Written answers

Wednesday, 1 March 2017

Department of Finance

Pension Provisions

Photo of Noel GrealishNoel Grealish (Galway West, Independent)
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104. To ask the Minister for Finance to outline his plans to amend section 772(2)(e) of the Taxes Consolidation Act 1997 regarding non-trading companies which, before being formally wound up, are in a position to retrospectively meet pension obligations to their occupational pension schemes but are not allowed to avail of exempt approval status because they are non-trading; if section 772(4)(a) provides sufficient discretion for the Revenue Commissioners in approving such cases; if he is satisfied that an employer’s delay in recognising pension liabilities should absolve it from its obligations; and if he will make a statement on the matter. [10712/17]

Photo of Michael NoonanMichael Noonan (Limerick City, Fine Gael)
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I am advised by Revenue that Section 772 of the Taxes Consolidation Act (TCA) 1997 prescribes the conditions required for the approval of a retirement benefits scheme. Under section 772 of the TCA a retirement benefits scheme shall be approved once it is established and Revenue is satisfied that the conditions set out in subsections 2 and 3 have been complied with.

As referred to by the Deputy, one of the conditions provided under section 772(2) is the requirement that the scheme seeking the approval of Revenue be 'established in connection with some trade or undertaking carried on in the State by a person resident in the State'(section 772(2)(e) TCA).

Notwithstanding the above, section 772(4) provides Revenue with the discretion to approve a retirement benefits scheme, in the absence of one or more of the conditions specified in section 772. In particular, section 772(4) authorises Revenue to approve a scheme which:

- exceeds the limits imposed by the prescribed conditions as respects benefits for less than 40 years' service,

- allows benefits to be payable on retirement within 10 years of the specified age or on earlier incapacity,

- provides for the return in certain contingencies of employees' contributions and payment of interest (if any) on the contributions or,

- relates to a trade or undertaking carried on only partly in the State and by a person not resident in the State.

Revenue exercises its discretionary power in relation to this Section in an open and transparent manner. To this end Revenue produces a Pensions Manual which outlines the current practice in exercising its discretionary powers. This Revenue Pensions Manual is updated on a regular basis to ensure that Revenue's discretionary powers are clear and made available to all interested parties. The scenario outlined by the Deputy is not provided for in Section 772(4), nor is it provided for in Revenue's Pensions Manual, and Revenue does not consider it appropriate to their statutory discretion.

I have no plans to amend this legislation.

The duties of employers to meet pension obligations whether on winding up or otherwise are matters which are dealt with in the Pensions Acts which come under the responsibility of my colleague the Minister for Social Protection.

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