Revenue Note for Guidance

The content shown on this page is a Note for Guidance produced by the Irish Revenue Commissioners. To view the section of legislation to which the Note for Guidance applies, click the link below:

Revenue Note for Guidance


Occupational Pension Schemes, Retirement Annuities, Purchased Life Annuities and Certain Pensions


Occupational pension schemes


This Chapter, together with Schedules 23, 23B & 23C contain the taxation provisions relating to the provision for employees of retirement and other benefits. It sets out the main rules under which occupational pension schemes may be approved by the Revenue Commissioners for the purposes of those provisions. The approval conditions include an option for employees to use approved retirement funds (section 784A) to provide income in their retirement. While the availability of the option regarding approved retirement funds is mandatory in regard to schemes approved on or after 6 April, 1999 in relation to proprietary directors, on or after 6 April, 2000 in the case of other employees with AVCs and on or after 6 February 2011 in the case of employees’ main scheme benefits in respect of defined contribution occupational pension schemes approved before those dates may be amended by agreement to incorporate the various options as appropriate. For defined benefit occupational pension schemes, the use of approved retirement funds extends only to AVC contracts.

The Chapter also deals with the taxation treatment of contributions by employers and employees to, and of the benefits arising from, such schemes.

The information given in the following notes is intended as a general outline only. A detailed booklet (known as the “Revenue Pensions Manual”) containing the practice notes on the application of the legislation is available from the Revenue website or from the Financial Services (Pension Schemes) section of Large Cases Division.

770 Interpretation and supplemental (Chapter 1)


This section is concerned with the interpretation of terms used in the Chapter. It also gives effect to Schedules 23 and 23C, which contains administrative provisions.


Definitions and construction

(1) The definitions are generally self-explanatory but the following call for comment —

additional voluntary contributions” are voluntary contributions made under the rules of a retirement benefits scheme which provides specifically for the payment of voluntary contributions other than contributions made at rates specified for members’ contributions in the rules of the scheme and includes contributions made under a separately arranged scheme for members’ voluntary contributions which is associated with the main scheme.

approved retirement fund” is defined in section 784A.

approved minimum retirement fund” is as defined by section 784C.

approved scheme” means a retirement benefits scheme which is approved by the Revenue Commissioners. Approval signifies no more than that the person or persons for whom the scheme caters will be exempt from the tax charge under section 777 on an employee in respect of the value of retirement benefit provision made for him/her by his/her employer. An “approved scheme” might, for example, consist of a service agreement with an employee in which the employer remains in control of the funding arrangements (if any).

exempt approved scheme”, which has the meaning given in section 774, is an approved scheme established under irrevocable trusts, usually, but not necessarily, by way of formal trust deeds, or an approved scheme which is an overseas pension scheme. The mark of an “exempt approved scheme” established under irrevocable trusts is that the assets or policies of the scheme are held in an established trust arrangement, not under the control of the employer or the employees, and the disposal of the assets or policies of the scheme is governed independently by the constitution of the scheme itself.

director” means a person, or one of a group of persons, by whom the affairs of a company are managed and includes a person “who is to be or has been” a director. This brings within the scope of the Chapter financial provision for retirement benefits made before the director has commenced, or after the director has ceased, to hold office.

proprietary director” means a director who, alone or with his or her spouse and minor children, or as the case may be, his or her civil partner, his or her minor children and the minor children of his or her civil partner, is or was (at any time within 3 years of the date of (i) normal retirement date, (ii) an earlier retirement date, where applicable, (iii) leaving service, or (iv) in the case of a pension (or part of) payable in accordance with a pension adjustment order, the relevant date in relation to that order) the beneficial owner of shares which, when added to any shares held by relevant trustees, carry more than 5 per cent of the voting rights in the company providing the benefits or in a company which controls that company.

personal retirement savings account” or “PRSA” is as defined in Chapter 2A of this Part.

employee” is defined as including, in addition to an employee in the ordinary sense, any person taking part in the management of the affairs of a company, specifying in particular, a director of a company. The term also includes a person who is to be or has been an employee.

final remuneration” means the average annual remuneration of a person’s last 3 years’ service in his/her employment. Under section 772, however, the Revenue Commissioners have discretion in the approval of schemes, and schemes may be permitted to adopt other bases of final remuneration where the circumstances so warrant.

overseas pension scheme” means a retirement benefits scheme, other than a state social security scheme, which is operated or managed by an institution for occupational pension provision as defined by Article 6(1) of Directive (EU) 2016/2341 of the European Parliament and of the Council of 14 December 20161 and which is established in an EU Member State which has implemented the Directive in its national law. The Directive sets out a framework for the operation and supervision of occupational pension schemes in all Member States and ensures that any schemes being marketed here by providers in other EU Member States are regulated under the Directive.

relevant date” means, in relation to a pension adjustment order, the date on which the decree of separation, the decree of divorce, or the decree of dissolution, as the case may be, was granted, by reference to which the pension adjustment order in question was made.

state social security scheme” means a system of mandatory protection put in place by the Government of a country or territory, other than the State, to provide a minimum level of retirement income or other benefits, the level of which is determined by that Government. Section 771(1) of Chapter 1 specifically excludes retirement benefits provided in the State under the Social Welfare legislation from the scope of the Chapter and similar type benefits provided by other States are, therefore, being excluded from the definition of “overseas pension scheme”.

(2) References to the provision of retirement benefits for employees of an employer include references to such provision by means of a contract with a third party. This covers schemes provided by means of a contract with an insurance company.

Application of Schedules 23 and 23C

(3) The provisions of Schedules 23 and 23C apply for the purposes of supplementing this Chapter.

1 This Directive repeals Directive 2003/41/EC of the European Parliament and of the Council of 3 June 2003 with effect from 13 January 2019.

Relevant Date: Finance Act 2021