Michael McGrath (Cork South Central, Fianna Fail)
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111. To ask the Minister for Finance the number of persons who were granted a personal increase in the standard fund threshold applying to their pension in 2015; the cumulative increase represented by these cases; the amount of tax foregone as a result; and if he will make a statement on the matter. [17794/16]

Michael Noonan (Limerick City, Fine Gael)
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I take it that the Deputy is referring to the facility available under the Standard Fund Threshold (SFT) regime whereby individuals can seek a Personal Fund Threshold (PFT) in certain circumstances.

The Standard Fund Threshold (SFT) is the maximum allowable pension fund on retirement for tax purposes. Its purpose is to discourage over-funding and over-accrual of pension benefits through tax-relieved and tax-subsidised arrangements. The regime achieves this by imposing a significant tax charge on the value of retirement benefits above set limits when they are drawn down.

When the SFT limit was reduced in Budget and Finance Act 2011 to a level of €2.3 million, with effect from 7 December 2010, and was further reduced in Budget and Finance (No. 2) Act 2013 to €2 million, with effect from 1 January 2014, the clear legal advice to the Government (as at the time of the original introduction of the regime in 2005) was that an individual who had pension rights in excess of the SFT limit at the relevant dates was entitled to protect or "grandfather" those rights. Accordingly, the legislation provided that such individuals could protect their higher pension values, subject to certain ceilings and conditions, by applying to Revenue for a PFT certificate.

The Deputy is seeking to establish the cumulative level of protection afforded and the estimated tax foregone resulting from the grandfathering arrangements outlined above. In relation to the tax foregone as a result of the PFT legislation, the Revenue Commissioners are not in a position to compute this figure for a number of reasons such as, the fact that it is not known when exactly the individuals who have PFT's will retire; what tax free lump sums, if any, they may be entitled to take from their pension fund; what the tax rate will be when they retire and the size of their pension fund at retirement. 

The concept of "tax foregone" is arguably more applicable in the context of tax reliefs where there is a choice as to whether to pursue the particular policy stance or not. In that regard, it is important to note that these grandfathering arrangements were not considered optional and were provided in the legislation following legal advice to that effect from the Attorney General. In other words, introducing the SFT regime to put an end to the provision of excessive pension pots at the expense of the general body of taxpayers required the simultaneous protection of pension rights that had been built up legitimately by individuals under the tax provisions that applied up to the relevant dates. This was the firm legal advice to the Government when the SFT was introduced and on each subsequent occasion that the SFT limit was reduced. The choice, therefore, was to introduce the SFT regime with grandfathering or not at all.

I am informed by Revenue that in 2015 they issued a total of 501 PFT certificates with a total value of €1,107 million. The combined overall total number and value of PFT certificates issued since 7 December 2010 is 1,584 and €4,387 million, respectively.

The cumulative additional value of pension benefits protected in 2015 as compared with the SFT limits applying amounted to €105 million. The cumulative additional value of pension benefits protected as compared with the SFT limits applying at 7 December 2010 and 1 January 2014, respectively, amounts to €942 million.