Michael McGrath (Cork South Central, Fianna Fail)
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Question 100: To ask the Minister for Finance the position regarding the present rules allowing a person to withdraw their contributions from an occupational pension scheme; his plans to change those rules; and if he will make a statement on the matter. [47439/10]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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I am advised by the Revenue Commissioners that the ability of a scheme member to withdraw their contributions from an occupational pension scheme is limited to circumstances where the scheme member leaves his or her employment with less than 2 years' qualifying service. Qualifying service normally means 2 years in the pension plan as a member for pension purposes. In such circumstances, and assuming Revenue practice and the scheme rules permit, a scheme member can get a refund of his or her contributions which may include interest at a reasonable rate. The benefit of any employer contributions are surrendered where this occurs.

In general, a refund of contributions is liable to tax at the standard rate of tax applying when the refund is made. Once a scheme member has at least 2 years qualifying service he or she is entitled under the Pensions Acts to preserved benefits and cannot get a contribution refund. Under the preserved benefit rules, a member leaving a scheme has several options including leaving the accumulated benefits in place with the former employer's scheme or transferring the benefits to a new employer's scheme, to a Personal Retirement Savings Account or to a buy out bond.

The limited circumstances in which employee contributions can be accessed under current arrangements reflects the fundamental nature of pension savings. The rationale for giving various tax reliefs to pension savings schemes in the first place is to encourage and promote savings over the long term in order that individuals will have an adequate replacement income in old age. Emerging demographic indicators point to increasing numbers of people living longer and healthier lives with more of their lives spent in retirement than previously. In these circumstances, and while I am conscious of the case being made for access to pension funds which can be further examined, it is also important to protect pension savings to ensure an adequate post-retirement income.