The Minister for Finance Jack Chambers has today (18 September) published the report of the independent examination of the Standard Fund Threshold (SFT).
The targeted review of the Standard Fund Threshold (SFT) regime was led by an independent expert, Dr. Donal de Buitléir. The SFT has remained unchanged since 2014 and the report makes a number of recommendations to modernise and update the operation of the SFT which reflect developments in the pensions landscape and the impact of wage growth.
Minister Chambers has today outlined the decision taken by Government in relation to the De Butléir report. Minister Chambers has set out a multi-year plan to implement the recommendations of the report. This includes phased increases in the SFT of €200,000 per year beginning in 2026 until 2029 and then converging the level of SFT with the applicable level of growth.
The rate of CET is to remain unchanged with a specific review of the rate to take place by 2030.
The report also recommends revised valuation factors, taking into account the different types of pensions that the factors apply to and in particular, the different types of benefits that are provided. An independent evaluation of the age-related valuation factors proposed in the report will be undertaken.
In relation to lump sums, the threshold for the higher rate of taxation to apply to a pension lump sum will be limited to €500,000 rather than a proportion of the SFT and this change will be introduced in Budget 2025.
An inter-agency group will be formed to oversee the implementation of the remaining recommendations.
Minister Chambers commented:
“I wish to thank De Butléir for his work on this report which was commissioned by my predecessor Minister McGrath. The SFT has remained unchanged since 2014 and it was considered timely to undertake an examination.
The key decision taken by Government today is an important retention measure and gives certainty and clarity to those pursuing promotion in the workplace."
