Revenue simplify qualification criteria for SSIA Pension Incentive
The Revenue Commissioners have today announced a simplification of the qualifying criteria for the new SSIA related Pension Incentive tax credit scheme. Under these arrangements a taxpayer whose income does not exceed €50,000 in the year prior to the SSIA maturing can avail of the incentive. For simplicity, the condition that they must be below the 42% rate of tax will no longer apply.
The new Pension Incentive scheme was introduced in the 2006 Finance Act to encourage those on lower incomes to roll over some or all of their SSIA proceeds into an approved pension product and to continue the savings habit with regular savings into a pension. The new incentive will involve a Tax Credit of €1 for every €3 invested, up to a maximum of €2,500, along with a proportion of the tax deducted from the SSIA at maturity. The investment in the pension product must be made within three months of the SSIA maturing.
Revenue has today advised all pension providers of the revised arrangements and has advised any person wishing to make enquiries to contact their pension provider directly.
The first SSIAs are due to mature at the end of May and the new Pensions Incentive Scheme will operate from 1 June 2006.
[Ends 26/04/2006]
Additional Information
Criteria for individuals wishing to avail of the scheme
In order to qualify for the incentive, the following criteria will now apply:
- Your income must not exceed €50,000 in the year prior to the year in which the SSIA matures;
- You cannot claim tax relief, under normal tax rules, for SSIA amounts up to and including €7,500 reinvested in an approved pension product;
- You cannot use this incentive to replace any amounts you are already committed to contribute to a pension product.
In order to avail of the new incentive, you need to forward an SSIA Maturity Statement (obtained from the Financial Institution when the SSIA matures) to a pension provider and then sign a declaration that the conditions set out above are, and will be, fully complied with.
Alternative
As an alternative to availing of the new incentive, a tax deduction for your pension contribution can be claimed under the normal tax rules.