Seán Haughey (Dublin Bay North, Fianna Fail)
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139. To ask the Minister for Finance if he will amend existing legislation in order to allow pensioners draw down the full amount of an approved minimum retirement fund prior to 75 years of age; and if he will make a statement on the matter. [26459/16]

Michael Noonan (Limerick City, Fine Gael)
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An individual in a defined contribution pension savings arrangement (whether an occupational pension scheme, an Additional Voluntary Contribution arrangement or a personal pension) has the option of putting the funds accumulated under the arrangement into an Approved Retirement Fund (ARF) on retirement subject to conditions. Where such an individual is under the age of 75 at the time of exercising the option and does not meet the requirement of having a minimum guaranteed pension income for life of €12,700 per annum, he or she is required to "set aside" an amount of €63,500 (or the remainder of the pension fund if less than €63,500 after taking a retirement lump sum) by investing the amount in an Approved Minimum Retirement Fund (AMRF) or by the purchase of an annuity.

The purpose of the AMRF is to ensure that an individual, without the minimum guaranteed pension income for life, has a capital "nest-egg" to provide for the latter years of his or her retirement. The proposal in the question would clearly remove that safety net.

I introduced changes to the AMRF arrangements in Finance Act 2014, with effect from 1 January 2015, to allow an AMRF owner draw down up to 4% of the value of the fund assets on one occasion annually until he or she either meets the guaranteed pension income requirement or attains the age of 75, at which point, the AMRF automatically becomes an ARF and any remaining funds can be drawn down at the owner's discretion.

In general, drawdowns from AMRFs (and ARFs) are subject to income tax, PRSI (up to age 66) and USC.

The 4% annual draw down arrangement, replaced the facility that existed previously, whereby an AMRF owner could draw down the accrued income and gains of the AMRF (subject to tax etc.) as and when they wished. This change was prompted by a concern to allow all AMRF owners, particularly those with relatively modest retirement funds, access to a more certain level of annual drawdown from their AMRF, rather than the uncertain level of drawdown that dependence on investment performance had given rise to heretofore. This is particularly important for those individuals whose AMRF constitutes a significant part of their retirement funds.

I have no plans to change these arrangements.