Written answers

Tuesday, 9 June 2020

Photo of Mattie McGrathMattie McGrath (Tipperary, Independent)
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88. To ask the Minister for Finance if he will consider a once-off measure that each PRSA holder will be allowed to take a once-off withdrawal of €7,500 from their PRSA irrespective of other drawings they may or may not have made in the past (details supplied) in an effort to kickstart the economy following the Covid-19 pandemic; and if he will make a statement on the matter. [10448/20]

Photo of Paschal DonohoePaschal Donohoe (Dublin Central, Fine Gael)
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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 kept under review 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.

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