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Pensions

There has never been a “better right time” than now to start!

A pension is a long-term savings plan that helps you save for the future, it is also very tax efficient! A pension plan allows you to make regular and/or one-off lump sums payments into a fund for retirement. The amounts saved into your pension are called ‘contributions’.

We are now living longer than previous generations. In fact, most of us can now look forward to 20 or 30 years of retirement. A pension can help you plan for these years, whether you want to retire to the country, travel, or spend time with your grandchildren, there has never been a “better right time” than now to start!
Starting a pension will give you greater ownership of your future. The money you save into your pension plan is invested so that your fund can grow over time, this is why the earlier you start a pension plan, the more time your retirement fund will have to grow and compound and the bigger your pension pot will be. The more you can save into your pension the more you will have in the future. The value of your pension at retirement depends on how much you put away each month, the length of time you are making contributions, the type of pension plan you select and the investment return. One thing we know is that the sooner you start a pension, the bigger it should grow!

Unlike a regular savings account, money invested in your pension can earn important tax breaks. And when you retire and look for access to your fund, the benefits of your pension can be available in a tax efficient way. Check out our personal pension tax relief calculator to see the tax benefits available to you.
When deciding how much to save into your pension, it’s comes down to affordability, how long you’ve got until retirement, what level of income you think you’ll need during your retirement. Our team of advisors along with Pension Calculators, can help you decide the right amount for you to save.
There are a few factors we consider when choosing the right type of pension plan for you, such as your employment status, if you are a director in a limited company, sole trader, professional and your attitude to investment risk. Whatever your personal circumstances are, we can help you choose the right type of pension that’s best for you.

Pre Retirement

Pensions - Pre Retirement – Savings Phase

The pre-retirement phase of Pension planning is all about building a savings pot for your retirement. When you are no longer willing or able to continue working, you will need to have savings from income earned in your working years.  

Yes, the State Pension is currently €248 per week or €12,900 p.a. and that’s a welcome payment. But you need to build your own savings pot to increase the household income after you retire.

The good news is that the State helps you to save for your pension. When you put €1,000 into your pension the state refunds you the income tax paid on this money, which can be 20% or 40%. The relevant tax break can be described as the tax you would have paid had you not put the money into your pension.

Personal Pension

Is a personally owned pension, held in your name and is suitable for anyone saving for their retirement. It is mainly suited to those who are self-employed, or whose employer does not offer a pension scheme.

One of the most common questions people ask is, how much should I contribute?  While there’s no minimum amount as such, the maximum amount you can contribute depends on your age.

AGE

MAXIMUM CONTRIBUTION BY AGE

29 or younger

15% of net relevant earnings *

30 – 39 years

20%

40 – 49 years

25%

50 – 54 years

30%

55 – 59 years

35%

60 +

40%

* These are percentages of your earnings up to €115,000. If you’re a professional athlete, your limit will be 30% of earnings, regardless of your age.

On retirement you can take a tax-free lump sum of 25% of your fund, up to a maximum of €200,000.The remainder of your fund can then be invested in an Annuity or Retirement Fund, which will be used to pay you an income in retirement.

The information contained herein is based on our understanding of current Revenue practice as at July 2020 and may change in the future.

PRSA (Personal Retirement Savings Account)

Is a personally owned pension that lets you save for retirement. It’s a simple flexible pension which you can take out, regardless of your employment status. You are eligible for a PRSA if you’re self-employed or working in non-pensionable employment. The maximum amount you can contribute depends on your age the same as a personal pension noted above. One of it’s best features is its portability, if you move jobs, or even take a career break, you can take your PRSA with you.

Executive Pension / Directors Pension Trust

Is designed to help company directors and employees save for their retirement. Both employers and employees can avail of tax relief on their contributions. Some of its best features are its flexibility, you can make regular or one-off contributions, at any stage. The employee’s contributions are restricted to the same age-related max contribution scale as the Personal pensions. The permitted employers pension payments are far more generous, this is of particular advantage to Company Directors. It is one of the most tax efficient ways to transfer company profits into personal assets.

A Small Self-Administered Pension (SSAP) / Self-Directed

A SSAP is a form of corporate pension scheme, it is established under trust by your employer, for your benefit. It is mainly used by Company Directors, however it is available to employees at the employer’s discretion. It is a tax-efficient investment scheme which allows you to enjoy control over the direction of your investments.

 

You are the Member Trustee of the SSAP. The Trustees are responsible for and control all aspects of the SSAP’s investment strategy and payment of retirement benefits. The Pensioneer Trustee is an individual or company and is approved by the Revenue Commissioners.

