Written answers

Thursday, 26 October 2006

5:00 pm

Photo of Dan BoyleDan Boyle (Cork South Central, Green Party)
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Question 100: To ask the Minister for Finance the number of private pension plans, with a value of €5 million and more, that have been granted tax relief since 1 January 2005 until the coming into being of the Finance Act 2006, giving details of the granting of such reliefs on a monthly basis. [35011/06]

Photo of Brian CowenBrian Cowen (Laois-Offaly, Fianna Fail)
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I am assuming that the Deputy is referring to the provision in Section 787P of the Taxes Consolidation Act 1999 (introduced by section 14 of the Finance Act 2006) which introduced a maximum allowable tax-relieved pension fund on retirement of €5 million, known as the 'standard fund threshold' and to the higher 'personal fund threshold' to apply where the capital value of an individual's pension rights on 7 December 2005 exceeded the standard fund threshold amount. This limit or ceiling applies to the total capital value of pension benefits that an individual can draw in their lifetime from all tax relieved pension products, including public sector pension schemes, where those benefits first come into payment on or after 7 December 2005. To avail of the higher personal threshold, the individual concerned was required to notify Revenue and provide details of the higher amount on or before 6 June 2006.

Private pension plans can take a number of forms: Occupational Pension Schemes (including small self-administered schemes used primarily by proprietary directors of companies); Retirement Annuity Contracts (used primarily by the self-employed); and PRSAs (which are open to all). The €5m standard fund threshold and the personal fund thresholds apply to all these categories of private pension plan.

However, notification to Revenue of amounts in excess of €5 million, for the purpose of these thresholds, did not arise until 2006 (as these measures were not announced until Budget 2006, and the relevant processes were put in place in Finance Act 2006.) I am informed by the Revenue Commissioners that 117 notifications of personal fund thresholds in excess of €5 million were received by them before the 6 June 2006 deadline. I am further informed that, to date, Revenue has issued certificates noting the relevant personal fund thresholds in respect of 75 of the notifications received. The other 42 notifications are at various stages of enquiry.

The Deputy will be aware that, in due course, where the capital value of pension benefits drawn by an individual, whether by way of pension, lump sum or transfer to an approved retirement fund etc, exceeds the relevant threshold, the excess will be subject to an up-front income tax charge of 42%. This charge is in addition to any other income tax charge that might arise in the normal course on the pension benefits drawn down. The Deputy will also be aware that this measure was part of a suite of measures in relation to pensions announced in Budget 2006, and should not, of course, be seen in isolation.

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