Richard Bruton (Dublin North Central, Fine Gael)
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Question 159: To ask the Minister for Finance if a person who has been forced to take early retirement on health grounds may withdraw money from a pension fund before retirement age in order to apply the money to other purposes; and if he will make a statement on the matter. [2115/11]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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I am advised by the Revenue Commissioners that under Revenue rules an employee retiring on ill-health grounds may have his or her retirement benefits paid immediately, in the form of a lump sum and pension, regardless of the employee's age, based on the service record the individual would have had if he or she had continued in service until normal retirement age. The precise benefits payable will of course depend on the rules of the particular scheme and on whether it is a defined benefit or defined contribution arrangement.

I am also advised that it is only in cases of "exceptional circumstances of ill-health" that the Revenue Commissioners will allow the full commutation of a pension whereby it can be paid as a lump sum subject to tax at 10%. This phrase is to be interpreted strictly and narrowly. It is not intended to refer to the kind of ill health that prevents a person from working but to cases where the expectation of life is unquestionably very short. Commutation of the pension in such cases can only take place where the administrator is satisfied based on the receipt of adequate medical evidence that terminal illness is in point and that the expectation of life is measured in months rather than years.