Finance (No. 2) Act 2013

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Retirement benefits

18. (1) Chapter 1 of Part 30 of the Principal Act is amended—

(a) in section 776(2)(ba)(i) by substituting the following for “retirement, or”:

“retirement or from the balance of a lump sum payable to the employee in accordance with paragraph 5 of Appendix A of the Department of Finance Circular 12/09, dated 30 April 2009, entitled ‘Incentivised Scheme of Early Retirement’, or”,

and

(b) in section 782A—

(i) in subsection (1)(a) by inserting the following definition:

“ ‘PRSA contract’ has the meaning assigned to it in section 787A;”,

and

(ii) by substituting the following for subsection (2):

“(2) Notwithstanding—

(a) section 32 of the Pensions Act 1990 ,

(b) the rules of a scheme of which a relevant individual is a member or the terms of a PRSA contract to which a relevant individual is party, or

(c) the provisions of a pension adjustment order made in relation to a relevant individual,

a relevant individual may during the specified period irrevocably instruct in writing the administrator of his or her AVC fund to exercise, on one occasion only, the option (in this section referred to as the ‘pre- retirement access option’) provided for in subsection (3).”.

(2) Chapter 2C of Part 30 of the Principal Act is amended—

(a) in section 787O—

(i) in subsection (1)—

(I) by inserting the following definition:

“ ‘accrued pension amount’, in relation to a benefit crystallisation event of the kind referred to in paragraph 2(a)(i) of Schedule 23B in respect of a relevant pension arrangement that is a defined benefit arrangement, means the part (if any), determined in accordance with subsection (2A), of the amount represented by P in the formula in paragraph 3(aa) of that Schedule that had accrued to the individual under the arrangement on the specified date;”,

(II) in the definition of “personal fund threshold”—

(A) by substituting the following for paragraph (a)(i):

“(a) (i) where the individual is an individual to whom the Revenue Commissioners have issued a certificate or, as the case may be, a revised certificate in accordance with section 787P as that section applied at any time before the date of the passing of the Finance (No. 2) Act 2013 (in this Chapter referred to as the ‘earlier certificate’), the amount stated in the earlier certificate as being the individual’s personal fund threshold, and”,

(B) in paragraph (a)(ii) by substituting the following for all of the words from and including “in any other case” to the end of clause (I):

“in any other case, for the year of assessment 2014, the lesser of—

(I) €2,300,000, and”,

and

(C) in paragraph (b) by substituting “year of assessment 2014” for “year of assessment 2011”,

(III) in the definition of “specified date” by substituting “1 January 2014” for “7 December 2010”, and

(IV) in the definition of “standard fund threshold”—

(A) by substituting the following for paragraph (a):

“(a) for the year of assessment 2014, €2,000,000, and”,

and

(B) in paragraph (b) by substituting “year of assessment 2014” for “year of assessment 2011”,

(ii) by substituting the following for subsection (2):

“(2) (a) Subject to paragraph (b), for the purposes of this Chapter and Schedule 23B, the relevant valuation factor in relation to a relevant pension arrangement that is a defined benefit arrangement (in this subsection referred to as the ‘pension arrangement’) is—

(i) on the specified date, 20, and

(ii) after the specified date, where at the date of the current event relating to the pension arrangement the individual has attained the age included in an entry in column (1) of the Table to Schedule 23B, the figure in column (2) of that Table opposite that entry (in this Chapter and Schedule 23B referred to as the ‘relevant age-related factor’).

(b) Where the administrator of a pension arrangement has, with the prior agreement of the Revenue Commissioners, used (before the specified date) a valuation factor (in this paragraph referred to as the ‘first-mentioned factor’) greater than the relevant valuation factor referred to in paragraph (a)(i) then, in such a case, for the purposes of this Chapter and Schedule 23B, the relevant valuation factor in relation to the pension arrangement is—

(i) on the specified date, the first-mentioned factor, and

(ii) after the specified date, the greater of the first-mentioned factor and the relevant age-related factor and the reference to the meaning of ‘A’ in the formula in paragraph 3(a) of Schedule 23B shall be construed accordingly.”,

and

(iii) by inserting the following subsection after subsection (2):

“(2A) For the purposes of this Chapter and Schedule 23B—

(a) where the individual has made a PFT notification (within the meaning of section 787P), the accrued pension amount shall be the annual amount of pension included in the statement from the administrator referred to in subsection (2)(a) of section 787P, and

(b) in any other case, the accrued pension amount shall be an amount equivalent to the annual amount of pension which would be represented by AP in the formula in paragraph 1(2)(b) of Schedule 23B, if the individual’s uncrystallised pension rights under the arrangement on the specified date were being calculated.”,

(b) by substituting the following section for section 787P:

“Maximum tax-relieved pension fund

787P. (1) An individual’s maximum tax-relieved pension fund shall not exceed—

(a) the standard fund threshold, or

(b) the personal fund threshold, where—

(i) the conditions set out in subsection (2) are met and the Revenue Commissioners have issued a certificate in accordance with subsection (7) or a revised certificate in accordance with subsection (8), or

(ii) the Revenue Commissioners have issued an earlier certificate.

