Michael Noonan (Limerick City, Fine Gael) | Oireachtas source

Deputy Michael McGrath tabled this amendment for consideration on Committee Stage. It proposes the preparation of a report for the House in respect of pre-retirement access to all forms of pension savings in certain unspecified circumstances. What I have done, following quite an amount of consideration, has been measured. I outlined my concerns with regard to this matter on Committee Stage. I do not intend to return to this area of pension law during the remainder of the lifetime of the Government. I do not want to create any expectation to the effect that a more generous scheme might be introduced in next year's finance Bill. That will not happen. If I was to raise such an expectation, people who want to access AVCs might wait until next year to do so. If, on the other hand, I stated that it was going to be more restrictive next year, it would have the opposite effect and there would be a rush to access them.

I do not want either to incentivise or disincentivise and saying that I will go back into this next year would have an effect one way or the other. This was done after careful consideration, and it will stand.

On Deputy Doherty's point about the tax forgone, that is precisely why I made the announcements at budget time that tax relief on pension contributions will only apply in future to pensions valued at €60,000 or less. I gave notice of that because it requires not only tax law but pension law to be changed. That will have the effect of achieving significant savings in the coming years as contributions are no longer incentivised through the tax system for very large pensions. In the meantime, and in parallel, the Minister for Social Protection is also examining the generality of pension provision. There is quite a good deal in play already on the pensions front. I have set up a cross-departmental committee to examine my piece of it to ensure that the restrictions I announced in the budget will take effect from 1 January next year. It is quite severe, as the Deputy knows.

The Deputy will be familiar with the calculation of public service pensions. A pension of €60,000 would be based on 50% - I think 40 80ths is the correct calculation - of a salary of €120,000. In effect it means that once one's salary increases to €120,000, any contribution one makes to a pension fund or an investment fund beyond that will not have the benefit of tax relief. When one considers the private sector in that respect, it was common for people on very large salaries not only to pay annual amounts but for their employers to also pay annual amounts and sometimes bullet-type payments that were very large, and there were no limits. I will bring legislation before the House when we can get into this, but it certainly goes in the direction the Deputy is signalling, and we can debate the detail when the legislation comes before the House. I am not moving on this today, but I do not want to raise any expectations of a prospective change to what we have announced in the budget either next year or in the medium term.

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