Róisín Shortall (Dublin North West, Labour)
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Question 7: To ask the Minister for Finance if he will provide an explanation of the concerns raised by the covered institution remuneration oversight committee in respect of the section dealing with pensions in its report of 27 February 2009; the practice identified in which cash allowances were paid to compensate for the effects of the pension cap imposed by the Finance Act 2006; and the steps he will take to address these matters. [14881/09]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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The Deputy will be aware that the report of the Covered Institution Remuneration Oversight Committee (CIROC) considered that pension arrangements for top management should be reviewed.

Specifically, the Report stated that: "We have become aware of a practice in which cash allowances were paid to compensate for the effects of the "pensions cap" imposed by the Finance Act, 2006. Pension schemes should reflect public policy and tax law and it is unacceptable that arrangements should be put in place which would be inconsistent with the intent of the relevant legislation."

Finance Act 2006 introduced a number of measures aimed at preventing abuse of tax relief arrangements in the private pensions area, including the introduction of a maximum allowable pension fund on retirement for tax purposes. The above extract from the CIROC Report would indicate that the pension fund cap is working as intended. From a tax perspective, the only concern relates to the tax implications of any alternative means of remuneration referred to. If an individual is paid a 'cash allowance' these amounts would be taxable in a manner similar to the tax treatment of any paid remuneration. My Department is examining the matter to ensure that this is the case.