Taxes Consolidation Act, 1997 (Number 39 of 1997)
772 Conditions for approval of schemes and discretionary approval.
[FA72 s15(1) to (7); FA74 s64(1); FA92 s6(a); FA96 s131(2) and Sch5 PtII; FA97 s146(1) and Sch9 PtI par5(1)]
(1) Subject to this section, the Revenue Commissioners shall approve any retirement benefits scheme for the purposes of this Chapter if it satisfies all of the prescribed conditions, namely—
(a) the conditions set out in subsection (2), and
(b) the conditions as respects benefits set out in subsection (3).
(2) The conditions referred to in subsection (1)(a) are—
(a) that the scheme is bona fide established for the sole purpose of providing relevant benefits in respect of service as an employee, being benefits payable to, or to [24]>the widow or widower, children or dependants or personal representatives of, the employee;<[24][24]>the widow, widower, surviving civil partner, children or dependants, or personal representatives, of the employee, or children of the surviving civil partner of the employee;<[24]
(b) that the scheme is recognised by the employer and employees to whom it relates, and that every employee who is or has a right to be a member of the scheme has been given written particulars of all essential features of the scheme which concern the employee;
[15]>
(c) that there is a person resident in the State who will be responsible for the discharge of all duties imposed on the administrator of the scheme under this Chapter;
<[15]
[15]>
(c) that in relation to the discharge of all duties and obligations imposed on the administrator of a scheme [16]>by this Chapter<[16][16]>by this Chapter and [23]>Chapter 2C<[23][23]>, Chapter 2C and section 125B of the Stamp Duties Consolidation Act 1999<[23]<[16]—
(i) the administrator of an overseas pension scheme has entered into a contract with the Revenue Commissioners enforceable in a Member State of the European Communities [36]>or in the United Kingdom, as the case may be,<[36] in relation to the discharge of those duties and obligations and in entering into such a contract the parties to the contract have acknowledged and agreed in writing that—
(I) it is governed solely by the laws of the State, and
(II) that the courts of the State have exclusive jurisdiction in determining any dispute arising under it,
or
(ii) there is a person resident in the State, appointed by the administrator, who will be responsible for the discharge of all of those duties and obligations and the administrator shall notify the Revenue Commissioners of the appointment of that person and the identity of that person;
<[15]
(d) that the employer is a contributor to the scheme;
(e) that the scheme is established in connection with some trade or undertaking carried on in the State by a person resident in the State;
(f) that no amount can be paid, whether during the subsistence of the scheme or later, by means of repayment of an employee’s contributions under the scheme.
(3) The conditions as respects benefits referred to in subsection (1)(b) are—
(a) that any benefit for an employee is a pension on retirement at a specified age not earlier than 60 years and not later than 70 years, or on earlier retirement through incapacity, which does not exceed one-sixtieth of the employee’s final remuneration for each year of service up to a maximum of 40 years;
[10]>
(b) that any pension for any widow or widower of an employee who dies before retirement shall be a pension payable on the employee’s death of an amount that does not exceed two-thirds of any pension or pensions which, consonant with the condition in paragraph (a), could have been provided for the employee on retirement on attaining the specified age, if the employee had continued to serve until the employee attained that age at an annual rate of remuneration equal to the employee’s final remuneration;
<[10]
[37]>
[10]>
(b)that any pension for [25]>any widow, widower, children or dependants of an employee<[25][25]>any widow, widower, surviving civil partner, children or dependants, or children of the surviving civil partner, of an employee<[25] who dies before retirement shall be a pension or pensions payable on the employee’s death of an amount that does not or, as the case may be, do not in aggregate exceed any pension or pensions which, consonant with the condition in paragraph (a), could have been provided for the employee on retirement on attaining the specified age, if the employee had continued to serve until the employee attained that age at an annual rate of remuneration equal to the employee’s final remuneration;
