Report of the Interdepartmental Pensions Reform and Taxation Group
The Report of the Interdepartmental Pensions Reform & Taxation Group has been published. The Group was set up, as a result of the Pensions Roadmap, to look at three general areas: proposals aimed at simplifying and harmonising the supplementary pension landscape; an assessment of the cost of State support for pension savings; and a review of the Approved Retirement Fund (ARF). Many of the recommendations would appear to be in line with the IAPF’s response to the consultation that took place in 2018. Among the recommendations made in the Report are:
- There are no proposals to change the current system of tax relief. The report highlights the challenge of operating a different system of tax relief for automatic enrolment and this will be considered by the Automatic Enrolment Programme Board
- Approved Retirement Funds, Retirement Annuity Contracts and Buy Out Bonds would be replaced on a prospective basis by a revised PRSA product
- This produce would facilitate drawdown and in-scheme drawdown would also be an option available to occupational pension schemes
- There will be greater harmonisation of existing products
- Early retirement would be available from 55 and “normal” retirement age could be up to age 75
- If the proposals are accepted the AMRF would be abolished
- ARF assets should be treated for inheritance tax purposes in the same way as other assets where inherited by anyone other than the individual’s spouse. Both Income Tax and Capital Acquisitions Tax should apply.
- The differential treatment of the PRSA for funding purposes should be abolished, employer contributions to PRSAs should not be subject to BIK.
- The mandatory requirement to purchase an annuity having taken a lump sum based on the salary and service methodology should be abolished. The ARF option should also be available to the DC element of pension savings where an individual has DB and DC entitlements from the same employer.
- As an alternative to compulsory annuitisation, the ARF option should be available for excess funds remaining after the payment of the maximum death-in-service lump sum.
The report is quite extensive and will require greater consideration. However it appears to be a major step ahead in achieving a much simpler pensions landscape.
Click here for the full report.
Trustee Checklist - Death in Service Benefits
We have published a checklist to assist Trustees in managing the Scheme’s Death in Service benefits or looking to change its risk provider.
Click here to download.
The Minister for Social Protection, Heather Humphreys, T.D., has established a Commission on Pensions. The Commission, which will be chaired by Ms Josephine Feehily, will examine sustainability and eligibility issues in respect of State Pension arrangements and will outline options for Government to address issues such as qualifying age, contribution rates, total contributions and eligibility requirements. We will be engaging with the Commission to ensure that the expertise and experience of our members is availed of.
Read the full details here.