 

You can invest in individual company shares, Exchange Traded Funds, or buy your own Direct Property, which is the most appealing and most commonly used. There are specific Revenue rules as to what you can invest in, the term “at arm’s length” is a useful guide. We have outlined using your pension to purchase a property in more detail below.

 

Self-administered pension arrangements allow an investor to identify and acquire specific investments including property

Pension Rules allow the use of retirement funds for the purchase of real property assets in individual, co-ownership, or syndicated funds. Properties held fall under the categories of residential, commercial, industrial, or may be a combination of each of these held within syndicated funds.

 

Reasons to invest pension in property

  • You can pick the property you wish to purchase with your pension, residential, commercial, and industrial or a combination of each can be held with the fund.
  • Income tax relief on contributions made to fund the purchase are at the higher rate of tax.
  • There is no income tax on the rental income and no Capital Gains Tax (CGT) on the eventual sale of the property.
  • Upon retirement, you can take 25% of the value of the pension fund as a lump sum, of which €200,000 is tax free. The property can transfer in specie to a self- administered Retirement Fund (ARF) and the rental income can contribute to your income in retirement (retirement income is subject to PAYE).
  • You have control over every aspect of your pension.
  • Gearing (Borrowing money from a lender) can be used to assist in purchasing the property.
  • If you are purchasing a Commercial Property, the fund can be registered for VAT if required.

 

Are there restrictions buying property through pension?

Yes, but they are not too onerous and include:

  • The vendor must not be related to you, your employer, it’s directors and associated companies.
  • The property cannot be sold or let to relatives, your employer or its directors and associated companies.
  • Personal use of the property is prohibited.
  • The development of a property with a view to its disposal is not allowed.

 

Can I borrow to fund the purchase?

Yes, but the loan must comply with certain rules including:

  • “Limited Recourse” – the lender can take security over the property only.
  • Maximum loan term of 15 years or NRA if sooner.
  • Subject to bank’s lending criteria.
  • The pension scheme cannot borrow retrospectively.

 

Advantages of Investing pension in property

  • Generous tax reliefs on funds to purchase property.
  • All purchase costs are met by the pension.
  • Rental income is exempt from income tax, PRSI and USC.
  • There is no Capital Gains Tax on the sale of the property.
  • You can transfer the property in specie into your Approved Retirement Fund (ARF) at retirement

 

Disadvantages of Investing pension in property

  • You cannot use the property – it must be for investment only.
  • Risk – Gearing significantly increases the risk profile of the investment.
  • It is an illiquid asset.
  • The property will tend to be Irish based limiting the investment choice
  • Your risk exposure is concentrated in Ireland, with no exposure to Global Assets
AVCs (Additional Voluntary Contributions)

Additional payments to an existing pension scheme, to build up additional retirement funds. AVCs give you the opportunity to grow your pension ahead of retirement, on your own terms. AVC’s are tax efficient as you can claim tax relief against contributions, subject to revenue limits.

Buy out Bond (BOB) / Personal Retirement Bond

A retirement bond allows you take your pension entitlements with you when changing jobs and/or if you are made redundant, without having to transfer to your new employer’s scheme.

A Buy out Bond allows you to bring your pension benefits with you, when you leave a pension scheme.

  • It’s flexible – You have control over your pension plan and how it is invested.
  • It’s tax-efficient – That’s because any growth on your investment is tax-free.
  • It helps cut ties with your previous employer and/or their Trustees.
  • It allows you to retire the benefits from that previous employment after age 50.
  • It lends itself to a smoother retirement of the benefits of that employment
  • If you were to die before taking your retirement benefits, the fund forms part of your estate with no involvement from your past Employer or Trustees.

Post Retirement

Pensions - Post Retirement – Ready to Retire
The post retirement phase of pension planning should be focussed on how you use your savings pot to compliment your income in retirement. We encourage you to focus on the 4 pillars of retirement income as follows:

  • State pension (typically from ages 67 or 68)
  • Private Pension savings
  • Private assets and Income, e.g. rental income, dividend income, other employment
  • Part time employment or Consultancy work

A planned and tailored approach to these income sources can help to minimise your income tax. Did you know that a couple with total income of €36,000 in retirement will pay no Income Tax? We recommend that you view our income tax planning examples below to see how good planning lead to highly tax effective outcomes.

Retiring Soon

The first thing you should consider is the lifestyle you would like to have in retirement and the Income in retirement you will need to enjoy that lifestyle. Important dates to note, when you should seek advice are when you are 10 and 5 years away from retiring, to make sure you are on track for the retirement you desire.

