Pearse Doherty (Donegal South West, Sinn Fein)
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44. To ask the Minister for Finance the amount that was paid to consultants (details supplied) to research possible changes to the tax treatment of pensions; the length of time their consultancy ran; and if their and the tax policy pensions group claimed savings of €400 million in a full year, to be achieved through changing the tax treatment of private pensions in ways that would affect 27,000 individuals, are still expected to deliver €400 million after closer scrutiny of the proposal. [18123/14]

Michael Noonan (Limerick City, Fine Gael)
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I understand that the consultants referred to by the Deputy were engaged by the Taxation Policy (Pensions) Group (TPPG) which is essentially an umbrella group representing the Irish Association of Pension Funds, Insurance Ireland and the Society of Actuaries of Ireland. As they were not engaged by my Department, I am not in a position to comment on how much they were paid to research possible changes to the tax treatment of pensions or the duration of any consultancy in this regard. Nor would it be appropriate for me to do so.

The Standard Fund Threshold (SFT) is the maximum allowable pension fund at retirement for tax purposes. I received proposals in late 2012 from the TPPG for changes to the SFT regime, as an alternative to standard rating of pension tax relief, which it was claimed would yield savings and tax revenues in the region of €400 million.

I announced in Budget 2013 that changes would be put in place in 2014 to the SFT together with other possible changes to give effect to the commitment in the Programme for Government to cap taxpayers subsidies for pension schemes which deliver pension income of more than €60,000 per annum. At that time and pending further analysis of the TPPG proposals, I included a much lower savings figure of €250 million in the Budget 2013 arithmetic. That analysis ultimately revealed significant downside risks to the achievement of even this lower level of yield or savings.

The estimate of the yield from the changes to the SFT regime which I actually announced in Budget 2014 and provided for in Finance (No. 2) Act 2013 is €120 million. These changes differ in some respects from those proposed by the TPPG; for example the introduction of age-related valuation factors for the purposes of placing a capital value on Defined Benefit pension rights for SFT purposes which vary with the age at which the pensions are drawn down, thereby improving equity within the regime. They also reflect the requirement, on legal advice, to protect pension rights already accrued at the date of change (i.e. 1 January 2014).