Written answers

Wednesday, 6 May 2009

Department of Finance

Pension Provisions

8:00 pm

Photo of Joan BurtonJoan Burton (Dublin West, Labour)
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Question 166: To ask the Minister for Finance his views on allowing people in financial difficulty through loss of employment or income to access a proportion of their AVC or PRSA contributions during the period of financial distress; and if he will make a statement on the matter. [17461/09]

Photo of Brian Lenihan JnrBrian Lenihan Jnr (Dublin West, Fianna Fail)
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The rationale for giving tax relief for contributions to various types of retirement savings products is to encourage and promote savings over the long term in order that individuals will have an adequate replacement income in old age. A pension fund is not a "rainy day" fund in the normal sense of that term. Emerging demographic indicators point to increasing numbers of people living longer, with a longer period spent in retirement than previously. Any proposal, however well intentioned, that would allow pre-retirement access by individuals to retirement savings could significantly reduce the quantum of pension savings available to those individuals in old age.

Revenue approval of pension schemes, including AVC schemes, is given on the basis that a scheme can only provide "relevant benefits" as defined by Section 770 of the Taxes Consolidation Act, 1997. This means, essentially, that benefits may only be paid at the point of retirement (usually from age 60) or on earlier death. The legislation governing Revenue approval of PRSA products contains a similar provision. I have no plans to amend these provisions. However, employees may take "early retirement" benefits from both a pension scheme and a PRSA, anytime from age 50. This may provide some immediate assistance to employees in that age group who find themselves in a redundancy situation.

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