From top: Department of Finance document urging the closing of a loophole that has cost the exchequer millions; Ken Foxe
Via journalist Ken Foxe:
The PRSA The Personal Retirement Savings Accounts scheme had been introduced in 2002 as a low-cost private pension savings plan, particularly for the self-employed.
However, in the ensuing years, it had become particularly popular among high wealth individuals.
This was explained by a loophole in the original wording, which had been seized on by tax advisers as a mechanism for avoiding tax.
According to Internal Department of Finance documents obtained by Mr Foxe:
“The wording is open to the interpretation that, whilst a PRSA owner who wishes to take benefits from his or her PRSA must do so by their 75th birthday at the latest, there is no compulsion to take benefits at that age (or indeed any age).
“While this may seem to fly in the face of the whole raison d’etre for pension savings – i.e. to provide an income in retirement – for those with substantial pension assets it can provide significant tax planning opportunities.”
In one example, they describe how through careful planning, a person with a pension pot worth €2.5 million could avoid €200,000 in tax.