Michael McGrath (Cork South Central, Fianna Fail) | Oireachtas source

Section 22 of the Finance Act 2022 removed the difference in treatment between PRSAs and occupational pension schemes in relation to the funding rules, by abolishing the BIK charge on employer contributions to an employee's PRSA. In addition, employer contributions to an employee's PRSA are no longer counted towards an employee's age related and salary percentage limits on tax deductible contributions.

These changes were recommended by the interdepartmental pension reform and taxation group, IDPRTG, with a view to improving and simplifying the pension landscape in Ireland. In discussing the possible impacts of its implementation, the report acknowledges such a change would also likely result in a change in behaviour, encouraging increased PRSA contributions. However, it also states that this is likely to be a displacement of contributions that otherwise would have been made to new single member schemes.

I can confirm that my Department did receive a paper from the Society of Actuaries in Ireland in summer 2022 which related to this recommendation. When considering the appropriate way to implement the IDPRTG recommendation, removing the BIK limits for PRSAs was examined in detail, and the submission referred to above fed into these considerations. A decision was made to proceed with a proposal to fully remove the BIK charge for employer contributions to a PRSA in order to continue to work towards the overall goal of simplifying and harmonising the pension landscape.

In relation to tax planning, I am informed by Revenue that there is a continuous focus on compliance across pensions, identifying and confronting non-compliant behaviour across schemes. This is in line with Revenue's Corporate Priorities 2024 commitment to comprehensively use the full suite of interventions set out in its compliance intervention framework to assist voluntary compliance and to provide an appropriate response to non-compliance. As with all measures, my officials and I will continue to keep this change under review and, should any necessary changes be identified, they will be considered in the context of future finance Bills.

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