Pensioners who have been locked out of their retirement lump sums because they were short just €49 in annual income will now be able to access their funds.
Up to now, some people who retired were prevented from accessing their funds for 10 years until they reached the age of 75 as, under Revenue rules, pensioners had to earn at least €12,700 a year to get access to their lump sums.
With the full rate of the State pension being €12,651 per annum, many pensioners were finding themselves with saved funds locked in an account because they were 94 cents per week, or €49 per annum, short of the stipulated pension income.
Revenue has confirmed that following a review to take account of changing circumstances, the Christmas bonus will count towards the calculation of the minimum income threshold of €12,700 for allowing access to funds in an Approved Retirement Fund.
Jim Daly, the minister of state for older people, has been making the case for a budgetary measure that would allow pensioners to tap into their savings since last September.
When no changes were made to the annuity rate in Budget 2018, Mr Daly asked Revenue if it would include the Christmas bonus when calculating the figure to allow pensioners access their funds.
This week the chairman of the Revenue Commissioners wrote to Mr Daly confirming that Revenue will alter the rules to allow pensioners access their funds.
The Christmas bonus, which is paid out by the Department of Social Protection, is an extra payment for people who are getting a long-term social welfare payment and amounts to 85% of their normal weekly payment. Including this once-a-year payment means pensioners would be brought over the threshold to access their lump sums.
Mr Daly said this change will be “a small but significant change that will improve the lives of people”.
He said: “This is the essence of good governance, a small but pragmatic change that will improve the lives of people in a tangible way.”
He said the previous situation represented a “glaring anomaly” in the system that was preventing healthy and fit pensioners from accessing their funds to maybe do some travelling or buy a new car.
“I am glad the Revenue chairman saw the merit in my proposal and will now amend the scheme rules accordingly,” said the Cork South West TD.
Mr Daly said: “This is a major policy shift in relation to pensioners’ retirement funds and is about to unlock hundreds of thousands of euro, to be spent in the open economy as pensioners see fit.”
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