Cowen unveils new SSIA cash-for-pensions scheme

The Government is to give certain SSIA holders a cash incentive to convert their accounts into pensions, Minister for Finance Brian Cowen announced today.

Mr Cowen speaking at the publication of the Finance Bill in Government Buildings today

The measure, unveiled as part of the Finance Bill, is aimed at low-income earners on the 20 per cent tax rate. When eligible SSIA accounts mature, the Government will give €1 for every €3 transferred into a pension, Mr Cowen said.

The bonus is to be capped at €2,500 on a €7,500 SSIA, giving a pension contribution of €10,000.

There has been a great deal of pressure on Mr Cowen from Minister for Social Welfare Séamus Brennan, the Pensions Board and the Opposition to make it financially worthwhile for people, especially the lower paid, to transfer their SSIA savings into pensions.

The Finance Bill also includes new measures to facilitate the Revenue Commissioners in an offensive against tax avoidance.

Mr Cowen said the Government would also waive the exit tax paid on SSIA monies transferred into these pension accounts.

He said the scheme was restricted to people at the lower end of the income scale as higher earners - those on the 42 per cent tax rate - already had significant pension incentives.

Mr Cowen said the total cost of the incentive would depend on the take-up rate but that €200-250 million over 2 years had be set aside.

The Finance Bill also includes new measures to facilitate the Revenue Commissioners in an offensive against tax avoidance.

The Minister said he was proposing legislative changes aimed at addressing the use of "aggressive tax avoidance schemes, principally by way of a surcharge of 10 per cent on undisclosed transactions that are ultimately determined to be tax avoidance transactions".

Mr Cowen said the surcharge would not apply where full details of the transaction are disclosed in advance to the Revenue.

The Minister also unveiled an increase in the cap on tax relief available for film production in the Republic.

The cap will rise to 80 per cent of expenditure on any film in an effort to restore Ireland's competitive position as a film location.

The ceiling on spending on a film will be increased from €15 million to €35 million.