Standard Fund Threshold
The Examination of the Standard Fund Threshold has been published on the Department of Finance’s website. The Key Recommendations highlighted in the examination are:
- Increase the SFT in line with the increase in incomes since 2014. This is likely to result in an SFT of approximately €2.8 million.
- Provide for an annual adjustment in SFT in line with increases in earnings. It would be open to the Minister to vary this adjustment as they wish.
- Reduce the rate of Chargeable Excess Tax to a level to ensure that the effective rate on the excess benefits over the Threshold is not less than the top marginal rate of tax. In current circumstances a CET rate of 10% would be sufficient to achieve this.
- Revise the age related multipliers used to value defined benefit pensions to take account of changes since they were last set.
There are also a number of other recommendations to remove certain anomalies and to make simplifications. We welcome the publication of the examination, which we were happy to contribute to.
In the Dáil, the Minister for Finance, Jack Chambers T.D. confirmed the decision of the cabinet to phase in the increase in the SFT over a number of years in increments of €200,000 from 2026 until 2029 and then converging the level of SFT with the applicable level of growth at that time. The Government also agreed to maintain the Chargeable Excess Tax rate at 40% and will review this by 2030, or before should it be considered appropriate. This will allow for a full assessment of the increase in the level of the SFT in the intervening period. The Minister’s speech can be accessed here.