Feargal Quinn (Independent) | Oireachtas source

I second the recommendation.

I welcome the Minister of State to the House again. He must be getting very fond of us.

I thank him for his detailed response on my Committee Stage recommendation on PRSAs, personal retirement savings accounts, and USC, universal social charge. I have read its great technical detail but it does not detract from the very fundamental principle that, in the eyes of an employee, there is no real difference between a PRSA and a defined contribution occupational pension which is funded by his or her employer. Why should they be treated differently from a USC perspective? I do not understand that.

One of the Minister of State’s main points is that PRSAs are not benefit-limited but occupational pension schemes are, which is why the USC is applied to an employer. There is no logic to that decision, for three reasons. First, the comparison for PRSAs is with defined contribution occupational pension scheme arrangements. As they are both contribution-based arrangements, they should therefore be subject to the same tax rules. Second, since 1 January 2014, an overarching limit of €2 million is in place on the total value of retirement benefits that any individual can take from all sources, including PRSAs, before a penal tax charge is applied at retirement. Accordingly, PRSAs cannot provide unlimited retirement benefits, as they are subject to the same €2 million limit as any other retirement arrangements. Last, if the USC anomaly - the word also used by Senator Darragh O’Brien - were to be remedied, there are existing tax avoidance provisions in tax legislation - section 118B of the Taxes Consolidation Act 1997 - which would prevent an employee from foregoing remuneration to allow a large contribution to be made by an employer to a PRSA.

It is incumbent on the Minister of State to reflect on the strength of the case I made on Committee Stage and today on the need to equalise the USC treatment of pension contributions. I have looked back over the Finance Bills that came before the House in the past five years. It will come as no surprise to colleagues that not one recommendation has ever been accepted. I did not go back earlier than 2009, so maybe it goes back much longer. It is through that lens I view the debate and the Minister of State’s position in respect of other worthwhile recommendations discussed in the House yesterday on Committee Stage. I really believe this recommendation is worthy of attention.