Michael McGrath (Cork South Central, Fianna Fail)
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232. To ask the Minister for Finance further to Parliamentary Question No. 79 of 22 January 2015, the process in place in the Revenue Commissioners to verify entitlement to a personal fund threshold when one is requested; the documentation which must be furnished in support of such a claim if the Revenue Commissioners audit holders of personal fund thresholds to ensure compliance is maintained; and if he will make a statement on the matter. [4322/15]

Michael Noonan (Limerick City, Fine Gael)
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I am informed by the Revenue Commissioners that tax legislation provides for a limit or ceiling on the total capital value of tax-relieved pension benefits that an individual can draw down in his or her lifetime from all of that individual's pension arrangements. This is known as the Standard Fund Threshold (SFT) and was introduced on 7 December 2005 and reduced on a number of occasions since, most recently in Finance (No 2) Act 2013 which, among other things, reduced the SFT from €2.3 million to €2 million from 1 January 2014.

A higher limit, known as a Personal Fund Threshold (PFT), may be claimed where the capital value of an individual's pension benefits exceeded the SFT on the date of its introduction or on the various dates on which it was reduced. Accordingly, the legislation provided that such individuals could protect his or her higher pension values, subject to certain ceilings and conditions, by applying to the Revenue Commissioners for a PFT certificate.

In order to be in a position to make a correct application for a PFT the individual concerned had to request a statement from the administrator of his or her defined benefit and/or defined contribution arrangement certifying the capital value of that individual's pension rights at that date, as calculated in accordance with the provisions of Chapter 2C of Part 30 of, and Schedule 23B to, the Taxes Consolidation Act 1997.

Up to June 2014, when the PFT process was paper based, each application was examined and documentary evidence was requested to verify the accuracy of the submission and that the correct amount of a PFT was being claimed.

Since the advent of the new electronic system in July 2014 an individual is required, when making an application for a PFT, to provide basic identifying information about him or herself and the various pension arrangements of which he or she is a member. In addition, the individual has to obtain from the administrator of each pension arrangement of which he or she is a member, a statement certifying the amount of the individual's pension rights as at 1 January 2014 relating to that arrangement, calculated in accordance with the provisions of the relevant legislation.

The legislation places an obligation on both the individual making the PFT application and the administrator(s) of the pension arrangement(s) to retain the certifying statements for a period of 6 years after the last benefit is paid out and to make them available to an officer of the Revenue Commissioners on being required by a notice in writing to do so.

Section 787P (2) (b) of the Taxes Consolidation Act 1997 requires the PFT applications to be made electronically within 12 months of the electronic system becoming available (1 July 2015). After this closing date for applications, Revenue will launch a compliance program to ensure the electronic applications are correct and comply fully with the terms of the legislation.

Since 1 January 2014 when the SFT was reduced to €2 million, Revenue has issued 159 PFT certificates.