There are lots of factors to consider, it’s a very special time but it can be a daunting time! Having someone at your side to cut through the jargon and clearly outline the options and the benefit of those decisions. It can make all the difference to what type retirement you will have. With the right information, you should be in full control of when and how you take your money. We’re here to help you understand your options and will guide you as you take the next steps in planning your financial future.

Annuity

Is a regular income you will receive for the rest of your life. Annuities may be more suited for people who would prefer a guaranteed income for their retirement. There are three decisions you need to make when purchasing an Annuity:

  • single life or joint life Annuity
  • what guaranteed period you want
  • if you want your pension to escalate (increase with inflation) or remain level.

The more of these proceeding options you choose the lower annuity rate you will receive. Annuity rates currently offer poor value as they are directly linked to deposit intertest rate. While your income may be guaranteed the level of income payable may not be attractive.

Approved Retirement Fund (ARF)

An ARF gives you more control over how your retirement fund is managed. It is an investment plan with the intention of growing your fund during your retirement years based on your own investment strategy.

There are two categories of post retirement funds, these are called Approved Minimum Retirement Funds (AMRF) and Approved Retirement Funds (ARF).

An AMRF is required when on retirement, an individual does not have a guaranteed income for Life of €12,700, the first €63,500 of the capital sum must be designated as an Approved Minimum Retirement Fund (AMRF). As the State Retirement Pension now exceeds the €12,700 threshold, individuals in receipt of a full state pension are not obliged to establish an AMRF.  

If an AMRF is required, the maximum drawdown permitted is 4% of the fund value each year. The AMRF does not have a minimum drawdown requirement. Once you are in receipt of the full State Retirement Pension or reach age 75 your AMRF will automatically become an ARF. 

Retirement funds in excess of this threshold of €63,500 are invested in ARF’s.

An ARF is a personal retirement fund which allows you to keep your money invested after retirement, as a lump sum. You can withdraw from it regularly to provide an income, which may be subject to Income Tax, PRSI and Universal Social Charge (USC) subject to your individual circumstances. Any remaining value left in the fund after the death of the ARF/AMRF holder can be left to your next of kin. 

The minimum yearly drawdown requirement is currently 4% for those aged 60 and under the age of 71 where funds are under €2 million. For those over 71 years, a 5% drawdown applies. Larger funds with over €2m value require a 6% drawdown. ARF holders are subject to income tax assessment whether the income is taken or not. This is called a deemed distribution and ARF holders are advised to take at least the minimum income payment annually.

Investment Options

An ARF/AMRF invests in various assets such as shares, property, bonds and cash. The growth of your Retirement fund depends on the performance of the assets it is invested in. The funds are designed to grow in value, but your original investment is not guaranteed.

The key attributes of Retirement Funds can be summarised as follows:

  • You keep control of your retirement money and retain ownership of the capital
  • You have flexibility in terms of when and at what rate you draw on your ARF in retirement
  • You can choose how to invest your ARF/ AMRF and select the type of investments that suit your needs and attitude to risk
  • Any growth in your AMRF/ARF is tax-free but withdrawals may be liable to income tax
  • You have the option to use your AMRF/ARF to buy an Annuity at a later date
  • There is a risk that the AMRF/ARF could run out in your lifetime. This could happen if you take income from your ARF at a rate which is higher than the investment growth achieved over a number of years

Income and Capital appreciation within the A(M)RF are not subject to tax . Income distributions to you from your ARF / AMRF may be exposed to taxation and may be liable to Income Tax of 0%, 20% or 40%. Retired couples over age 65 have an aggregate income tax exemption up to €36,000 p.a. The exemption for individuals over age 65 is €18,000 p.a. – PRSI & USC may also apply.

Summary of the tax rules of your ARF / AMRF after your death

(based on rates at July 2020)

ARF inherited by

Income tax due

Capital Acquisitions Tax (CAT) due

Surviving Spouse

No tax due on the transfer to an ARF in the spouse’s name

No

Children (under 21)

No tax due

Yes*

Children (21 & over)

Yes (30%)

No

Others (including surviving spouse/civil partner if benefit paid out as a lump sum)

Yes, at deceased’s tax rate at the time of death (either 20% or 40%)

Yes*

        *Normal Capital Acquisitions Tax thresholds apply

Example 1

Sample maturing Pension – ARF Option

 

  • The imputed distribution is currently 4% between age 61 and 70
  • The imputed distributions increases to 5% from age 71
  • ARFs are not guaranteed, and can deplete and bomb out over time during the lifetime of the client
  • The combined income of 4% from ARF and AMRF in year 1 is €12,000
  • All withdrawals subject to PAYE, USC and PRSI where applicable

