at any stage where retirement is due to serious ill health or incapacity. I appreciate the intention behind the Deputy’s proposal. I also recognise that the kind of early access he has in mind is more to deal with temporary financial or medical crises which may befall individuals or families, as opposed to the more permanent type access which is already provided for under pension tax law and Revenue rules which I have just outlined.

However, while there may be a case for the consideration of conditional early access to pension savings as part of longer term planned options for pension reform - this is a matter primarily for my colleague, the Minister for Social Protection - I do not believe it is an appropriate extension to the existing restricted and temporary early access measure. In my view, it is preferable not to allow early unplanned withdrawals of core pension savings as the inevitable result is to divert the savings initially intended to finance retirement to meet largely short-term financial crises.

This clearly poses retirement income adequacy issues. The impact of the early withdrawal of pension savings on the ultimate value of the pension pot at retirement should not be underestimated. For these various reasons, I have no plans to extend the current temporary early access measure beyond AVCs. Accordingly, I cannot commend amendment No. 52. I will refer to it to my colleague, the Minister for Social Protection, who is reviewing pensions policy, however.