The Institute of Chartered Accountants in Ireland (ICAI) carefully notes the announcement by the Minister for Finance last month which will allow greater flexibility for private sector workers in making pension arrangements. The Minister is proposing to remove the obligation to purchase an annuity using funds accumulated over the working career immediately upon retirement.

“The attempts by Government to encourage citizens to make private provision for retirement in recent times have not been matched by practical action. In fact, recent Finance Acts have progressively restricted the tax reliefs available for private sector pension funding” according to ICAI Tax Director Brian Keegan. “The most recent example is that there is no relief against the Income Levy for contributions to pension schemes. The Minister's announcement offers some limited redress. It will help people in defined contribution schemes ensure that they have more choices for the money they have built up when they reach retirement age”.

The window of opportunity for the deferral option is very short – it expires at the end of 2010. ICAI notes that the new arrangements will be operated on an administrative basis by the Revenue Commissioners, and looks forward to seeing the full details of the proposals.

The Minister's announcement is available at http://www.finance.gov.ie/viewdoc.asp?DocID=5564