Noel Ahern (Dublin North West, Fianna Fail)
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Question 103: To ask the Minister for Finance the system of regulation for additional voluntary contribution schemes; if legislation covering AVCs allows participants to reduce the amount of money they are paying into schemes and or release a portion of the contributions that they have made to date; and the extent he will intervene in cases in which participants are dissatisfied with the conditions of AVC schemes. [17454/10]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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Additional Voluntary Contributions (AVCs) are made by an employee in addition to any compulsory contributions the employee may be required to make under the rules of an occupational pension scheme of which he or she is a member. AVCs can be made in order to improve the benefits of scheme members over and above those provided by the scheme rules but within Revenue limits. Where an employer operates a pension scheme, it is usual to provide a facility to scheme members to make AVCs. Although the law does not require schemes to allow AVCs, the Pensions (Amendment) Act, 2002 requires any employer whose pension arrangements do not include an AVC facility to offer access to at least one standard PRSA to be used for AVC purposes.

As AVCs are voluntary, individuals can decide on the level of such contributions they wish to make and they may reduce or cease contributions at any time. Contributions to AVCs must, however, comply with the relevant tax legislation and the requirements of the Revenue Commissioners in relation to the tax treatment of pension provision and retirement benefits. For example, there are age-related percentage limits of earnings (subject to an overall annual earnings limit of €150,000) on which tax relief on contributions by an employee or individual to a pension arrangement, including contributions to an AVC, is allowed.

Moreover, the maximum benefit that an individual can receive from an occupational pension scheme at normal retirement age is a pension of two-thirds of final remuneration. When benefits secured by AVCs are added to the main scheme benefits, this maximum cannot be exceeded. A funding review and maximum benefits test must take place before any AVC is paid. It is the responsibility of the scheme trustees to ensure that excessive employee contributions are not made. Finally, in this regard, and as with pension contributions generally, AVC contributions once made are effectively "locked in" and access to the funds in an AVC is usually restricted to the time when access to the retirement benefits of the main scheme is permitted (generally at the normal retirement age provided for under the rules of the scheme).

Occupational pension schemes and personal pension plans such as Personal Retirement Savings Accounts (PRSAs), which can encompass AVC arrangements, are subject to regulation by the Pensions Board which comes under the aegis of my colleague, the Minister for Social Protection. The Deputy's question is not clear on the specific aspects of the regulation or otherwise of AVCs about which he has concerns. If he were to set out the specific issues involved, then perhaps I or my colleague, the Minister for Social Protection, may be in a position to comment further on the matter.