The Finance Bill 2013 sets out draft legislation to permit an individual to access his/her additional voluntary contributions (AVCs) prior to retirement.  The Bill also proposes to ease access requirements for approved retirement funds (ARFs) for the next three years.

Early access to AVCs

The Bill provides for a mechanism for an individual to make a once-off withdrawal of up to 30% of the value of his/her AVCs from certain pension arrangements.  This option will be available for three years from the passing of the Finance Act 2013 (which is expected in April).  Any such withdrawal will be subject to income tax at the individual’s marginal rate but will be exempt from the USC.  A withdrawal is also expected to be exempt from PRSI under the next Social Welfare and Pensions Act.  

Revision of ARF and AMRF requirements

The Bill also proposes to temporarily relax the qualifying conditions which one must satisfy to avail of the ARF option.  It provides that an individual under 75 years will be permitted to invest in an ARF where he/she has income of at least €12,700 per annum.  This will be a significant reduction from the current requirement of €18,000 per annum.  Furthermore, where an individual under 75 years does not satisfy the €12,700 income requirement, he/she will be able to avail of the ARF option where he/she places €63,500 in an approved minimum retirement fund (AMRF) rather than €119,800 as is currently the case.  These revised limits will apply for 3 years from the passing of the Finance Act 2013.

The Bill also includes provisions to ensure that those individuals affected by the higher ARF and AMRF limits since the passing of the Finance Act 2011 will not be disadvantaged.

Contributed by Mary Greaney & Lorna Osborne.