Revenue published an information note on the changes to the Standard Fund Threshold (SFT) regime as reflected in Finance (No.2) Bill 2013. The changes to the SFT regime will not take effect until 1 January 2014, once the Finance Bill is passed into law. The information note provides details on the procedures for making a Personal Fund Threshold (PFT) application.

Section 18 of the Finance Bill makes a number of changes to the SFT regime including the reduction in the absolute value of the SFT, with effect from 1 January 2014, from £2.3m to £2m. However, as on previous occasions, an individual who has pension rights in excess of this new lower SFT limit on 1 January 2014, may claim a PFT from the Revenue Commissioners.

In the past the PFT application procedure was paper based. However, on this occasion a new electronic based application process is being developed by Revenue under which the relevant PFT information will have to be provided. For the purposes of the application an individual will be required to provide basic identifying information about him or herself and the various pension arrangements he or she is a member of. In addition, the individual will have to obtain from the administrator of each pension arrangement of which he or she is a member, a statement certifying the amount of the individual’s pension rights on 1 January 2014 relating to that arrangement, calculated in accordance with the provisions of the legislation. In the case of a DB arrangement, the individual will also have to indicate the annual amount of pension accrued at 1 January 2014 underpinning that calculation as certified by the administrator. Full details of the application requirements will be reflected in the electronic system when it is made available. The time limit for making a PFT application is 12 months after the date on which the electronic system is made available. So if the system is made available by, say, 1 February 2014, an individual will have until end-January 2015 to make an application.

The exception to this is where a person is entitled to a PFT and is retiring after 1 January 2014 and before the electronic application system comes on stream. In such cases, the existing paper based application process must be used and the application must be made in advance of retirement, otherwise the administrator is required to apply the SFT limit of £2m.

See Revenue’s information note on the changes to the SFT regime which is published here for further details.