Michael McGrath (Cork South Central, Fianna Fail)
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Question 42: To ask the Minister for Finance his views on a matter (details supplied) regarding the PRSA pension option. [11031/11]

Michael Noonan (Limerick City, Fine Gael)
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The position is that the universal social charge (USC) applies to all emoluments of an employment, including anything treated as a taxable benefit-in-kind. The USC also applies to a person's aggregate income before granting relief in respect of pension contributions, including contributions to a personal retirement savings account (PRSA), a personal pension plan, additional voluntary contributions or a retirement annuity contribution. For the purposes of determining the overall contribution to a PRSA, the amount contributed by an employer is specifically treated as the employee's own contribution and, for this reason, both are subject to the USC in the same way as any other type of pension contribution made by an employee. In contrast, an employer's contribution to a non-PRSA occupational pension is not treated as the employee's own contribution and is not taxed as a benefit-in-kind. If this treatment were not to apply and if the employer contribution, which for PRSA purposes is treated as if it were made by the employee, were to be exempt from USC, an employee who is in a position to influence his or her employer to make contributions to a PRSA on his or her behalf would not pay USC on these contributions, but an employee who is unable to get his or her employer to contribute to his or her PRSA, and instead personally makes contributions of the same amount from his or her own resources, would suffer USC on those contributions.

I should point out that there is a commitment in the Programme for Government to carry out a review of the USC and I would anticipate that the review will be completed in time for Budget 2012. The USC treatment of PRSA's may well be within the ambit of the review.