John Lahart (Dublin South West, Fianna Fail)
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276. To ask the Minister for Finance the number of proposals in the Interdepartmental Pensions Reform and Taxation Group report from 2020 that have been implemented; the number not yet been implemented; the expected timeline for those not yet implemented; and if he will make a statement on the matter. [36059/25]

Paschal Donohoe (Dublin Central, Fine Gael)
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The Interdepartmental Pensions Reform and Taxation Group (IDPRTG) was established to carry out a number of tasks set out in the Roadmap for Pensions Reform 2018 -2023. The Roadmap set out the need to promote long-term pension saving to address income adequacy in retirement, in particular for low income earners.

The IDPRTG is chaired by the Department of Finance, and includes representatives from the Department of Public Expenditure and Reform; the Department of Social Protection (DSP); the Office of the Revenue Commissioners; and the Pensions Authority. In 2020 the IDPRTG published a report which set out a number of actions to aid in the harmonisation and simplification of supplemental pensions.

A number of reforms suggested by the IDPRTG 2020 report been implemented or are actively being progressed. From a Department of Finance perspective, multiple changes to tax legislation have been introduced that have helped simplify the pensions landscape, including Personal Retirement Savings Accounts (PRSAs).

At present, there are 11 actions completed; and 18 actions are currently being advanced. There are a number of outstanding reforms highlighted in the report that are substantial and complex in nature and will require major policy work across a number of Departments and bodies. Further to this, careful sequencing and interdependency across other issues is necessary for implementation.

The IDPRTG has provided a valuable cross departmental forum where key policy stakeholders can engage, and the group remains committed to progressing outstanding actions and continuing pension reform going forward.

John Lahart (Dublin South West, Fianna Fail)
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277. To ask the Minister for Finance if there are any plans for increasing the cap for PRSAs or introducing any changes on how employer contributions to PRSAs are capped; and if he will make a statement on the matter. [36060/25]

Paschal Donohoe (Dublin Central, Fine Gael)
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Prior to 1 January 2023, where the combined contributions by an employer and an employee to the employee’s Personal Retirement Savings Account (PRSA) did not exceed the employee’s annual percentage limit, as set out in section 787E(1) Taxes Consolidation Act 1997 (TCA), the contributions were relieved from tax. The employee’s annual percentage limit is between 15% and 40% of “net relevant earnings”, varying depending on age, up to a maximum relieved salary of €115,000. However, where the combined employer and employee contributions exceeded the applicable threshold, the amount above the threshold was treated as a taxable benefit in kind (BIK) in the hands of the employee. In contrast for occupational pension schemes, employer contributions are not a BIK.

Section 22 Finance Act 2022 sought to remove the difference in BIK treatment between PRSAs and occupational pension schemes This section amended the Taxes Consolidation Act 1997, by abolishing the BIK charge on employer contributions to an employee’s PRSA. In addition, employer contributions to an employee’s PRSA were no longer counted towards an employee’s age and salary related percentage limits on tax deductible contributions. These changes were recommended by the Interdepartmental Pension Reform and Taxation Group (IDPRTG) with a view to improving, harmonising and simplifying the pension landscape in Ireland. It was expected that the amendment would likely result in a change in behaviour by encouraging increased PRSA contributions.

As with any change in tax policy, Revenue actively monitored developments since the introduction of the changes in Finance Act 2022.

From Revenue’s analysis of employer PRSA contributions in 2023, it appeared some cases suggested behaviour that was not in keeping with the policy intention of the changes. Revenue advised officials in my Department of these concerns.

Section 12 Finance Act 2024 addressed these concerns by providing for an “employer limit” on employer PRSA contributions of 100% of the relevant employee’s salary. Any contributions above the “employer limit” will be considered a taxable BIK for the employee and therefore subject to tax.

I would note that the process of ensuring that taxation relief is availed of in an appropriate manner is ongoing and continuous and involves Revenue and my Department working closely together to monitor developments, assess data and, where necessary, amend provisions to avoid misuse.

I have no plans to change these arrangements at present. However, these provisions, along with other pension taxation measures, are kept under review.

John Lahart (Dublin South West, Fianna Fail)
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278. To ask the Minister for Finance if there are plans to harmonise pension tax relief so that the State contribution under AE is equivalent to the tax relief which people get on private pensions; if so, whether the harmonisation plans upwards or downwards; what other details can be provided on the plans; and if he will make a statement on the matter. [36061/25]

Paschal Donohoe (Dublin Central, Fine Gael)
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The introduction of the Automatic Enrolment Retirement Savings System, known as AE, is a landmark reform designed to get people to save for their retirement earlier thereby helping them to sustain a reasonable standard of living in their old age. It is also designed to support the long-term sustainability of the pension system more generally.

As the Deputy is aware the operation of AE is a matter for the Minister for Social Protection. However responsible for taxation policy including for the AE scheme lies with me as Minister for Finance and the legislation governing the taxation element of AE was provided for in Finance Act 2024.

My Department and Revenue worked closely with the Department of Social Protection to prepare these legislative provisions governing the taxation treatment of Auto Enrolment savings. As agreed by Government, the approach is to align as much as possible with the taxation of Personal Retirement Savings Accounts (PRSAs), other than for employee contributions.