<[10]
<[37]
[37]>
(b) that any pension or benefit for any widow, widower, surviving civil partner, children or dependants, or children of the surviving civil partner, of an employee who dies before retirement shall be provided for as either—
(i) a pension or pensions payable on the employee’s death of an amount that does not or, as the case may be, do not in aggregate exceed any pension or pensions which, consonant with the condition in paragraph (a), could have been provided for the employee on retirement on attaining the specified age, if the employee had continued to serve until the employee attained that age at an annual rate of remuneration equal to the employee’s final remuneration, or
(ii) benefits transferred to an approved retirement fund on the employee’s death of an amount that does not or, as the case may be, do not in aggregate exceed any benefit which, consonant with the condition in paragraph (a), could have been provided for the employee on retirement on attaining the specified age, if the employee had continued to serve until the employee attained that age at an annual rate of remuneration equal to the employee’s final remuneration;
<[37]
(c) that any lump sums provided for [26]>any widow or widower, children, dependants or personal representatives of an employee<[26][26]>any widow, widower, surviving civil partner, children or dependants, or personal representatives, of an employee, or children of the surviving civil partner of an employee<[26] who dies before retirement shall not exceed in the aggregate 4 times the employee’s final remuneration;
[11]>
(d) that any benefit for any widow or widower of an employee payable on the employee’s death after retirement is a pension such that the amount payable to the widow or widower does not exceed two-thirds of any pension or pensions payable to the employee;
<[11]
[11]>
(d) that any benefit for [27]>any widow, widower, children or dependants of an employee<[27][27]>any widow, widower, surviving civil partner, children or dependants, or children of the surviving civil partner of an employee<[27] payable on the employee’s death after retirement is a pension or pensions such that the aggregate amount of such pension or, as the case may be, pensions so payable does not exceed any pension or pensions payable to the employee;
<[11]
[12]>
(e) that any pensions for the children or dependants of an employee who dies before retirement or on the employee’s death after retirement shall not exceed in the aggregate one-half of the pension specified in paragraph (b) or (d), as the case may be;
<[12]
(f) [1]>that<[1][1]>that, subject to subsection (3A),<[1] no pension is capable in whole or in part of surrender, commutation or assignment, except in so far as the scheme allows an employee on retirement to obtain by commutation of the employee’s pension a lump sum or sums not exceeding in all three-eightieths of the employee’s final remuneration for each year of service up to a maximum of 40 years;
(g) that no other benefits are payable under the scheme.
[2]>
[4]>
(3A) (a) The Revenue Commissioners shall not approve a retirement benefits scheme for the purposes of this Chapter unless it appears to them that the scheme provides for any individual entitled to a pension under the scheme, being a proprietary director of a company to which the scheme relates, to opt, on or before the date on which that pension would otherwise become payable, for the transfer, on or after that date, to—
[9]>
(i) the individual, or
<[9]
[9]>
(i) a proprietary director of, or where a pension or part of a pension is payable in accordance with a pension adjustment order, the spouse or former spouse to whom the pension or part of the pension is so payable, of a proprietary director of, a company to which the scheme relates, or
<[9]
(ii) an approved retirement fund,
of an amount equivalent to the amount determined by the formula—
A – B
where—
A is the amount equal to the value of the individual’s accrued rights under the scheme exclusive of any lump sum paid in accordance with paragraph (f) of subsection (3), and
B is the amount or value of assets which the trustees, administrator or other person charged with the management of the scheme (hereafter in this section referred to as “the trustees”) would, if the assumptions in paragraph (b) were made, be required, in accordance with section 784C, to transfer to an approved minimum retirement fund held in the name of the individual or to apply in purchasing an annuity payable to the individual with effect from the date of the exercise of the said option.
