Michael McGrath (Cork South Central, Fianna Fail)
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97. To ask the Minister for Finance his plans to change the law in respect of the 25% maximum tax free lump sum drawdown of certain pension schemes before 75 years of age ; the rules in this area; and if he will make a statement on the matter. [52171/17]

Paschal Donohoe (Dublin Central, Fine Gael)
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I am advised by Revenue that in relation to Retirement Annuity Contracts (RACs) and Personal Retirement Savings Accounts (PRSAs), Part 30 of the Taxes Consolidation Act 1997 provides that individuals may draw down a maximum retirement lump sum of 25% of the accumulated value of their RAC or PRSA generally from age 60, but not later than age 75. For PRSAs linked to occupational pension schemes into which Additional Voluntary Contributions have been made, the maximum lump sum is based on the scheme rules, the individual’s length of service and final earnings, with 150% of final salary being the maximum lump sum available based on 20 years service. Under Chapter 1 of Part 30, retirements benefits from occupational schemes must be taken not later than age 70.

In the case of an RAC, the retirement lump sum must be taken at the time an annuity becomes payable under the contract or the individual opts to transfer the balance of the fund after the lump sum to an Approved Retirement Fund or take the fund as a taxable cash sum. Both of these options are subject to the requirement that the individual transfers €63,500 of the fund balance (or all of the balance, if less than €63,500) to an Approved Minimum Retirement Fund, or uses it to purchase an annuity. In the case of a PRSA, the lump sum must be taken on the first occasion benefits are taken from the PRSA.    

I am further advised that the maximum cumulative tax-free total of all retirement lump sums that an individual can take from all pension arrangements since 7 December 2005 is €200,000. Any lump sums taken in excess of this cumulative life-time limit are subject to taxation at a ring-fenced rate of 20% on the next €300,000, and at the individual’s marginal income tax rate plus USC on any balance.

I have no plans to change the current retirement lump sum rules in this area.