Paul Murphy (Dublin South West, Solidarity)
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344. To ask the Minister for Finance the reason the Revenue Commissioners removed the option at retirement for defined benefit members to transfer to an approved retirement fund in mid-August 2025 (details supplied); when this change was first proposed; when the affected defined benefit scheme members were formally notified; the departments, agencies, or stakeholder groups that lobbied for or against the change; if the change applies only to defined benefit schemes; the changes which were made for defined contribution schemes at the same time; and if the change will be reverted or amended to allow those already affected to avail of the previous situation. [54888/25]

Paschal Donohoe (Dublin Central, Fine Gael)
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The Deputy’s question relates to transfers from an occupational pension scheme to an Approved Retirement Fund (ARF), whereas the “details supplied” relate to a recent update to the Revenue Pensions Manual relating to transfers from an occupational pension scheme to a Personal Retirement Savings Account (PRSA). For completeness I will address both issues.

An ARF is a post-retirement investment vehicle through which individuals can invest the proceeds of their pension fund at retirement and draw down benefits as required. ARFs are available to individuals who started to take retirement benefits after 2 December 1998 and are available only at retirement, with the exception of benefits transferred to an ARF on the death-in-service of an employee of an occupational pension scheme. The tax treatment of ARFs is addressed in legislation by section 784A Taxes Consolidation Act 1997 (TCA).

For clarity, a defined contribution (DC) pension scheme is one where a member makes a “defined” or specific contribution and the pension available is dependent on the cumulative contributions and the growth in value of the fund up to retirement. A defined benefit (DB) scheme is one where a member is guaranteed a “defined” or specific level of benefits on retirement.

ARFs are available to all members of DC schemes, and members of DB schemes who are proprietary directors, in respect of their accrued benefits from the scheme, including benefits from additional voluntary contributions (AVCs). For members of DB schemes who are not proprietary directors, the ARF option is only available in relation to pension benefits arising from their AVCs. The relevant legislation is section 772(3A) TCA and is unchanged since 2011 in respect to the availability of ARFs to members of different pension schemes.

A PRSA is a personal pension product which, unlike an occupational scheme, is not directly connected to an individual’s employment. Unlike an ARF, which is only available after an individual’s retirement, a PRSA is a “whole of life” product, meaning that an individual can make contributions to the product while in employment or self-employment, and also draw down benefits from the PRSA after retirement.

Chapter 13 of the Revenue Pensions Manual deals with the transfer of pension benefits from an occupational pension scheme when an employee leaves service with an employer, whether by moving employment or on retirement. The Pensions Act 1990 gives employees a statutory right to transfer their pension benefits within two years of leaving service up to the point of retirement, provided the scheme rules allow such a transfer.

From the introduction of PRSAs under the Pensions (Amendment) Act 2002, a transfer from an occupational pension scheme to a PRSA has been prohibited once benefits become payable to the scheme member from the scheme. This is provided for in section 772(3D) TCA, as inserted by section 4 Pensions (Amendment) Act 2002. The rules of the relevant pension scheme determine when pension benefits become payable. In most cases, benefits become payable at “normal retirement age” (NRA), usually between age 60 years and age 70 years. This means that, since PRSAs were introduced in 2002, a transfer of benefits from the scheme to a PRSA is not permitted after the scheme member’s NRA.

I am informed by Revenue that the update to Chapter 13 of the Revenue Pensions Manual mentioned by the Deputy was in response to queries from practitioners who sought clarity on certain matters, including the rules for transfers of benefits from an occupational pension to a PRSA when a scheme member was retiring. The update also covered transfers from overseas pension arrangements to an Irish scheme, and from an Irish pension scheme to an overseas pension arrangement.