Changes To The Standard Fund Threshold And Pension Lump Sum Limits

In September, the then Minister for Finance, Jack Chambers, published the report of

the independent examination of the Standard Fund Threshold. The targeted review

of the SFT regime was led by an independent expert, Dr. Donal de Buitléir.

The Standard Fund Threshold is a limit on the amount of pension benefits an

individual can accrue from Irish pension arrangements. The current limit is set at €2

million and has remained static since 2014 and anything over this amount will be liable to chargeable excess tax at 40%.

The Government implemented some aspects of the report in this year’s Finance Bill

which included;

Changes to the Standard Fund Threshold

The Finance Bill confirms future increases in the SFT of €200,000 per year

beginning in 2026 until 2029.

Year SFT

2024 €2,000,000

2025 €2,000,000

2026 €2,200,000

2027 €2,400,000

2028 €2,600,000

2029 €2,800,000

In addition to those increases, the Finance Bill confirms that from 2030 onwards the

SFT will be index linked to increases in average earnings as per Central Statistics

Office (CSO) data.

It is also important to note that for Defined Contribution clients the ability to fund for

an extra €150,000 above SFT remain possible as tax paid on pension lump sums up

to €500,000 can still be offset against Chargeable Excess Tax bills. See the

enhanced effective rates of the SFT for these future years below.

Year SFT SFT (effective)

2024   €2,000,000 €2,150,000

2025   €2,000,000 €2,150,000

2026   €2,200,000 €2,350,000

2027   €2,400,000 €2,550,000

2028   €2,600,000 €2,750,000

2029   €2,800,000 €2,950,000

The ringfencing of pension lump sum limits

There will be no changes to the taxation of pension lump sums. The lifetime limit for

tax free lump sums will remain at €200,000 with the next €300,000 of any pension

lump sum taxable at 20%. 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.

The above changes will require careful retirement planning, at Quigley Financial

Brokers we can provide a range of solutions for employers and their employees.

Reach out today

Contact us today and book your consultation https://www.quigley.ie/book-consultation and see how Quigley Financial Brokers can help you choose the best options available or contact richard@quigley.ie for further information.