<[4]
[18]>
[4]>
(3A) (a) The Revenue Commissioners shall not approve a retirement benefits scheme for the purposes of this Chapter unless it appears to them that the scheme provides for any individual entitled to a pension under the scheme who is—
(i) a proprietary director of a company to which the scheme relates, or
(ii) an individual entitled to rights arising from additional voluntary contributions to the scheme,
to opt, on or before the date on which that pension would otherwise become payable, for the transfer, on or after that date, to—
(I) the individual, or
(II) an approved retirement fund, of an amount equivalent to the amount determined by the formula—
A – B
where—
A is—
(i) in the case of a proprietary director, the amount equal to the value of the individual’s accrued rights under the scheme exclusive of any lump sum paid in accordance with subsection (3)(f), and
(ii) in the case of any other individual, the amount equal to the value of the individual’s accrued rights under the scheme which relate to additional voluntary contributions paid by that individual exclusive of any part of that amount paid by way of lump sum in accordance with subsection (3) (f) in conjunction with the scheme rules, and
B is the amount or value of assets which the trustees, administrators or other person charged with the management of the scheme (in this section referred to as “the trustees”) would, if the assumptions in paragraph (b) were made, be required, in accordance with section 784C, to transfer to an approved minimum retirement fund held in the name of the individual or to apply in purchasing an annuity payable to the individual with effect from the date of the exercise of the said option.
<[4]
<[18]
[18]>
(3A) (a) Subject to paragraph (aa), the Revenue Commissioners shall not approve a retirement benefits scheme for the purposes of this Chapter unless it appears to them that the scheme provides for any individual entitled to a pension under the scheme or, as the case may be, where the pension or part of the pension is payable in accordance with a pension adjustment order, the [28]>spouse or former spouse<[28][28]>spouse or former spouse, or civil partner or former civil partner,<[28] of such an individual to whom the pension or part of the pension is so payable (in this subsection referred to as the “relevant individual”), to opt, on or before the date on which that pension would otherwise become payable, for the transfer, on or after that date, to—
(i) the relevant individual, or
(ii) an approved retirement fund,
of an amount equivalent to the amount determined by the formula—
A–B
where—
[30]>
A is the amount equal to the value of the relevant individual’s accrued rights under the scheme (including accrued rights which relate to additional voluntary contributions under the scheme) exclusive of any lump sum paid in accordance with subsection (3) (f), and
<[30]
[30]>
A is—
(I) the amount equal to the value of the relevant individual’s accrued rights under the scheme (including accrued rights which relate to additional voluntary contributions under the scheme) exclusive of any lump sum paid in accordance with subsection (3)(f), or
(II) the amount equal to the value of the relevant individual’s accrued rights under the scheme which relate to additional voluntary contributions paid by that individual exclusive of any part of that amount paid by way of lump sum in accordance with subsection (3)(f) in conjunction with the scheme rules, and
<[30]
[40]>
B is the amount or value of assets which the trustees, administrators or other person charged with the management of the scheme (in this section referred to as “the trustees”) would, if the assumptions in paragraph (b) were made, be required, in accordance with section 784C, to transfer to an approved minimum retirement fund held in the name of the relevant individual or to apply in purchasing an annuity payable to the relevant individual with effect from the date of the exercise of the option.
<[40]
[40]>
B is the amount or value of assets which the trustees, administrators or other person charged with the management of the scheme (in this section referred to as ‘the trustees’) would, if the assumptions in paragraph (b) were made, apply in purchasing an annuity payable to the relevant individual with effect from the date of the exercise of the option.
<[40]
<[18]
[19]>
(aa) In the case of a retirement benefits scheme that is a defined benefit arrangement within the meaning of section 787O(1), paragraph (a) shall, with any necessary modifications, apply in relation to an individual entitled to a pension under the scheme (other than a proprietary director of a company to which the scheme relates) as if—
(i) the reference in that paragraph to any relevant individual entitled to a pension under the scheme were a reference to any individual entitled to a pension under the scheme who is an individual entitled to rights arising from additional voluntary contributions to the scheme, and
[31]>
(ii) A in the formula in that paragraph was the amount equal to the value of the individual’s accrued rights under the scheme which relate to additional voluntary contributions paid by that individual exclusive of any part of that amount paid by way of a lump sum in accordance with subsection (3)(f) in conjunction with the scheme rules.
