Bernard Durkan (Kildare North, Fine Gael)
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335. To ask the Minister for Finance the extent to which he has studied the impact on holders of combined contribution pensions who are prevented from accessing their total savings due to the requirements of the need for proof of an independent pension of €12,700, Approved Retirement Fund, ARF, in respect of whom the State appears to attempt to provide for their retirement by way of a nominal payment as low as €1,200 per annum, which can have virtually no impact on their quality of life, but who could benefit in a variety of ways if allowed to draw down their full entitlement in a single payment subject to normal taxation or, at least, if consideration may be given to their availing of the most beneficial option in the circumstances; and if he will make a statement on the matter. [41921/14]

Michael Noonan (Limerick City, Fine Gael)
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There are a number of alternative options available at retirement to individuals who have Defined Contribution pension funds (after taking their tax-free lump sum) other than the immediate purchase of a pension annuity.  

These options include investing in an Approved Retirement Fund (ARF) where the funds can be drawn-down at the ARF owner's discretion subject to taxation or taking the balance of the pension funds as one taxable lump sum. The availability of these options is subject to certain conditions including the requirement that (if aged under 75) the individual has in payment, in his or her own right, at the time of exercising these options a guaranteed pension income for life of €12,700 per annum. This guaranteed pension income can include a pension paid by the State.  

If the guaranteed pension income requirement is not met and the individual does not wish to purchase a pension annuity at that time, a maximum of €63,500 of the remaining pension funds (or the remaining funds if lower than that amount) must be invested in an Approved Minimum Retirement Fund (AMRF) until either the guaranteed pension income requirement is met or the individual reaches age 75 at which point the AMRF becomes an ARF with unrestricted access to the funds subject to taxation. Any remaining pension funds in excess of the €63,500 set-aside amount can be invested in an ARF. The funds in an AMRF can be used at any time to purchase a pension annuity.

The purpose of these various arrangements is to seek to ensure that individuals have options to access a source of income from their pension funds over the full period of their retirement. In this year's Finance Bill, I have included a number of amendments to further enhance these arrangements. I have no plans, however, to remove the guaranteed pension income in payment requirement.

Section 17 of the Bill, as published, reduces the imputed distribution rate from 5% to 4% for ARFs and vested Personal Retirement Savings Accounts (PRSAs) beneficially owned by individuals aged between 60 and 70 where the value of assets in those products is €2 million or less. The purpose of this change is to reduce the risk that the owners of funds in these circumstances will outlive the funds available for their retirement. Section 17 also replaces access by the beneficial owner to the accrued income, profits or gains arising in an AMRF with an option to draw-down up to 4% of the assets of such funds each year. This is primarily aimed at those individuals whose AMRF constitutes a significant part of their retirement funds and who, while not wishing to purchase a pension annuity with those funds, may require access to a portion of these funds to provide a more certain form of income prior to reaching age 75.