Brendan Howlin (Wexford, Labour)
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Question 222: To ask the Minister for Finance the status of outline proposals made for the enhancement of pensions for retired public servants on low incomes; and if he will make a statement on the matter. [16602/05]

Brian Cowen (Laois-Offaly, Fianna Fail)
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The proposal to enhance the pension entitlement of retired public servants on low pay is at an advanced stage. Discussions are ongoing with the public service unions. These discussions will be completed successfully and the relevant circular will issue in the near future to implement the new arrangements. The proposals will benefit public service employees who are on full pay related social insurance and whose pensions are integrated with a social welfare pension. The proposal under consideration will benefit those whose income is below three and one third times the old age contributory pension. The application of the improved terms will be retrospective to 1 April 2004.

Brendan Howlin (Wexford, Labour)
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Question 223: To ask the Minister for Finance if persons aged 65 years and over who remain in employment and wish to continue to make additional voluntary pension contributions are entitled to avail of tax relief on their additional voluntary contributions on the same terms as persons aged under 65 years; and if he will make a statement on the matter. [16603/05]

Brian Cowen (Laois-Offaly, Fianna Fail)
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The rules governing the approval by the Revenue Commissioners of retirement benefit schemes, such as occupational pension schemes, provide, among other things, that the basic benefit under such schemes must be a pension for the employee at a specified age not earlier than 60 years of age and not later than 70 years of age. It is a condition of approval that individual occupational pension scheme rules specify the age at which members will normally retire. In practice, this is typically set at 65 years.

An individual occupational pension scheme member who remains in service after reaching his or her normal retirement age, say 65 years, may continue paying contributions, including additional voluntary contributions, up until the date of his or her actual retirement, subject to the maximum retirement age of 70 years of age. Tax relief on such contributions is subject to the age related percentage limit of 30% of salary and annual earnings cap of €254,000 as applies to those over 50 years of age.

Under current rules, the maximum pension that an individual can receive at normal retirement age is two thirds of final remuneration. Part of this may be taken as a tax-free lump sum up to one and a half times final remuneration. However, not all occupational pension schemes provide the maximum pension benefits allowed by the Revenue Commissioners and, even where they do, an individual scheme member may not have the requisite service to draw maximum benefits. Where this is the case, a scheme member may, depending on the rules of the scheme, top up the occupational pension benefits by additional voluntary contributions. These may be used to increase the basic pension or to provide benefits based on non-pensionable pay; increase the tax-free lump sum; provide for, or increase, cost of living provisions on benefits; increase death in service provisions; provide for the social welfare offset in the case of a co-ordinated scheme; and provide for periods of service while not a scheme member.

The benefits payable under the occupational pension scheme and the additional benefits funded through additional voluntary contributions cannot exceed the maximum permissible Revenue benefits.