Dáil Éireann - Volume 625 - 18 October, 2006

Written Answers. - Tax Code.

Mr. Gormley asked the Minister for Finance the measures he has taken to close the loophole where SSIA holders transferring into pension have received an additional €2,500 benefit. [33197/06]

Mr. Pattison asked the Minister for Finance his views on his recent press release regarding the SSIA pension top up scheme; when he will introduce legislation to require that SSIA funds transferred to a pension product should remain there for at least 12 months; and if he will make a statement on the matter. [33093/06]

  Mr. Cowen: I propose to take Questions Nos. 160 and 171 together.

[1801] The Pensions Incentive Tax Credits scheme was introduced by me to encourage SSIA holders, particularly those on low incomes, to continue the savings habit and to commence or improve their pension arrangements under the scheme.

For each €3 of matured SSIA funds invested by an eligible SSIA holder in an approved pension product, the Exchequer will contribute an additional €1 by way of tax credit to a maximum of €2,500. The Exchequer will also contribute an additional tax credit relating to the exit tax deducted from the SSIA on maturity and based on the proportion of SSIA funds transferred to the pension product.

I assume in referring to a loophole that the Deputy has in mind the publicity given recently to the possibility that SSIA holders who are already retired might transfer matured SSIA funds into a savings product, claim the Pensions Incentive Tax Credits and then withdraw the topped-up amount immediately.

This is not the purpose for which the incentive was introduced. Accordingly, I announced in a press release on 29 September last that I will introduce legislation at the earliest appropriate opportunity to ensure that, with effect from 29 September 2006, individuals who avail of the Pensions Incentive Tax Credits only to withdraw the funds immediately or within 1 year will not get the benefit of the incentive. The necessary legislative amendment will be made in the 2007 Finance Bill. However, the amendment will have retrospective effect to Friday, 29 September 2006.