Michael McGrath (Cork South Central, Fianna Fail)
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88. To ask the Minister for Finance the number of approved retirement funds in operation; the value of funds held in these; and if he will make a statement on the matter. [19015/16]

Michael McGrath (Cork South Central, Fianna Fail)
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89. To ask the Minister for Finance the value of pension buy-out bonds in the Irish markets that may now qualify for approved retirement fund options; and if he will make a statement on the matter. [19016/16]

Michael Noonan (Limerick City, Fine Gael)
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I propose to take Questions Nos. 88 and 89 together.

Approved Retirement Funds (ARFs) are investment vehicles into which the proceeds of the pension savings of the self-employed, business owners and any individual with Defined Contribution pension arrangements may be invested at retirement, subject to conditions. Beneficial ownership of the assets in an ARF vests in the individual owner of the ARF and, among other conditions, the ARF must be managed by an independent Qualifying Fund Manager. The ARF option is an alternative to annuity purchase and essentially gives control over post-retirement income to those individuals who, generally, have borne the investment risk on their funds in the pension growth phase.

A Buy-out Bond, otherwise known as a Personal Retirement Bond, is a single premium pension policy into which an existing pension fund or the cash value of an accrued pension benefit can be transferred from a Defined Contribution (DC) or Defined Benefit (DB) occupational pension scheme. Buy-out Bonds are generally effected by the trustees of a scheme on behalf of a scheme member when the scheme member is leaving the employment of the scheme-sponsor or when the scheme is being wound-up, in lieu of providing the member with a preserved retirement benefit under the scheme. They are also availed of in circumstances where the scheme member's pension entitlements are being split under the terms of a pension adjustment order. Buy-out Bonds are usually provided and administered by life assurance companies.

There is no requirement on Qualifying Fund Managers or on life assurance companies to provide my Department or the Revenue Commissioners with detailed data of the kind requested in the questions in relation to ARFs or Buy-Out Bonds. I am, therefore, not in a position to supply the Deputy with information on the current numbers or values of such products.

I am assuming that the questions raised by the Deputy have been prompted by the change which I announced last week whereby the holders of Buy-out Bonds whose funds originate from DB schemes will from now on have access to the ARF option. Buy-out Bonds whose transfer values originate from DB schemes have not had access to the ARF option up to now and the only option available to the holder of a Bond in those circumstances has been to purchase a pension annuity with the remaining funds in the Bond (after taking the permissible tax-free retirement lump sum).  Buy-out Bonds are DC pension products, however, and whether funded originally from DB or DC pension schemes, the holders of such Bonds bear the investment risk on their funds in the same way as holders of other DC pension savings who would have access to the ARF option as well as the annuity purchase option at retirement.

The ARF option is not available to the main benefits paid from DB pension schemes, generally, since it was never intended or considered a necessary requirement for such schemes which pay out a specified pension benefit. This position remains unchanged.  

My decision to change the policy on ARF access for the holders of Buy-out Bonds whose funds originate from DB schemes has been particularly informed by the increasing frequency over recent years of the wind-up of DB pension schemes, with the members of such schemes having no choice in many cases but to accept a transfer to a Buy-out Bond and inevitable annuity purchase on retirement. The policy change will be of particular benefit to individuals in this situation. The Deputy should note that there is no Exchequer cost involved as a result of this change.