During a Seanad debate on the Finance Bill 2014, I said: I wish to raise a number of issues, but before doing so, I welcome the Minister of State again. We seem to be seeing quite a lot of him, as he comes before us on a regular basis...

I have raised before the many problems relating to pensions and what will happen in future. In particular, I wish to raise what has already been discussed, the personal retirement savings accounts, PRSAs. As the Minister of State knows, there had initially been a good take-up of PRSAs, but that rate has fallen significantly in recent years due to changes in legislation that came about for the 2011 budget. As a result, PRSAs suffered significant disadvantage compared with other employer pension arrangements in that employees are forced to pay universal social charge, USC, on the value of employer contributions to their PRSA. On the other hand, employees who benefit from employer contributions to their ordinary pension are not required to pay USC on the value of employer contributions to their pensions. At a time when pension coverage was already low and remains low, the change in the 2011 budget resulted in a move away from PRSAs. This is an inconsistent policy and it is also difficult to understand at a time when the Government is seeking to encourage workers to take out a pension and provide for the future. It seems like a move in the wrong direction. This could be changed with a technical amendment to the existing law and I am considering the position to see if something can be formulated for next week. Will the Minister of State comment on the area as it is of great concern?

To continue on the important subject of pensions, we can also consider the extension of additional voluntary contributions, AVCs, and the UK example of allowing access to pensions. I welcome the move in recent years to allow people have access to 30% of their AVCs. Will the Minister of State indicate how much money has been released into the economy since the AVC measure was introduced? It was very welcome but we have not heard feedback on its success. The Government should extend the scheme to allow people more access to tax-free cash to get more money flowing into the economy. Will the Government consider extending the deadline beyond 2016 in this Bill? The scheme has been a success so will the Government allow a bit more money to be used, such as 50% or even 100% of AVCs? Access to cash would be a massive boost to the economy. The Minister of State should include at least an extension of the AVC deadline in this Bill, so will he indicate if he will be open to an amendment in this regard?

Anecdotally, at least, the scheme has been a massive success, as we have repeatedly heard. I spoke to a garda who told me all his colleagues were availing of the scheme and using the money that was freed up. I spoke to another man who could access part of his AVC, which he used to buy his daughter a new secondary school uniform and books. He is not sending her to a fee-paying school. That man could pay a host of bills, including credit card bills, and he might even have a holiday for the first time in a long while. Such spending of money helps the economy, and if a person or a small or medium enterprise could access several thousand euro, tax free, from pensions tomorrow, they could pay off credit card debt or overdue bills. It would help people get back on their feet or in starting a new business.
I do not understand the penalty on self-employed people and I hope it can be removed. The USC levied on a self-employed person is higher than that levied on others, and it is almost like saying to somebody who is thinking of leaving a secure nine-to-five job that he or she should stay in that job. If that person becomes self-employed, he or she will pay a higher rate of tax. I do not know where the thinking came from.

Allowing people to take more money from their pensions would pay for house renovations, holidays or new cars. It would get cash flowing back into the economy. I draw the Minister of State's attention to interesting recent news from the UK. The plan is that people will be able to use their pension pots like bank accounts from the age of 55. This will allow them to withdraw thousands of pounds to save, invest or spend as they wish on whatever purchases are required. The UK Chancellor of the Exchequer, Mr. George Osborne, has indicated:

People who have worked hard and saved all their lives should be free to choose what to do with their own money, and that freedom is central to our long-term economic plan. From next year, they will be able to access as much or as little of their defined contribution pension as they want and pass on their hard-earned pensions to their families, tax-free.

That seems to make sense. Under current rules in the UK, people from age 55 can take 25% of pension savings as a tax-free lump sum, but in future, savers will be able to dip into their pension pot when they want and each time, 25% of what they take out will be tax-free. That will start next April. People will be able to withdraw thousands of pounds to save, invest or spend as they wish, and that will help the economy. Will the Minister of State comment on the UK example and if the Government is willing to consider it, particularly with the idea of getting cash flowing in the economy, including into SMEs? With each passing budget, pensions will become more important.

I have pointed out that Ireland has the highest rate of inheritance tax in Europe, at almost six times that of Italy and double that of Germany. However, in the UK, it was announced just the other day that there will be a change in inheritance tax laws. Currently, if people die in the UK without exhausting their pension funds, any inheritance that passes to children or grandchildren over the age of 23 is taxed at a massive 55%. From April next year, the tax will be abolished altogether, bringing such inheritance into line with money left to spouses. The Minister for Finance must examine this issue as the UK is taking a much more sensible approach. Our current scheme inhibits investment, including that for SMEs. We have the highest death taxes in the world, which is not good for our economy. This inhibits investment in business, so could we include something in this Bill to improve the circumstances of inheritance tax?

I was contacted some time back by a person who was very concerned that the large number of parents providing support and maintenance to adult children who are permanently incapacitated will fall outside the terms of the exemption that was mentioned. It is likely a large number of individuals will become liable for capital acquisitions tax as a result of circumstances in which the tax will never be realistically collected. I congratulate the Minister of State as I gather from his speech that the exemption expressly applies to a child who, regardless of age, is permanently incapacitated either physically or mentally. He has put my mind at rest as it certainly did not seem to be covered by the original budget.

We must do much work to tackle the debt but I congratulate the Minister of State on the work done. I hope other changes can also take place.

For a full record of that debate, please click here.