Light has been shed on the regulations surrounding the Overseas Transfer of a PRSA fund to other EU jurisdictions, providing direction to both the Irish pension saver and the Irish pension scheme administrator in dealing with an overseas transfer request.
A High Court Judgement in the case of O’Sullivan Vs Canada Life (Case No. 6355 P) has ruled that under Statutory Instrument 716 of 2003 – Occupational Pension Schemes and Personal Retirement Savings Accounts (Overseas Transfer Payments) Regulations, 2003 a PRSA contributor can transfer his/her retirement fund to an Overseas pension scheme administrator while continuing to both work and reside in Ireland.
Tax consultants and International Pension Transfer Consultant client, Mr Michael O’Sullivan, a PRSA contributor with Canada Life had requested that Canada Life transfer his PRSA to a pension arrangement in Malta. Canada Life declined his instruction as he did not reside in and was not employed in Malta and therefore believed that the transfer was not for bona fides reasons.
Michael O’Sullivan, who had completed the required Revenue Declaration stating his bona fide reasons, then issued proceedings seeking to compel Canada Life to make the transfer.
Mr Justice Sean Ryan stated that under the Transfer Regulations two specified conditions needed to be satisfied prior to accepting a transfer request;
- The transfer is for bona fides purposes and,
- The Overseas pension scheme administrator provides ‘’relevant benefits’’ as defined in section 770 (I) of the Taxes Consolidation Act 1997.
On the issue of bona fides purposes, it was held that each case would depend on its own particular circumstances but a Pension Scheme Administrator does not have to perform an evaluation of the reasons for the requested transfer of funds and that the Transfer Regulations did not require that a PRSA contributor be resident or employed another EU Member State such as Malta.
On the issue of “relevant benefits”, The Taxes Consolidation Act, 1997 state that ‘’relevant benefits’’ means:
Any pension, lump sum, gratuity or other like benefit—
(a) given or to be given on retirement or on death or in anticipation of retirement or, in connection with past service, after retirement or death, or
(b) to be given on or in anticipation of or in connection with any change in the nature of the service of the employee in question,
It was judged that scheme met the legislative requirements as the benefits under the Maltese Schemes were payable on either death or on retirement of the member.
In this case, Justice Ryan found that there was no evidence of mala fides on the part of Mr O’Sullivan and that the Transfer Regulations did not require that he be resident in or employed in Malta in order to transfer his PRSA policy there.
The decision has important implications for the Irish Pension Industry as the judgement removes a significant obstacle for those seeking to transfer funds abroad.
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