Róisín Shortall (Dublin North West, Social Democrats)
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268. To ask the Minister for Finance the annual tax savings and costs to the State if the standard fund threshold were to be changed from €2 million to €1.2 million; €1.4 million; €1.6 million; €1.8 million; €2 million; and €2.4 million. [34443/15]

Róisín Shortall (Dublin North West, Social Democrats)
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269. To ask the Minister for Finance the annual tax savings to the State if, when computing the standard fund threshold for members with defined benefit pensions, post 1 January 2014 conversion factors were to be applied to all pensions, and not just the portion accrued after that date. [34444/15]

Finian McGrath (Dublin North Central, Independent)
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286. To ask the Minister for Finance the estimated yield to the Exchequer if the standard fund threshold was decreased from €2 million to €1 million; and if he will make a statement on the matter. [34722/15]

Michael Noonan (Limerick City, Fine Gael)
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I propose to take Questions Nos. 268, 269 and 286 together.

The SFT is the maximum allowable pension fund on retirement for tax purposes which was introduced in Budget and Finance Act 2006 to prevent over-funding of pensions through tax-relieved arrangements. The threshold was initially set at €5 million, which was subsequently reduced to €2.3 million in 2010 and further reduced in Budget 2014 and Finance (No 2) Act 2013 to €2 million with effect from 1 January 2014.

Information on the numbers and values of individual pension funds or on individual accrued benefits in pension schemes are not generally required to be supplied to either the Revenue Commissioners or to my Department by the administrators of pension schemes and personal pension arrangements. The estimate of the yield of €120 million in 2014 and in a full year arising from the changes to the SFT regime introduced in Finance (No 2) Act 2013 was arrived at following considerable internal work over a period by my Department involving, among other things, data gathering and consultation with private sector sources relating to the specific changes to be made. There is no readily available underlying data or methodology on which to base reliable estimates of the savings that would arise from further changes to the SFT of the scale envisaged in the questions.

I should explain that the valuation factors to be used for establishing the capital value of defined benefit (DB) pension rights at the point of retirement for SFT purposes, and which accrue after 1 January 2014, were changed by Finance (No 2) Act 2013 from the previous single factor of 20 to a range of higher age-related valuation factors that vary with the individual's age at the point at which the pension rights are drawn down. The higher factors range from 37 for defined benefit pension entitlements drawn down at age 50 or under to a factor of 22 for pensions drawn down at age 70 or over.

This change was introduced in response to the major criticism levelled at the  SFT regime that the fixed rate conversion factor of 20:1 used up to 1 January 2014 was inequitable relative to defined contribution pension arrangements, given the higher market annuity rates that those with defined contribution (DC) arrangements could face if they were to purchase annuities. The move to higher age-related factors that vary according to the individual's age at the point the benefits are drawn down will substantially improve the equity between DC and DB arrangements and as between those who retire at younger ages and those who retire later in life.

Based on legal advice regarding the protection of pension rights, the higher valuation factors apply to DB pension entitlements accruing after 1 January 2014. The impact of the higher valuation factors on the SFT regime for DB scheme members will depend on a number of things including, for example, the choices made by affected individuals about their continued accrual of pension entitlements (where that choice is available) and the age at which they decide to draw down their pension entitlements. Since my Department or the Revenue Commissioners can have no information on these choices or on the accrued pension entitlements of such individuals as at 1 January 2014, or indeed generally, I am not in a position to provide the costing requested in the question about the application of post 1 January 2014 conversion factors.