Finance Act 2016

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Retirement benefits

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

(a) in section 784—

(i) by inserting the following after subsection (2E):

“(2F) Notwithstanding any other provision of this Chapter, a retirement annuity contract shall not cease to be an annuity contract for the time being approved by the Revenue Commissioners where, notwithstanding anything contained in the contract as approved—

(a) the person with whom the contract is made—

(i) on or before 31 March 2017—

(I) commences payment of an annuity to the individual,

(II) pays a lump sum of a kind referred to in subsection (2)(b) to the individual, or

(III) transfers the value of the individual’s accrued rights under the contract in accordance with subsection (2A),

or

(ii) in priority to any payment or transfer referred to in subparagraph (i), makes available from the cash and other assets representing the value of the individual’s accrued rights under the contract, to such extent as may be necessary, an amount for the purposes of discharging a tax liability in relation to the individual under the provisions of Chapter 2C of this Part in respect of the contract,

(b) insofar as subparagraph (i) of paragraph (a) is concerned, the annuity contract is deemed to be a vested RAC in accordance with section 787O(6), and

(c) insofar as subparagraph (ii) of paragraph (a) is concerned, the annuity contract is a vested RAC within the meaning of section 787O(1).”,

and

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

“(8) Where an annuity contract is a vested RAC within the meaning of section 787O(1), the provisions of section 784A(4) shall apply to the cash and other assets representing the individual’s accrued rights under the contract at the time of death of the individual as if that cash and those other assets were assets of an approved retirement fund.”,

(b) in section 787G—

(i) by inserting the following after subsection (4A):

“(4B) For the purposes of subsection (6), the administrator of a vested PRSA of a kind referred to in paragraph (c) of the definition of ‘vested PRSA’ in section 790D(1) shall be treated as making the assets of the PRSA available to the PRSA contributor on the date the contributor attains the age of 75 years or, where the contributor attained the age of 75 years prior to the date of passing of the Finance Act 2016, on the date of passing of that Act.”,

and

(ii) in subsection (6), by substituting “where assets of a PRSA are treated under subsection (4) or subsection (4B)” for “where assets of a PRSA are treated under subsection (4) ”,

(c) in section 787K, by inserting the following after subsection (2C):

“(2D) A PRSA product (within the meaning of Part X of the Pensions Act 1990 ) approved under section 94 of that Act, shall not cease to be an approved product where, notwithstanding anything contained in the terms of the product as approved—

(a) the PRSA administrator—

(i) on or before 31 March 2017—

(I) commences payment of an annuity to the PRSA contributor,

(II) pays a lump sum to the PRSA contributor, in accordance with section 787G(3)(a),

(III) makes assets of the PRSA available to the PRSA contributor, or

(IV) transfers assets of the PRSA to an approved retirement fund in accordance with section 787H(1),

or

(ii) in priority to any payment, making of assets available or transfer referred to in subparagraph (i), makes available from the PRSA assets, to such extent as may be necessary, an amount for the purposes of discharging a tax liability in relation to the PRSA contributor under the provisions of Chapter 2C of this Part in respect of the PRSA,

(b) insofar as subparagraph (i) of paragraph (a) is concerned, the PRSA is deemed to be a vested PRSA in accordance with section 790D(1A), and

(c) insofar as subparagraph (ii) of paragraph (a) is concerned, the PRSA is a vested PRSA within the meaning of paragraph (c) of the definition of ‘vested PRSA’ in section 790D(1).”,

(d) in section 787O—

(i) in subsection (1) —

(I) in the definition of “uncrystallised pension rights”, by substituting “on that date;” for “on that date.”, and

(II) by inserting the following definition:

“ ‘vested RAC’ means a relevant pension arrangement of a kind referred to in paragraph (b) of the definition of that term in this subsection in respect of which—

(a) payment of the annuity to the individual entitled to the annuity under the contract has not commenced, or

(b) a transfer has not been made under section 784(2A),

on or before the date on which the individual attains the age of 75 years.”,

and

(ii) by inserting the following after subsection (5):

“(6) Where an individual of a kind referred to in the definition of ‘vested RAC’ attains the age of 75 years prior to the date of passing of the Finance Act 2016, the relevant pension arrangement is deemed to become a vested RAC on the date of passing of that Act.”,

(e) in section 787R—

(i) in subsection (5), by substituting the following for paragraph (b):

“(b) where the benefit crystallisation event is an event of a kind described at subparagraph (b), (ba) or (c) of paragraph 2 of Schedule 23B, refuse to transfer an amount to the individual, or to any of the funds referred to in the said subparagraph (b), refuse to make assets of the PRSA referred to in the said subparagraph (ba) available to the PRSA contributor or, as the case may be, refuse to make a payment or transfer referred to in the said subparagraph (c),”,

(ii) by inserting the following after subsection (5):

“(5A) (a) In this subsection—

‘relevant administrator’ means—

(i) in the case of a vested PRSA of a kind referred to in paragraph (c) of the definition of ‘vested PRSA’ in section 790D(1), the administrator of that vested PRSA, and