<[31]
[31]>
(ii) clause (I) of the construction of ‘A’ in the formula in paragraph (a) had never been enacted.
<[31]
(ab) (i) In this paragraph “deferred annuity option” means the option provided to an individual who is a member of a retirement benefits scheme to defer, in accordance with Revenue e-Brief No. 65/08 entitled ‘Deferral of Annuity Purchase’ issued by the Revenue Commissioners on 22 December 2008, the purchase of an annuity from a company carrying on the business of granting annuities on human life.
(ii) An individual entitled to a pension under a retirement benefits scheme approved by the Revenue Commissioners before the date of passing of the Finance Act 2011 who, before that date, has exercised a deferred annuity option may opt in accordance with paragraph (a) within the period of one month from that date, where on or after that date the rules of the scheme are altered to enable such an option.
(iii) For the purposes of this paragraph, where an individual has exercised a deferred annuity option, the purchase of the annuity may be further deferred for a period of one month from the date of passing of the Finance Act 2011.
<[19]
(b) The assumptions in this paragraph are—
[5]>
(i) that the retirement benefit scheme was an annuity contract approved in accordance with section 784,
<[5]
[5]>
(i) that the retirement benefits scheme or, as the case may be, the relevant part of the scheme was an annuity contract approved in accordance with section 784,
<[5]
(ii) that the trustees of the retirement benefit scheme were a person lawfully carrying on the business in the State of providing annuities on human life with whom the said contract had been made, and
(iii) that the individual had opted in accordance with subsection (2A) of section 784.
(3B) Where an individual opts in accordance with subsection (3A) then—
(a) the provisions of subsection (2B) of section 784 and of sections 784A, 784B[41]>, 784C, 784D<[41] and 784E shall, with any necessary modifications, apply as if—
(i) any reference in those sections to the person lawfully carrying on in the State the business of granting annuities on human life were a reference to the trustees of the retirement benefit [42]>scheme,<[42][42]>scheme, and<[42]
(ii) any reference in those sections to the annuity contract were references to the retirement benefit [43]>scheme,<[43][43]>scheme.<[43] [20]>and<[20]
[6]>
(iii) any reference in those sections to Case IV of Schedule D were a reference to Schedule E, and
<[6]
[44]>
[21]>
(iia) in the case of an individual referred to in subsection (3A)(ab)(ii) (in this paragraph referred to as the “first-mentioned individual”)—
(I) the reference in subsection (2)(ii) of section 784C to an amount equivalent to the amount determined by the formula in that subsection were a reference to an amount equal to €63,500,
(II) the reference in subsection (4)(a)of section 784C to specified income per annum of an amount equal to the amount determined by the formula in that subsection were a reference to specified income per annum of €12,700, and
(III) the reference in subsection (6A) of section 784C to the individual were a reference to the first-mentioned individual and the reference in that subsection to the transfer, before the date of passing of the Finance Act 2011, of the amount referred to as B in the formula in section 784(2A) to an approved minimum retirement fund in respect of the individual, were a reference to the transfer, within the period of time referred to in subsection (3A)(ab)(ii), of the amount referred to as B in the formula in subsection (3A)(a) to an approved minimum retirement fund in respect of the first-mentioned individual.
<[21]
<[44]
(b) [22]>[7]>in the case of a proprietary director,<[7]<[22][32]>[22]>other than in the case of an individual referred to in subsection (3A)(aa),<[22]<[32][32]>other than in the case of an individual referred to in clause (II) of the construction of ‘A’ in the formula in subsection (3A)(a) and an individual referred to in subsection (3A)(aa)<[32] paragraph (f) of subsection (3) shall apply as if the reference to “a lump sum or sums not exceeding in all three-eightieths of the employee’s final remuneration for each year of service up to a maximum of 40 years’ were a reference to “a lump sum not exceeding 25 per cent of the value of the pension which would otherwise be payable”.