(2) The conditions referred to in subsection (1)(b)(i) are—

(a) that the individual requests and obtains from the administrator of each relevant pension arrangement of which he or she is a member a statement—

(i) certifying the amount of the crystallised or, as the case may be, uncrystallised pension rights in respect of the arrangement on the specified date, in relation to the individual (in this subsection referred to as the ‘individual’s pension rights’), calculated in accordance with the provisions of this Chapter and Schedule 23B,

(ii) where the arrangement is a defined benefit arrangement, certifying the annual amount of pension represented by AP in the formula in paragraph 1(2)(b) of Schedule 23B included in the calculation of the individual’s pension rights, and

(iii) where the arrangement is an arrangement of a kind described in paragraph (a) of the definition of ‘relevant pension arrangement’ in section 787O(1), specifying the Revenue Approval Reference Number (in this subsection referred to as the ‘reference number’) of the arrangement,

and

(b) that the individual notifies the Revenue Commissioners, by such electronic means (within the meaning of section 917EA) as are required by the Commissioners, within the period of 12 months from the date the electronic means are made available by the Commissioners, or before the first benefit crystallisation event occurs after the specified date, whichever is the earlier, that he or she has a personal fund threshold and provides the following information (in this section referred to as the ‘PFT notification’)—

(i) his or her full name, address, telephone number and PPS Number,

(ii) the following particulars of each relevant pension arrangement in respect of which the personal fund threshold arises:

(I) the name, address and telephone number of the administrator;

(II) the name and reference number of the arrangement;

(III) whether the arrangement is a defined benefit or defined contribution arrangement;

(IV) (A) the amount of the individual’s pension rights in respect of the arrangement as certified by the administrator for the purposes of paragraph (a), and

(B) where the arrangement is a defined benefit arrangement, the annual amount of pension referred to in subsection (2)(a)(ii) as certified by the administrator for the purposes of paragraph (a);

and

(V) such other information and particulars as the Revenue Commissioners may reasonably require for the purposes of this Chapter and Schedule 23B.

(3) A statement referred to in subsection (2)(a) shall—

(a) be kept and retained by—

(i) the administrator, for the period of 6 years after the date of the benefit crystallisation event arising under the relevant pension arrangement or, where there is more than one such event, the date of the latest event, and

(ii) the individual, for the period of 6 years after the date of the last benefit crystallisation event arising in respect of the relevant pension arrangement or arrangements included in the PFT notification,

and

(b) on being so required by notice given to the administrator or, as the case may be, the individual in writing by an officer of the Revenue Commissioners, be made available to the officer within the time specified in the notice.

(4) Where a PFT notification is required to be made before the electronic means referred to in subsection (2)(b) are made available the notification shall be made in a manner approved by the Revenue Commissioners.

(5) A PFT notification made by electronic means shall be deemed to include a declaration to the effect that the notification is correct and complete.

(6) The administrator of each relevant pension arrangement of which an individual is a member shall comply with a request from the individual to provide a statement referred to in subsection (2)(a).

(7) Subject to subsection (8), the Revenue Commissioners, on receipt of a PFT notification, shall within 30 days of receipt, or such longer period as they may require for the purposes of this subsection, issue a certificate to the individual stating the amount of the personal fund threshold.

(8) The Revenue Commissioners may at any time withdraw a certificate issued in accordance with subsection (7) (in this subsection referred to as the ‘first-mentioned certificate’) and, where appropriate, issue a revised certificate if, following the issue of the first-mentioned certificate, the Commissioners are satisfied that—

(a) the information included in the PFT notification is incorrect, or

(b) the individual is not entitled to a certificate.”,

(c) in section 787Q—

(i) in subsection (7)—

(I) by substituting “20 per cent” for “50 per cent” in each place,

(II) in paragraph (a)(ii) by deleting “or”,

(III) in paragraph (a)(iii) by substituting “paid, or” for “paid,”,

(IV) in paragraph (a) by inserting the following subparagraph after subparagraph (iii):

“(iv) by the individual exercising the option referred to in subsection (8),”,

(V) in paragraph (b) by inserting “, by the individual exercising the option referred to in subsection (8), or” after “where the amount of tax paid is greater than 50 per cent of the net lump sum”,

(VI) in paragraph (b)(ii)(I) by substituting “20 years” for “10 years”,

(VII) by deleting paragraph (c),

and

(ii) by inserting the following subsections after subsection (7):

“(8) The option referred to in paragraphs (a)(iv) and (b) of subsection (7) is the option to have the gross annual amount of pension payable to the individual under the rules of the relevant pension arrangement reduced for a period that does not exceed 20 years from the date of first payment of the pension, such that the reduction in the pension over the period is sufficient to reimburse the administrator for the tax paid.

