Finance Minister Brian Cowen will move urgently to address a loophole in legislation providing a €2,500 bonus for people transferring money from their Special Savings Incentive Account (SSIA) to a pension.
The bonus is open to anyone who earned €50,000 or less in the year prior to the maturity of their SSIA. It provides a €1 bonus for every €3 moved from the SSIA to a pension product.
The Minister is acting after it emerged that people who were already retired but under the age of 75 could, technically, access the €2,500 bonus immediately by opening a Personal Retirement Savings Account (PRSA) and then closing it within a matter of days.
The loophole first emerged when Mr Cowen initially announced the provision in the Finance Bill but it was not amended before being passed through the Oireachtas.
A number of PRSA providers refused to open PRSA accounts for pensioners after the revenue threatened to clamp down on any perceived circumvention of the "spirit" of the original legislation.
The Revenue amended its advice following inquiries from The Irish Times.
A spokesman for the Minister said last night that Mr Cowen would introduce legislation "at the earliest appropriate opportunity to ensure that, with effect from today [ Friday], individuals who avail of the Pension Incentive Tax Credit only to withdraw the funds immediately or within one year will not get the benefit of the new initiative".
