Government scheme for early access to pension savings falls flat – McGrath

Published on: 23 December 2015

Fianna Fáil Press Office
Michael McGrath TD
Spokesperson on Finance

23 December 2015

Government scheme for early access to pension savings falls flat – McGrath 

– Restrictive nature of scheme discourages take up –

New figures obtained by Fianna Fáil spokesperson on Finance Michael McGrath TD reveal that the scheme introduced in Budget 2013 to give employees the option of early draw down of Additional Voluntary Contributions they have made to their pension scheme has fallen well short of expectations with take up nearly 75% below the level anticipated.

At the time of its introduction, the Minister for Finance predicted it would yield €100m in additional tax revenue in the first year and a total of €200m over 3 years. In reality, only €26 million in tax was paid in 2013, €16.9 million in 2014 and €13 million up to September 2015. The total tax raised of €55.9 million is some €144 million short of projected levels.

Individuals are allowed a once-off option to withdraw up to 30% of the value of funded Additional Voluntary Contributions made to supplement retirement benefits. Withdrawals are liable to tax at an individual’s marginal rate.

Deputy McGrath commented, “After five years the Government has not developed a co-ordinated pensions policy which reflects the changed nature of the workplace. Few, if any, employees expect to be with the same employer for 40 years anymore and there is a need to reflect this by providing for more flexible pension arrangements. A more dynamic pension and savings system would take account of other major life events that people have to deal with financially such as redundancy, critical illness, house purchase or dealing with debt issues.

“This concept has worked successfully in other countries and can actually result in more people saving for their future as they do not see it as locking money up for decades with no chance of accessing it should they need to do so. The low take-up of the early access option is not surprising given the restrictive nature of the scheme. Employer paid contributions, regular employee contributions, self-employed personal pensions and normal Personal Retirement Savings Account (PRSA) contributions were all excluded from the scheme by the government.

“The Pension Levy, high management charges and volatile markets have discouraged people from saving for their future through a pension scheme and have all contributed to considerable damage being done to the pensions industry. Fianna Fáil’s election manifesto will contain proposals to ensure that pension provision is more reflective of the modern working environment.”

Note to Editor: Parliamentary Question from Deputy McGrath is below. 



DÁIL QUESTION addressed to the Minister for Finance (Deputy Michael Noonan)

by Deputy Michael McGrath

for WRITTEN ANSWER on 17/12/2015

To ask the Minister for Finance the yield from allowing persons early access to pension as provided for in Budget 2013 in each of the years 2013 to date; and if he will make a statement on the matter.


Pre-retirement access to certain Additional Voluntary Contributions (AVCs) was passed into law with the enactment of the Finance Act 2013 on 27 March 2013. The option to access up to 30% of an AVC runs for 3 years from that date to 26 March 2016. The administrator of the pension scheme has to make a return within 15 working days of the end of each quarter showing the following information:

  • The number of transfers made
  • The aggregate value of the transfers made and the tax deducted.

The latest returns received are for the quarter ended 30 September 2015 and I am informed by the Revenue Commissioners that the tax yield up to that date is as follows:

2013 €25,893,897
2014 €16,944,144
2015 (to 30 September 2015) €13,068,070.



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