772A Approval of retirement benefits products

Summary

The Revenue Commissioners may, in certain circumstances and subject to conditions, approve a “generic” retirement benefits product and retirement benefit schemes established under such a product may be treated as approved schemes for tax purposes without the requirement for each individual scheme to be approved by the Commissioners. The type of retirement benefits product envisaged is one under which single member retirement benefits schemes are marketed by Life Offices and established using standard documentation secured by way of an insurance contract. A condition of approval is that the combined employer and employee contributions to such schemes in any year may not exceed the maximum age-related tax-relievable contributions that may be made by an employee to a retirement benefits scheme.

Details

(1) The following terms are used in the section:

“promoter” means, in effect, a Life Office and includes insurance undertakings who, while not resident in the State, are authorised to transact insurance business in the State under the relevant EU Directive.

“retirement benefits product” means, in effect, a product in respect of which approval has been sought by a Life Office and under which, if and when approved, single member retirement benefit schemes may be set up and marketed by Life Offices, using standard documentation and secured by an insurance contract. Even though such schemes will be secured by way of contracts of insurance they are, nonetheless, occupational pension schemes established by way of irrevocable trust – the trust document in such cases consists of a “Letter of Exchange” with rules attached.

“single member retirement benefits scheme” means a scheme that relates to a single employee.

“terms and rules” mean the provisions of the retirement benefits product in respect of which approval is sought which will, in effect, form the rules of the single member schemes when set up.

(2) The Revenue Commissioners may approve a retirement benefits product as they see fit and subject to whatever conditions they think appropriate to attach to the approval.

(3) A retirement benefits scheme (in effect a single member scheme) set up under an approved retirement benefits product will be deemed to be a retirement benefits scheme approved for the purposes of Chapter 1 and all of the provisions of Chapter 1 will apply, except where the section provides otherwise.

Deeming the retirement benefits scheme to be an approved scheme (and given that the schemes are established under irrevocable trusts) means that they are considered “exempt approved schemes” for the purposes of the tax reliefs on contributions and fund growth provided by Chapter 1.

(4) & (5)(a) & (b) An application for approval of a retirement benefits product must be made by the promoter in writing and be in such form and contain such information and particulars as the Revenue Commissioners may determine from time to time. However, the Revenue Commissioners shall not approve a product if the terms and rules to apply to a retirement benefits scheme established under it do not (i) limit the contributions that can be paid by both an employer and employee when added together to an amount not exceeding the maximum amount of annual contributions that can be made by an employee to a retirement benefits scheme in the normal course and (ii) provide for the option to invest the pension fund in an Approved Retirement Fund, as appropriate. [Section 772(3A) provides this option to proprietary directors and individuals with AVCs].

The maximum amount of employee annual contributions are as follows (subject to a current earnings cap of €115,000 – section 790A refers):

(6) Where the terms and rules of a specific retirement benefits scheme established under an approved retirement benefits product are subsequently changed, the deemed approval of the scheme provided for in subsection (3) shall not apply to the scheme after the change unless the change is specifically approved by the Revenue Commissioners.

(7) The Revenue Commissioners may withdraw approval for a retirement benefits product, by way of a notice in writing, if in their opinion the facts concerning any such product cease to warrant the continuance of their approval. The grounds for withdrawal and the date from which the withdrawal is to apply, must be stated in the notice.

(8) Where the approval of a retirement benefits product is withdrawn, the revenue Commissioners may raise assessments on individuals who established retirement benefits schemes under the product or the Life Offices who administer the “pension fund”, as appropriate, for the purposes of withdrawing any tax relief given under Chapter 1. Withdrawal of approval from the product does not necessarily imply that retirement schemes established under the product prior to approval being withdrawn will necessarily lose their approved status – it will depend on the circumstances.

(9) Where a retirement benefits product has been altered after it has been approved by the Revenue Commissioners, the approval will not apply after the date of the alteration unless the alteration has been approved by the Commissioners.

Relevant Date: Finance Act 2021