<[2]
[8]>
(3C) Where the rules of a retirement benefits scheme provide for the purchase of an annuity from a company carrying on the business of granting annuities on human life, references in subsection (3A) to the date on which a pension would otherwise become payable shall, in relation to that retirement benefits scheme, be construed as references to the latest date on which such an annuity must be purchased in accordance with those rules.
<[8]
[13]>
(3D) A retirement benefits scheme shall not cease to be an approved scheme because of any provision in the rules of the scheme whereby, either or both—
[39]>
(a) a member’s entitlements under the scheme, other than an amount referred to in paragraph (b), may, either on the member’s changing employment or on the scheme being wound up, be transferred to one or more than one PRSA to which that member is the contributor if the following conditions are satisfied, that is to say—
(i) benefits have not become payable to the member under the scheme, and
(ii) the period or the aggregate of the periods for which the individual has been a member of the scheme or of any other scheme related to that individual’s employment with, or with any person connected with, the employer immediately before the said transfer is 15 years or less,
<[39]
[39]>
(a) a member’s entitlements under the scheme, other than an amount referred to in paragraph (b), may, either on the member’s changing employment or on the scheme being wound up, be transferred to one or more than one PRSA to which that member is the contributor if benefits have not become payable to the member under the scheme,
<[39]
(b) an amount equal to the accumulated value of a member’s contributions to the scheme, which consist of additional voluntary contributions made by the member, may be transferred to one or more than one PRSA to which that member is the contributor.
<[13]
[14]>
(3E) A retirement benefits scheme shall neither cease to be an approved scheme nor shall the Revenue Commissioners be prevented from approving a retirement benefits scheme for the purposes of this Chapter because of any provision in the rules of the scheme which makes provision for borrowing by the scheme.
<[14]
[17]>
(3F) A retirement benefits scheme shall neither cease to be an approved scheme nor shall the Revenue Commissioners be prevented from approving a retirement benefits scheme for the purposes of this Chapter because of any provision in the rules of the scheme whereby a member’s entitlement under the scheme may be commuted, to such extent as may be necessary, for the purpose of discharging a tax liability in connection with that entitlement under the provisions of Chapter 2C of this Part.
<[17]
[29]>
(3G) A retirement benefits scheme shall not cease to be an approved scheme where the trustees of the scheme, notwithstanding anything contained in the rules of the scheme as approved, discharge liabilities of the scheme under section 59(3) of the [34]>Principal Act<[34][34]>Pensions Act 1990<[34] (inserted by section 43 of the Social Welfare and Pensions Act 2010).
<[29]
[33]>
(3H) A retirement benefits scheme shall neither cease to be an approved scheme nor shall the Revenue Commissioners be prevented from approving a retirement benefits scheme for the purposes of this Chapter because of any provision in the rules of the scheme allowing a member who comes within the provisions of section 787TA to exercise an option in accordance with that section requiring an amount representing the value of, or part of the value of, the member’s accrued rights under the scheme at the date of the exercise of the option to be transferred by the trustees of the scheme to the member.
<[33]
[35]>
(3I) A retirement benefits scheme shall not cease to be an approved scheme where the trustees of the scheme, notwithstanding anything contained in the rules of the scheme as approved, allow a member or, as the case may be, where the scheme is subject to a pension adjustment order, the spouse or former spouse or civil partner or former civil partner of the member, to avail of an option in accordance with section 782A.
