Shane Ross (Dublin South, Independent)
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133. To ask the Minister for Finance his plans to increase the tax-free amount which may be withdrawn from annuity-tied and restricted pension funds; and if he will make a statement on the matter. [17438/15]

Michael Noonan (Limerick City, Fine Gael)
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I am informed by the Revenue Commissioners that the retirement benefits that may be provided by Revenue approved retirement arrangements cannot exceed certain maximum levels as set out in Part 30 of the Taxes Consolidation Act 1997 and in the Revenue Pensions Manual.

In the case of retirement lump sums, the maximum amount that may be taken depends on both the nature of the pension arrangement and the benefit options chosen by the member of the arrangement at the point of retirement.

In general, where the pension arrangement is an occupational pension scheme, the amount that may be taken in cash form at retirement in lieu of pension benefits cannot exceed a maximum of 1.5 times final remuneration where the member has at least 20 years of service with the employer, or a lower proportion where the member has completed less than 20 years of service.

However, where the occupational pension scheme is a defined contribution (as opposed to a defined benefit) arrangement, the member has the option of taking a retirement lump sum based on final remuneration and service as outlined above, with the remainder of the fund being available to purchase an annuity or, alternatively, providing the scheme rules allow and subject to conditions, to take a retirement lump sum of up to 25% of the accumulated value of the fund with the balance transferred to an Approved Retirement Fund or taken as a taxable cash sum. This is generally known as the "ARF Option" and the conditions that must be met are that the scheme member is in receipt of guaranteed pension or annuity income for life of €12,700 per annum at the point of retirement or,  in the absence of that, that he or she invests up to €63,500 of the balance of the pension fund (or the whole of the remainder of the fund after taking the retirement lump sum, if less than that amount) in an Approved Minimum Retirement Fund or an annuity.

In the case of personal pension arrangements such as Retirement Annuity Contracts (RACs) and Personal Retirement Savings Accounts (PRSAs), in general a lump sum of up to 25% of the value of the fund can be taken from age 60, with the remainder of the fund used to either purchase an annuity or avail of the ARF Options described above.

I am further advised by the Commissioners, that the maximum cumulative tax-free total of all retirement lump sums that an individual can take from all pension arrangements since 7 December 2005 is €200,000. Any lump sums taken in excess of this cumulative life-time limit are subject to taxation at a ring-fenced rate of 20% on the next €300,000 and at the individual's marginal income tax rate plus USC on any balance.

I have no plans to change the current retirement lump sum rules or the life-time tax-free limit.