Is it time to reduce the tax-free pension lump sum?

Some experts argue €200,000 limit overly favours high earners and costs exchequer too much

When you retire, you are typically able to withdraw a certain portion of your pension fund, tax free, up to a limit of €200,000. Photograph: iStock

When you retire, you are typically able to withdraw a certain portion of your pension fund, tax free, up to a limit of €200,000. Photograph: iStock

Some say it’s overly generous. Others say it’s essential as a means of incentivising people to set aside money for their retirement. With calls to restrict how much pension savers can withdraw tax free at retirement, has the time come to cut the pension lump sum?

What is it?

When you retire, you are typically able to withdraw a certain portion of your pension fund, tax free, up to a limit of €200,000. This is a total lifetime limit, even if lump sums are taken at different times and from different pension arrangements.

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