Wednesday, 20 May 2020
Department of Finance
49. To ask the Minister for Finance his plans to consider allowing certain pension scheme members access to additional voluntary contributions as a means of stimulating the economy; and if he will make a statement on the matter. [5721/20]
In relation to the Deputy’s proposal to allow people access a portion of their pension fund before retirement, the long established policy of providing tax relief for pension contributions is to encourage saving by employers, employees and the self-employed towards their retirement income. A repayment of contributions is only permitted in highly limited circumstances, for example due to ill-health, and as such, this would be subject to income tax.
The policy rationale underpinning this is the State provides generous tax relief on both pension contributions and fund growth to ensure that people have sufficient savings to fund their regular costs and expenses during their retirement. However, on actual drawdown a pension is subject to tax at the individual’s marginal tax rate. In the event of any early encashment of a pension fund the tax relief received must be clawed back. It should also be noted that any refund of pension contributions is governed by the terms of the specific scheme or product.
As is the case with all matters of policy, while they are monitored on a continuous basis, I do not have any plan at this time to revise these pension arrangements.
It is important to point out that a very significant and comprehensive package of measures has already been put in place to assist those who have suffered a loss of income arising from the COVID-19 crisis. This includes the Temporary Wage Subsidy Scheme (TWSS), the Pandemic Unemployment Payment and bank-related forbearance measures.
Revenue data from 14 May 2020 show there are over 53,900 employers registered with Revenue and more than 464,400 employees had received at least one payment under TWSS. The data are available on Revenue’s website at the link: www.revenue.ie/en/corporate/documents/statistics/registrations/wage-subsidy-scheme-statistics-14-may-2020.pdf.
Data from the Department of Employment Affairs & Social Protection show there were 584,600 people in receipt of a Pandemic Unemployment Payment on 18 May 2020. The data are available at the link: www.gov.ie/pdf/?file=https://assets.gov.ie/74440/d2d234214f994fe6966afdb28eed1e55.pdf#page=1.