Dáil Éireann Debate, Wednesday - 30 April 2025
46. Deputy Pearse Doherty asked the Minister for Finance further to Parliamentary Questions Nos. 64 to 66 of 9 April 2025, if he was presented evidence by the Revenue Commissioners that the amendment introduced into the PRSA pension schemes in the Finance Act 2022 was being used in a manner not in keeping with the policy intention; the estimated scale in value terms and in number of people involved; and if he will make a statement on the matter. [21474/25]
View answerThe process of ensuring that taxation relief is availed of in an appropriate manner is ongoing and continuous and involves Revenue and my Department working closely together to monitor developments, assess data and, where necessary, amend provisions to avoid misuse.
As the Deputy is aware, Section 22 Finance Act 2022 removed the difference in treatment between PRSAs and occupational pension schemes. The amendment abolished the Benefit in Kind (BIK) charge on employer contributions to an employee’s PRSA. In addition, employer contributions to an employee’s PRSA no longer counted towards an employee’s age and salary related percentage limits on tax deductible contributions. The change in approach for PRSAs was recommended by the Interdepartmental Pension Reform and Taxation Group (IDPRTG) with a view to improving and simplifying the pension landscape in Ireland.
As with the introduction of any new provision, Revenue monitors trends and conducts analysis based on actual data to ensure the measure is operating as intended. I can confirm that Revenue submitted a paper to my Department outlining its findings and concerns regarding how the provisions were operating, on the basis of data relating to employer contributions to PRSAs in 2023 submitted in the payroll returns for that year.
The Revenue statistics supplied to my Department identified categories of cases that gave rise to concerns. Revenue data shows that in these cases, the employer contributions to PRSAs were significantly higher than the salary associated with the employment and, in many of these cases, the recipient of the contribution had a connection to the employer (for example, owner or spouse, child, parent of the employer).
For reasons of taxpayer confidentiality, I am unable to share all the data provided by Revenue. However, I can state that Revenue’s analysis of employer PRSA contributions included in the payroll returns for 2023 indicated that there were 125 employments in 2023 where the employer PRSA contribution exceeded €100,000, and in 99 of these cases Revenue established that the employee had a connection with the employer (for example, owner or spouse, child, parent of the employer). Whereas the 125 cases in 2023 represent 0.3% of the total number of employments with employer PRSA contributions in that year, the contributions paid in respect of these cases represents 20% of the overall amount of employer PRSA contributions in the same period.
To illustrate the nature of the behaviour and structures put in place by individuals and businesses, Revenue provided real life anonymised examples to further demonstrate how these changes were not in line with the policy intention. I am cognisant of the obligation to protect taxpayer confidentiality under section 851A Taxes Consolidation Act 1997 and I am therefore not in a position to share these specific examples provided to my Department by Revenue.
My officials in the Department engaged with Revenue following the submission of their analysis and I introduced an employer limit in Finance Act 2024 to address the concerns raised.