(9) A payment by an individual to an administrator referred to in subparagraphs (ii) and (iii) of paragraph (a) of subsection (7) and in clauses (II) and (III) of paragraph (b)(i) of that subsection (in this subsection referred to as the ‘first-mentioned payment’) shall be made before the administrator pays the amount of the net lump sum or, as the case may be, such amount of the net lump sum as has not been appropriated to reimburse the administrator for the payment of tax arising on the chargeable excess and the administrator may withhold payment of that amount until such time as the first-mentioned payment is made by the individual.”,

(d) in section 787R—

(i) in subsection (4)(d) by substituting the following for all of the words from and including “section 787P(5), whether issued before” to the end of that paragraph:

“section 787P(7) or, as the case may be, a copy of the revised certificate issued by the Commissioners under section 787P(8) (or, where relevant, a copy of the earlier certificate),”,

and

(ii) in subsection (5) by substituting “paragraphs (a) to (f)” for “paragraphs (a) to (e)”,

(e) in section 787TA by substituting the following for subsection (5):

“(5) A notification referred to in paragraph (a) or (b) of subsection (4) shall be in such form as may be prescribed or authorised by the Revenue Commissioners and shall include a declaration to the effect that the notification is correct and complete.

(5A) An individual shall be taken to have satisfied the conditions in subsection (4) notwithstanding that the notification referred to in paragraph (a) or (b) of that subsection has been made after the time limited by the said paragraph (a) or (b), as the case may be, has elapsed if the Revenue Commissioners consider that, in all of the circumstances, the failure of the individual to meet the conditions within the time limit concerned should be disregarded.”,

and

(f) by inserting the following section after section 787TA:

“Penalties

787TB. A person who fails to comply with any of the obligations imposed on that person by this Chapter and any regulations made under it and by Schedule 23B shall, for each such failure, be liable to a penalty of €3,000.”.

(3) Schedule 23B to the Principal Act is amended—

(a) in paragraph 1(2)(b) by inserting “on the specified date” after “RVF is the relevant valuation factor”,

(b) in paragraph 3—

(i) by substituting the following for subparagraph (a):

“(a) subject to subparagraph (aa), where the benefit crystallisation event is an event of the kind referred to in paragraph 2(a)(i), an amount equivalent to the amount determined by the formula—

P x A

where—

P is the amount of pension which would be payable to the individual, on the assumption that there is no commutation of part of the pension for a lump sum, in the period of 12 months beginning with the day on which the individual becomes entitled to it and on the assumption that there is no increase in the pension throughout that period, and

A is the relevant age-related factor,”,

(ii) by inserting the following paragraph after subparagraph (a):

“(aa) where the benefit crystallisation event is an event of the kind referred to in paragraph 2(a)(i) and the administrator of the relevant pension arrangement is satisfied, based on information and records available to the administrator, that there is an accrued pension amount in respect of that event, an amount equivalent to the amount determined by the formula—

(APA x B) + ((P - APA) x A)

where ‘P’ and ‘A’ have the meanings given to them respectively in the formula in subparagraph (a) and where—

APA is the accrued pension amount, and

B is the relevant valuation factor on the specified date,

and the administrator shall keep and preserve for a period of 6 years after the date of the event such information and records as may be required for the purposes of demonstrating to the satisfaction of an officer of the Revenue Commissioners that there was an accrued pension amount in respect of the event,”,

and

(iii) in subparagraph (f)—

(I) by substituting “A x IP” for “RVF x IP”, and

(II) by substituting “A is the relevant age-related factor, and” for “RVF is the relevant valuation factor, and”,

and

(c) by inserting the following Table after paragraph 5:

“TABLE

”.

(4) (a) Subsection (1)(a) shall apply as respects the balance of a lump sum referred to in section 776(2)(ba)(i) (as amended by subsection (1)(a)) of the Principal Act paid on or after 1 May 2009.

(b) Subsection (1)(b) shall be deemed to have effect from 27 March 2013.

(c) Subsections (2) and (3) have effect from 1 January 2014.