When
you have finished cringing at the admittedly appalling juxtaposition of a
classic of its genre and a somewhat unexciting piece of work, you will probably
have to agree that the Revenue Pensions Manual is a critical document for
anyone practising in pensions, be they providers or advisers. And it has been recently revised by Revenue
with changes being made to several chapters and new ones being written.
A
detailed review of the changes is beyond the scope of this blog, but it suffices
to point out that some aspects of the revised manual are, well, good, others
are bad and some are a bit ugly.
First,
the good. Chapter 22 on Pension Adjustment Orders confirms that either a
pension adjustment order or a property adjustment order can be used for ARF and
AMRF benefits. Previously there had been
a concern that a transfer of benefits from an ARF/AMRF to the ARF/AMRF of a
spouse, on foot of a property adjustment order, would give rise to a
distribution for tax purposes and a consequent income tax hit.
The
same section of Chapter 22 confirms that the recipient spouse or civil partner
can set up an ARF without qualifying for it under the Taxes Consolidation
Act. While this is to be welcomed, it
does seem remarkable that Revenue has the discretion, with no legislative
authority, to grant tax relief for a whole segment of society.
As for
the bad, it’s not that the changes are bad – it’s more the lost opportunity to
correct some issues that are crying out for change. For example, the manual continues to provide
that a proprietary director who takes their benefits due to ill-health must
dispose of their shareholding. While
there may be some justification in making the disposal of shares a condition of
early retirement - to prove genuine withdrawal from service where the
person is otherwise fit (though one would think that a P45 should do the trick)
- there seems no reason why a person who has to retire because of ill-health
should be subject to the same condition. This requirement may have been imposed in
error because Revenue systematically put the rules on ill-health in the chapter
on early retirement. And in practice Revenue even demand the sale of
shares in cases of retirement due to serious ill-health - these are the cases,
known as the death’s door concession, where the member only has weeks rather
than months to live.
As for
the ugly, and admittedly this is just a pet peeve of mine, I would have
preferred it if the whole manual had been treated as a single document and
someone had gone through it with a view to making it more readable or even to
format it consistently. Granted, this is
not an easy task with what is essentially a very dry and rule-bound subject,
and it is probably a resource issue (and that cannot make things easy), but
given that it is a primary source material for an important, albeit often
unacknowledged, area of most people’s lives it is a shame that there wasn’t
time for someone to give it the care and attention I feel it merits.
One final
comment concerns the process by which the manual is put together. There seems to be a lack of consultation in
the production of revisions to the manual.
For example, our understanding is that the Revenue officials who deal
with advisers on a day-to-day basis have little input into the manual. That is a pity because surely they are the
ones who know the kind of issues that are relevant to advisers and, more
importantly, pension scheme members.
And, apart
from consulting those closest to the issues, perhaps Revenue might also enter
into a consultation process with the industry, in the same manner practiced by
the Pensions Board and the Central Bank, before engaging in further updates of
such an important policy document as the manual. Such an approach may benefit all parties
involved, to include Revenue.
It
would also save us from blogs with excruciating headlines.
Head of ITC Consulting and Group Legal
