Revenue Note for Guidance

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Revenue Note for Guidance

787K Revenue approval of PRSA products

Summary

PRSA products must be approved by the Revenue for the purposes of the tax relief. This section sets out the approval conditions, including discretion for Revenue where those conditions are not fully met.

Details

Mandatory approval requirements

(1) Subject to the ARF option (section 787H) and the conditions regarding transferability, the mandatory requirements for approval of a PRSA product are—

  • The arrangements in relation to the product must be with a person lawfully carrying on in the State the business of PRSA provider.
  • Any annuity payable must not be capable of surrender, commutation or assignment.
  • During the life of the PRSA contributor, assets are not made available otherwise than by way of-
    • an annuity to the PRSA contributor,
    • a tax-free lump sum,
    • a transfer to an ARF, or
    • assets made available to the PRSA contributor where the PRSA provider retains such assets as would be required to be transferred to an AMRF if the ARF option were exercised.
  • An annuity cannot commence to be payable, or other assets made available, to the PRSA contributor before age 60 or after age 75.
  • Following the death of the PRSA contributor, no sums are payable other than:
    • an annuity payable to the surviving spouse or surviving civil partner of the PRSA contributor – which cannot be greater than an annuity which would have been payable to the PRSA contributor, or
    • where no annuity or other benefits have become payable either to the PRSA contributor or to the contributor’s surviving spouse or surviving civil partner, a transfer of the PRSA assets to the estate of the PRSA contributor – such a transfer is exempt from income tax by section 787G(3)(c).
  • Apart from the foregoing no other sums may be payable.
  • Any annuity must be a life annuity.

Discretionary approval

(2) The Revenue Commissioners have discretion to approve a PRSA product which otherwise satisfies the above conditions even though the product provides for one or more of the following—

  • Early payment of an annuity where the individual becomes permanently incapable of carrying on his or her occupation.
  • Payment of an annuity or the making available to an employed contributor of PRSA assets on retirement at age 50 or over.
  • Early payment of an annuity or the making available of assets, but not before age 50, where the individual’s occupation is one from which persons customarily retire before 60.
  • For the payment of annuities for a term certain and the assignment of that annuity in the event of the death of the PRSA holder.

(2A) Revenue approval of a PRSA product will not be prejudiced by any rule in the product that allows a PRSA administrator to make available from the assets of a PRSA, to such extent as may be necessary, an amount for the purposes of discharging any tax charge on a chargeable excess, which arises in connection with a relevant payment made to a PRSA contributor by the PRSA administrator, under the provisions of Chapter 2C (relating to the maximum tax-relieved pension fund).

(2B) The inclusion of a provision for the encashment option (see section 787TA) in a PRSA product will not affect Revenue approval or approval of the product under section 94 of the Pensions Act 1990.

(2C) An approved PRSA product shall not cease to be an approved product where a PRSA administrator pays an amount from the PRSA assets to a PRSA contributor on foot of the contributor availing of the AVC access option in section 782A, notwithstanding that the terms of the PRSA product as approved by Revenue would not allow for such a facility.

(2D) An approved PRSA product which becomes a “vested PRSA” (within the meaning of section 790D(1)) when the contributor attains the age of 75 years without having drawn down benefits, shall not cease to be an approved product where a PRSA administrator–

  • in the case of a contributor who was 75 years of age prior to 25 December 2016 (i.e. the date on which Finance Act 2016 was passed)—
    • pays an annuity or a retirement lump sum to the contributor, or
    • transfers the PRSA assets to the contributor or to an ARF
  • on or before 31 March 2017, or
  • regardless of whether the PRSA becomes vested on the date the contributor attains the age of 75 years or on 25 December 2016, uses the PRSA assets to discharge any liability to chargeable excess tax under Chapter 2C of Part 30 arising as a result of the deemed vesting of the PRSA.

(3) In the case of an individual who attains age 75 before 25 December 2016, the use of the PRSA assets to discharge chargeable excess tax is to be in priority to any payments to the individual or transfer to the individual or to an ARF. Where the Revenue Commissioners are of the opinion that approval of a product should be withdrawn they are to notify the Pension Authority in writing, specifying the grounds on which they formed the opinion.

(4) Tax assessments may be made or amended as appropriate to take account of the withdrawal of approval of a PRSA product.

Relevant Date: Finance Act 2019