(ii) in the case of a vested RAC within the meaning of section 787O(1), the person with whom the individual (referred to in the definition of ‘vested RAC’ in that section) made the annuity contract;

‘relevant person’ means—

(i) in the case of a vested PRSA of a kind referred to in paragraph (c) of the definition of ‘vested PRSA’ in section 790D(1), a PRSA contributor of a kind referred to in that paragraph, and

(ii) in the case of a vested RAC within the meaning of section 787O(1), an individual of a kind referred to in the definition of ‘vested RAC’ in that section;

‘date of the benefit crystallisation event’ means, as the case may be, the date the relevant person attains the age of 75 years or, where the relevant person attains that age prior to the date of passing of the Finance Act 2016, the date of passing of that Act.

(b) Notwithstanding subsection (4), where a benefit crystallisation event of a kind referred to in subparagraph (bb) or (bc), as the case may be, of paragraph 2 of Schedule 23B occurs in relation to a relevant person, the relevant person shall, within the period of 30 days from the date of the benefit crystallisation event, provide a declaration containing the details referred to in subsection (4) to the relevant administrator.

(c) Where a relevant person fails to comply with paragraph (b), section 787Q shall apply to the benefit crystallisation event referred to in that paragraph as if the condition referred to in subsection (2)(b) of that section is met.”,

and

(iii) in subsection (6), by substituting “subsections (4), (5) and (5A)” for “subsections (4) and (5) ”,

(f) in section 787S, by substituting the following for subsection (5):

“(5) Where any item—

(a) has been incorrectly included in a return as a chargeable excess, or

(b) has been included in a return as a chargeable excess in accordance with the application of paragraph (c) of subsection (5A) of section 787R in circumstances where, if a declaration referred to in paragraph (b) of that subsection had been provided to the relevant administrator (within the meaning of that subsection), no chargeable excess or a lesser chargeable excess would have arisen in respect of the benefit crystallisation event concerned,

then, on a case being made, an officer of the Revenue Commissioners may make such assessments, adjustments or set-offs as may in his or her judgement be required for securing that the resulting liabilities to tax, including interest on unpaid tax, whether of the administrator of a relevant pension arrangement or the individual or, where the provisions of section 787R(2A) apply, whether of the subsequent administrator, fund administrator, relevant member or non-member, as the case may be, are, so far as possible, the same as they would have been if the item had not been so included.”,

and

(g) in section 790D—

(i) in subsection (1), by substituting the following for the definition of “vested PRSA”:

“ ‘vested PRSA’ means—

(a) a PRSA in respect of which assets of the PRSA have been made available to, or paid to, the PRSA contributor or to any other person, by the PRSA administrator on or after 7 November 2002, other than assets of a kind referred to in paragraphs (b), (c) and (d) of section 787G(3), and for the purposes of this definition the provisions of subsections (4) and (4A) of section 787G shall apply,

(b) in the case of a PRSA that is a PRSA to which an individual is or was the contributor of additional voluntary PRSA contributions, such a PRSA where benefits become payable to the individual under the main scheme on or after 7 November 2002, or

(c) a PRSA in respect of which the PRSA contributor has attained the age of 75 years where, up to and including the date on which the contributor attained that age, no assets of the PRSA have been made available to, or paid to, the PRSA contributor or to any other person, other than a transfer of part of the assets to another PRSA to which the contributor to the first mentioned PRSA is the contributor;”,

and

(ii) by inserting the following after subsection (1):

“(1A) Where a PRSA contributor of a kind referred to in paragraph (c) of the definition of ‘vested PRSA’ attains the age of 75 years in the circumstances referred to in that paragraph prior to the date of passing of the Finance Act 2016, the PRSA is deemed to become a vested PRSA on the date of passing of that Act.”.

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

(a) in paragraph 2, by inserting the following after subparagraph (ba):

“(bb) the individual is a PRSA contributor and the PRSA becomes a vested PRSA of a kind referred to in paragraph (c) of the definition of ‘vested PRSA’ in section 790D(1),

(bc) the relevant pension arrangement becomes a vested RAC within the meaning of section 787O(1),”,

and

(b) in paragraph 3, by inserting the following after subparagraph (da):

“(db) where the benefit crystallisation event is an event of a kind referred to in paragraph 2(bb), the aggregate of the amount of any cash sums and the market value of the assets in the PRSA at the date the individual attains the age of 75 years or, where the individual attained the age of 75 years prior to the date of passing of the Finance Act 2016, on the date of passing of that Act,

(dc) where the benefit crystallisation event is an event of a kind referred to in paragraph 2(bc), the aggregate of so much of the cash sums and the market value of such of the other assets representing the individual’s rights under the relevant pension arrangement at the date the individual attains the age of 75 years or, where the individual attained the age of 75 years prior to the date of passing of the Finance Act 2016, on the date of passing of that Act,”.

(3) This section comes into operation on the passing of this Act.