<[35]
[38]>
(3J) Where benefits are provided in accordance with subsection (3)(b)(ii), sections 784A and 784B shall apply—
(a) as if the transfer of the benefits were the exercise of an option in accordance with section 784(2A), and
(b) with any necessary modifications, as if—
(i) any reference in those sections to the person lawfully carrying on in the State the business of granting annuities on human life were a reference to the trustees of the retirement benefit scheme, and
(ii) any reference in those sections to the annuity contract were references to the retirement benefit scheme.
<[38]
(4)(a) The Revenue Commissioners may if they think fit having regard to the facts of a particular case and subject to such conditions, if any, as they think proper to attach to the approval, approve a retirement benefits scheme for the purposes of this Chapter, notwithstanding that it does not satisfy one or more of the prescribed conditions.
(b) The Revenue Commissioners may in particular approve by virtue of this subsection a scheme which—
(i) exceeds the limits imposed by the prescribed conditions as respects benefits for less than 40 years’ service,
(ii) allows benefits to be payable on retirement within 10 years of the specified age or on earlier incapacity,
(iii) provides for the return in certain contingencies of employees’ contributions and payment of interest (if any) on the contributions, or
(iv) relates to a trade or undertaking carried on only partly in the State and by a person not resident in the State.
[3]>
(c) Notwithstanding paragraphs (a) and (b), the Revenue Commissioners shall not approve a scheme unless it appears to them that the scheme complies with the provisions of subsection (3A).
<[3]
(5) Where in the opinion of the Revenue Commissioners the facts concerning any scheme or its administration cease to warrant the continuance of their approval of the scheme, they may at any time, by notice in writing to the administrator, withdraw their approval on such grounds, and from such date, as may be specified in the notice.
(6) Where an alteration has been made in a retirement benefits scheme, no approval given as regards the scheme before the alteration shall apply after the date of the alteration unless the alteration has been approved by the Revenue Commissioners.
(7) For the purpose of determining whether a retirement benefits scheme, in so far as it relates to a particular class or description of employees, satisfies or continues to satisfy the prescribed conditions, that scheme shall be considered in conjunction with any other retirement benefits scheme or schemes relating to employees of that class or description, and, if those conditions are satisfied in the case of both or all of those schemes taken together, they shall be taken to be satisfied in the case of each of them but otherwise those conditions shall be taken to be satisfied in the case of none of them.
[1]
Substituted by FA99 s19(1)(a)(ii)(I). Paragraph (a) of subsection (1) shall apply as respects any retirement benefits scheme (within the meaning of section 771) approved on or after the 6th day of April, 1999.
[2]
Inserted by FA99 s19(1)(a)(ii)(II). Paragraph (a) of subsection (1) shall apply as respects any retirement benefits scheme (within the meaning of section 771) approved on or after the 6th day of April, 1999.
[3]
Inserted by FA99 s19(1)(a)(ii)(III). Paragraph (a) of subsection (1) shall apply as respects any retirement benefits scheme (within the meaning of section 771) approved on or after the 6th day of April, 1999.
[6]
Deleted by FA00 s23(1)(b)(iii)(I). Shall apply as regards an approved retirement fund or an approved minimum retirement fund, as the case may be, where the assets in the fund were first accepted into the fund by the qualifying fund manager on or after 6 April 2000.
[8]
Inserted by FA00 s23(1)(b)(iv). Shall be deemed to have come into force and shall take effect as on and from 6 April 1999.
[15]
Substituted by FA05 s21(1)(a)(iii). Applies as respects any retirement benefits scheme approved on or after 1 January 2005.
[22]
Substituted by FA11 s19(1)(e). Has effect as on and from the date of passing of this Act 6 February 2011.
[34]
Substituted by FA12 sched6(1)(i). Deemed to have come into force and have taken effect on and from 21 December 2010
[36]
Inserted by the Withdrawal of the United Kingdom from the European Union (Consequential Provisions) Act 2020 s42. Comes into operation on 31 December 2020 as per S.I. No. 723 of 2020.
[40]
Substituted by FA21 s14(1)(a). Comes into operation on and from the date of 21 December, 2021.