Michael Creed (Cork North West, Fine Gael)
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Question 93: To ask the Minister for Finance the reason the Revenue Commissioners insist that private pension lump sums can only be cashed in when the lump sum total is less than €20,000; if this provision is a pension fund or Revenue regulation; and if he will make a statement on the matter. [13819/11]

Michael Noonan (Limerick City, Fine Gael)
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The purpose of approved pension schemes is to provide for an income in retirement. I am advised by the Revenue Commissioners that in some cases, a member's entitlements under a scheme may be too small to justify the pension set-up costs (e.g. purchase of an annuity). The Revenue Commissioners recognise the difficulty this can cause and will allow full commutation of the pension (the payment of the pension in one sum) in certain circumstances.

First, full commutation of a pension is permitted by Revenue on what is referred to as "triviality" grounds where the aggregate benefits payable to an individual from the scheme in respect of the employment does not exceed the value of a pension of €330 per annum. The full amount of the pension commutation sum is subject to tax at a rate of 10%. Full commutation of a pension is also allowed by Revenue where, following the payment of any tax-free lump sum, the total of all remaining funds from all sources available for pension benefits is less than €20,000.

In a defined benefit scheme, the pension benefit is converted to a fund value using the scheme's commutation factor to determine if it is within the €20,000 limit. This treatment is subject to the agreement of both the scheme beneficiary and the trustees and the resulting payment is treated like any other pension payment for the purposes of tax and is taxed under normal tax rules. The €20,000 limit is reviewed from time to time and was last increased (from €15,000) in 2007. This arrangement is allowed for under discretionary powers given to Revenue under section 772(4) of the Taxes Consolidation Act 1997 and is published in the Revenue Pensions Manual.

Michael Creed (Cork North West, Fine Gael)
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Question 94: To ask the Minister for Finance the reason public construction contracts insist on participation in a pension scheme (details supplied); if this compulsion is in breach of competition law; the reason he will not accept evidence of pension provision as sufficient; and if he will make a statement on the matter. [13820/11]

Michael Noonan (Limerick City, Fine Gael)
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It is a legal requirement for all construction workers to be a member of a pension scheme that satisfies the Construction Industry Pensions Assurance and Sick Pay Registered Employment Agreement under the Industrial Relations Acts 1946 to 2004. Clause 5 of the Public Works contracts, which were developed by my Department as part of the Construction Procurement Reform Initiative, requires main contractors and all subcontractors registered in Ireland to comply with the pension provisions in the registered employment agreements.

The Construction Federation Operatives Pension Scheme fully meets the requirements of the Registered Employment Agreement. This Scheme is administered by the Construction Industry Federation and is available to all employers in the industry even though some may not be members of the federation. Other pension arrangements may also be used as an alternative to the Construction Federation Operatives Pension Scheme, provided the terms in such arrangements are no less favourable than the terms in the Registered Employment Agreement. The only exception to this is where a firm is registered in another member state of the EU and is working in this country and has employees temporarily posted from that jurisdiction who subscribe to a national pension scheme in their own country. In such circumstances, the firm or its employees do not have to subscribe to an Irish pension scheme that satisfies the legislative requirement.