Pearse Doherty (Donegal, Sinn Fein)
Link to this: Individually | In context

208. To ask the Minister for Finance the details of the tax changes in relation to auto-enrolment; and if he will make a statement on the matter. [56417/25]

Paschal Donohoe (Dublin Central, Fine Gael)
Link to this: Individually | In context

As the Deputy is aware, the legislative framework underpinning the automatic enrolment retirement (AE) savings scheme, is the Automatic Enrolment Retirement Savings System Act 2024. The policy and implementation of the AE system is a matter for the Minister for Social Protection. Responsibility for the tax treatment of AE lies with me as Minister for Finance.

My Department and Revenue have worked closely with the Department of Social Protection to develop the legislative provisions governing the taxation treatment of AE savings. Finance Act 2024 amended the Taxes Consolidation Act 1997 to provide for the taxation treatment of AE. These provisions aligned with the approach agreed by Government that the tax treatment of the AE scheme should as much as possible align with that of Personal Retirement Savings Accounts (PRSAs), other than for employee contributions. Under the AE scheme, the Government will make a contribution to employees’ pension funds. As a consequence, there are no tax exemptions provided on employee contributions.

Additional amendments have been identified for inclusion in Finance Bill 2025 in advance of the AE scheme commencing in January 2026. These amendments are required to address the tax treatment of AE retirement savings on the death of the participant which will involve changes to income tax, investment undertaking tax and capital acquisitions tax. Additional provisions will be introduced to ensure that the exemption in respect of AE extends to all relevant fund structures. Finance Bill 2025 will also provide for an exemption from USC for employer contributions. This will further align AE tax treatment with that for PRSAs, where employer contributions are specifically exempted from USC.

As stated, these additional tax provisions will be commenced when the AE scheme becomes operational in January 2026.