Louise O'Reilly (Dublin Fingal, Sinn Fein)
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193. To ask the Minister for Finance if his attention has been drawn to the practice in the public service whereby retirees receive a monthly pension payment and an interim payment of approximately half the after-tax amount in the middle of the month; if this arrangement is revenue compliant and all relevant deductions can and are being made; and if he will make a statement on the matter. [42037/21]

Paschal Donohoe (Dublin Central, Fine Gael)
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The matter of the Public Service payroll is primarily a matter for my colleague the Minister of Public Expenditure and Reform. Furthermore, enquiries made by my Department with relevant bodies failed to identify the practice within the public service pensions payment system to which the Deputy refers.  However, if the Deputy wishes to provide further details, my officials will make further enquiries.

That being said, in terms of Revenue compliance in relation to payroll practices, Revenue have advised as follows:

The Pay As You Earn (PAYE) system is a method of tax deduction under which an employer (including occupational pension providers) calculates and deducts any income tax due each time a payment of wages, salary, pensions etc. is made to an employee (any reference to employee also includes ‘occupational pension recipients’). In addition, employers are obliged to calculate and deduct any liability to Pay Related Social Insurance (PRSI), Universal Social Charge (USC) and Local Property Tax (LPT).

The PAYE system operates on a receipts basis which means that income tax and other statutory deductions are to be operated when a payment is being made to an employee. Under the PAYE system, tax should be operated on any interim payments or advance payments of emoluments made by an employer to an employee. With the introduction of PAYE real time payroll reporting with effect from 1 January 2019, employers are obliged to report their employees’ pay and statutory deductions to Revenue, on or before the date they pay their staff.

I have been advised by Revenue that the frequency of payments to retirees is a matter for the Public Service employer in question and notwithstanding this an employer is obliged to operate PAYE correctly on all payments.