Revenue Pension Manual, Tax Consolidation Act 1997 Sec 200

I have a small personal pension fund, which is eligible for taking benefits now. For reasons related to my current situation, instead of purchasing an annuity with this fund, I wish to take 25% of the fund tax free, and take the rest of the fund as a one off taxed amount, as described below.

The company who manage this pension fund informed me that taking a one off taxed amount is allowed by Revenue, and referenced chapter 23.4 of the Revenue’s Pensions Manual which can be found on page-6 here:


“An individual wishing to have the balance of their pension fund, after taking any retirement lump sum, paid to them or transferred to an ARF, must, if under 75 years of age, have a minimum guaranteed annual pension income (“specified income”) for life in payment at the time an ARF option is exercised in order to avoid having to go the AMRF or annuity route.”

The "specified income" amount is currently €12,700, and must be in payment at the date of exercise of the ARF option. Potential income cannot be included.

The company who manage this pension fund further informed me that, in calculating my current guaranteed income:

• income received from the Irish state pension can be included.
• income received from a UK state pension can only be included if it meets the requirements of Section 200 of the Taxes Consolidation Act 1997.

Instead of quoting the consolidation act in full, it is available here:


If I could include both my Irish and UK state (contributory) pensions, currently in payment, then I can meet Revenue’s requirement for guaranteed income.

Could someone please look at Section 200 of the above Act, and help me understand how to interpret whether or not I meet the requirements?

Thanks.

Edit 22/09/17: URL for Revenue’s Pensions Manual link was invalid.

You can look at the trivial pension rules or if you have a guaranteed income over €12,700 from your 2 pensions, you satisfy the AMRF requirement and can draw down the remainder as taxed income.



Steven
www.bluewaterfp.ie

Thanks Steven,

The 'trivial pension' route is not applicable, as my total Irish pension funds exceed the threshold value (after tax free cash is deducted).

Yes, a guaranteed income over €12,700 from pensions currently in payment should satisfy the requirement for draw down of the remainder (75%) of this particular pension fund as taxed income.

However, my current guaranteed income includes the UK state pension, and I'm not sure if chapter 23.4 of the Revenue’s Pensions Manual (page-7) allows it to be included:

"Specified income is defined in section 784C (4)(b) TCA 1997 as a pension or annuity which is payable for the life of an individual, including a pension payable under the Social Welfare Consolidation Act 2005 and any pension payable to which the provisions of section 200 TCA 1997 applies. Section 200 provides that certain foreign occupational and social security pensions may be exempt from income tax, whether the recipient is resident in Ireland or otherwise. While a pension to which section 200 applies may be exempt for tax purposes, the amount of the pension can be taken into account by an individual when determining whether he or she meets the specified income requirement."

The question I need to answer is: Do the provisions of section 200 TCA 1997 apply to my UK state pension?


Do you believe they do?

James

You should ask the life company who holds your pension. I have seen the life companies take different approaches as to what is guaranteed income and what is not. Eg. the single person allowance, some allow it, others say the person may get married in the future and lose the allowance (this is a nonsense as the government may also decrease the OAP too!).


Steven
www.bluewaterfp.ie

Thanks Steven,

The company holding the pension funds simply state that "income received from a UK state pension can only be included if it meets the requirements of Section 200 of the Taxes Consolidation Act 1997", and suggest I seek independent advice.

I suspect the onus is on me to interpret that Act correctly, and so I probably should ask Revenue.

James

Ask the insurance company if they will accept it. The Revenue will refer you to what you have just quoted.