John Lahart (Dublin South West, Fianna Fail)
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107. To ask the Minister for Finance his views on whether allowing holders of annuity pensions cash their lump sums and pay outstanding taxes would be more beneficial to persons that are in receipt of small monthly amounts from annuity pensions, in view of steps taken recently by the UK government regarding same; and if he will make a statement on the matter. [36991/17]

Paschal Donohoe (Dublin Central, Fine Gael)
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I am advised by Revenue that the Taxes Consolidation Act 1997 provides flexible options at retirement that are available in respect of all benefits from Defined Contribution (DC) retirement benefit schemes and other pension savings. They are also available to members of defined benefit (DB) schemes who are proprietary directors in respect of retirement benefits from their main scheme and from additional voluntary contributions (AVCs) and to other DB scheme members in respect of their AVC benefits only.

As an alternative to using the balance of their pension funds (after taking any retirement lump sum) to purchase an annuity, an individual who is entitled to do so may, subject to conditions, opt to receive the remaining funds in cash (subject to marginal rate income tax) or to invest them in an approved retirement fund (ARF) or an Approved Minimum Retirement Fund (AMRF). I am also advised by Revenue that the commutation of small or trivial pensions is allowable in certain limited circumstances on retirement.

Full commutation of pension benefits to a taxable single payment is permitted by Revenue on triviality grounds where, on retirement, the aggregate pension benefits payable to an employee under all schemes related to an employment do not exceed the value of €330 per annum.

Alternatively, where, on retirement and following the payment of any lump sum the total of all funds available for pension benefits is less than €20,000, a once-off payment of the pension benefits to an individual instead of the purchase of an annuity may be allowed with the agreement of the scheme (beneficiaries and) trustees. The quantum of retirement benefits from all sources must be taken into account when calculating this €20,000 limit.

The Deputy’s question refers specifically to proposals in the UK to allow for the sale of annuities.  Our understanding of the UK position is that the rule changes which would have allowed individuals sell their retirement annuities, and which were due to come into effect in April of this year, are not going ahead.