Therefore the key distinction between the AE scheme and the “Exempt-Exempt Taxed” (EET) system of pension taxation provided to PRSAs and other pensions, in line with the approach agreed by Government, is that participants in the AE scheme will not be eligible for tax relief for their individual AE contributions. Instead, participants will benefit from a State “top-up” directly to their AE accounts. AE participants will benefit from a State top up of €1 for every €3 they contribute. In contrast under the EET system, tax relief on contributions is available at the individuals’ marginal rate of income tax.

I do not intend at this time to introduce arrangements to amend the current tax relief system for pensions contributions, which is a well-established system. The current tax relief for contributions will continue to apply for those making private and occupational pension contributions outside the AE system. As with all taxation, the provisions applying to AE and supplementary pensions remain under review and will continue to do so as the AE scheme becomes operational.

John Lahart (Dublin South West, Fianna Fail)
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279. To ask the Minister for Finance If there any plans to simplify or align the rules for PRSAs and master trusts, specifically in relation to master trust contributions based on salary, age, and company service, and PRSA contributions with the limit of 100% of salary; if he agrees that there are very different rules for accessing benefits, either at retirement or on early retirement, in relation to tax-free lump sums, and different rules on death under each scheme, and that the funding for future and prior service opens up greater opportunities in a master trust, but not in a PRSA; and if he will make a statement on the matter. [36063/25]

Paschal Donohoe (Dublin Central, Fine Gael)
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While there are differences in the treatment of occupational pension schemes and Personal Retirement Savings Accounts (PRSAs), these differences stem from the nature of the products.

I am advised by Revenue that “master trusts” are not currently defined in either pensions or tax legislation. For tax purposes, a master trust is treated as an occupational pension scheme which caters for more than one employer, and which is subject to the provisions of Chapter 1 of Part 30, Taxes Consolidation Act 1997 (TCA). An occupational pension scheme is linked to an employment, and one of the conditions for Revenue approval of an occupational pension scheme is that an employer must contribute to the scheme (section 772(2)(d) TCA).

Tax relief is granted for employer contributions to a pension under section 774(6) TCA. There is no specific limit on allowable employer contributions to an occupational scheme. Instead, the maximum permitted funding is related to the amount required to provide pension benefits for members of the scheme, related to their salary and service and subject to the limits on pension benefits in section 772(3) TCA.

A PRSA, by contrast, is a personal pension product, based on a contract between an individual and the PRSA provider. An employer has no obligation to contribute to an employee’s PRSA, and there is no link between the PRSA and a specific employment. A PRSA may in fact be taken out by a self-employed person rather than an employee. However, tax relief is available for employer contributions to an employee’s PRSA, subject to certain limits. Any amount of an employer contribution in excess of the “employer limit” is not deductible for tax purposes, and is treated as a taxable benefit in kind for the employee. The employer limit is defined in section 787E(1) TCA as 100% of the relevant employee’s emoluments in a tax year or, where an employee’s salary is lower in the current year by reason of unpaid leave, in the previous year. The employer limit imposes a cap on the amount of PRSA contributions that qualify for tax relief for employees and employers, just as the maximum funding rules impose similar restrictions for occupational pension schemes.

Employers may make “non-ordinary” or special contributions to an occupational pension to cover scheme liabilities. However, the maximum contribution an employer can make in a tax year to a PRSA for any individual employee is capped at 100% of that employee’s salary.

All employee or individual contributions to all pension products, including occupational pension schemes and PRSAs, are subject to the age-related percentage limits, ranging from 15% to 40% of emoluments, and to the overall income limit, currently €115,000.

As to retirement benefits, the earliest age at which an individual can take retirement benefits is usually age 60 years. However, the terms of an occupational pension scheme or a PRSA may provide that, in certain circumstances, an individual can retire and take benefits from age 50 years.

An occupational scheme may pay a pension to members or may arrange for a member’s entitlements to be paid as a pension by other means, such as via an annuity, or in some circumstances transferred to an ARF. PRSA holders may take their benefits directly from the PRSA, transfer them to an ARF, or take out an annuity.

There is an overall lifetime allowance of €200,000 on a tax-free lump sum, which applies to lump sums from all pension products. In the event the €200,000 lifetime allowance is exceeded, section 790AA(3) TCA applies excess lump sum tax at 20% on amounts between €200,000 and €500,000, and at 40% on amounts over €500,000. Subject to those tax provisions, occupational pension schemes can provide a lump sum of up to 1.5 times final salary (section 772(3)(f) TCA); where the member can avail of the ARF option, they can take a lump sum up to 25% of their entitlements; while a PRSA holder can get a lump sum of up to 25% of their savings, subject to the €200,000 limit.

Individual occupational pension schemes and PRSA contracts may provide for different terms and conditions about what happens on the death of a scheme member or PRSA holder. Many occupational pension schemes and PRSA contracts provide for payments to spouses, civil partners or dependants in the event of the death either before or after retirement of a scheme member or PRSA holder respectively.

I have no current plans to align the rules governing PRSAs and occupational pension schemes. As outlined above, both products serve distinct purposes within the pension landscape. However, these provisions, along with other pension taxation measures, are kept under review.