Group to examine pension tax issues

The Minister for Social and Family Affairs, Mr Brennan, is to set up a working group to investigate the prudential and tax issues relating to borrowing within pension schemes.

Earlier this month the Social Welfare Bill prohibited pension schemes from borrowing for investment purposes in line with an upcoming EU directive. The Bill failed to enact an exemption allowed under the directive for schemes with 100 members or less to continue to be able to borrow.

Speaking at the annual dinner of the Irish Association of Pension Funds (IAPF), Mr Brennan said the application of the exemption would "require very careful consideration" and that a working group comprising representatives from his Department, the Department of Finance, the Revenue Commissioners, the Pensions Board and the Irish Financial Services Regulatory Authority (IFSRA) would examine the issue.

The ability to borrow within a pension scheme is highly valued by the industry as it facilitates tax-effective investment in property.

Mr Brennan said overall pensions coverage figures were disappointing. A review by the Pensions Board on the Government's progress in meeting its pensions coverage target of 70 per cent of workers has been brought forward from September 2006 to the middle of this year.

The Minister also indicated he is to consider a relaxation of the minimum funding standard for pension schemes, which IAPF chairman Mr Gerry Ryan described as "overly rigorous".