Income Tax Liability on Income Example

€300K AMRF (married / CP over 66) – Total Find of €400K

Income“Effective” income Tax Rate of overall Income/lump sum
Income from A(M)RF only of €12,000 (4% of €300,000)Zero
Add Max OAP for a Total Pension income of €24,912Zero
Add Max ADS for a Total pension Income of €0.53%
Add another income of say €8,519 to bring Total income to €45,000 for example8%
Plus TFC of €100,000Zero

Notes:

  • Pensions are fully taxable in payment.
  • PRSI and USC may also apply.
  • Future tax rates may be different.
  • You must qualify for state pensions
Example 2

Sample maturing Pension – ARF Option

Targeting fund of €800,000

  • All withdrawals subject to PAYE, PRSI and USC where applicable
  • Imputed drawdown is 4% between age 61 and 70
  • Imputed drawdown is 5% from age7 1
  • ARFs are not guaranteed, and can deplete or even bomb out over time during the clients lifetime
  • Combined income in year 1 from AMRF and ARF is €24,000.

Income Tax Liability on 4% income from €600K A(M)RF

(Married/CP over 66, fund of €800,000)

IncomeEffective’ income Tax Rate as a % of overall income

Income from A(M)RF only of €24,000 (4% of €600,000)

Zero

Add Max OAP for Total Pension income of €36,911

1%

Add Max ADS for Total pension Income of €48,481

10.3%

Add another income to bring Total to say €55,000

14%

Plus Lump Sum of €200,000

Zero

Notes: USC and PRSI may also apply. You must qualify for state pensions. Future tax rates may be different

The 10% ‘effective’ tax rate with the Lower Exemption Limit – Married & over age 65

We calculate the ‘sweet spot’ joint salary for a 10% effective tax rate to be €47,000 with marginal relief available on income between €36K and €47K

Tax Liability Calculation

First €36K: Exempt

€11,000 X 40% = €4,400

This cannot be reduced by tax credits, as we are using the LEL

Tax liability as a % of the overall income of €47K: 9.36%

Note: The information and tax rates presentenced above are based on our understanding of legislation and Revenue practice as of July 2020 and may change in the future. While great care has been taken to ensure the accuracy of the information, we cannot accept responsibility for its interpretation, nor does it provide legal or tax advice.

 

Defined Benefit

Defined Benefit (DB) Transfer Analysis

Anyone with a ‘DB’ scheme must get their head around the risks and rewards.

 

Brief History

Defined benefit (DB) pension schemes were originally created to provide retired employees with a monthly payment for life. That payment was based on the employees’ level of service and a percentage of salary. So, after 40 years of service an employee would get a pension up to two-thirds of their salary.

 

So why the decline of DB schemes

Firstly, we are living a lot longer, according to the Central Statistics Office life expectancy in 2012 had increased to age 81. Of course, this is good news for most people who can look forward to a long and healthy retirement, but for the companies responsible for paying their pensions it’s a massive financial burden.

Other factors which have contributed to a continual decline in DB schemes, include recent investment market crashes, low bond yields, increased regulation and accounting requirements, combined with the general rise in salaries during the boom years. At this stage, many companies have come to the obvious conclusion, that they cost too much, and those costs are loaded with uncertainty. According to the Pensions Authority the number of DB schemes in Ireland fell from 2,557 in 1991 to approx. 598 in 2018, with only 388 of them being active schemes. Today, many people are wondering whether their pension scheme will still be there when they retire. The level of protection in place for members of DB schemes is also relatively weak in Ireland compared to our closest neighbours.

 

What’s the alternative?

A great number of people with retained benefits in defined benefit pensions are reviewing the option to take a transfer value from their plan, to gain ownership of the capital value and manage their own retirement income. For some, this decision will be as a result of the uncertainty outlined above, moreover people are also focusing on the positives of moving to a defined contribution arrangement:

  • Potential to pass on wealth to the next generation (DB pensions end with the current generation)
  • Income flexibility
  • Potentially a larger tax efficient lump sum payment

More employers are also “topping up” transfer values called enhanced transfers, to incentivise members to exit DB schemes and ultimately reduce the cost and risks of maintaining a DB scheme.

Areas that give people reservations, during these conversations are: “What if I live too long and my fund runs out”, “What if there is a market correction or recession”.

Areas to consider when assessing a DB transfer option: What factors need to be weighed up?

 

  1. The Quality of the Promise

On first impressions, a Defined Benefit pension scheme is the best type of pension you can have – the “Rolls Royce” Pension. However, this depends on the scheme’s ability to fund its’ pension obligations for all members going forward. Benefits under Defined Benefit Schemes are not guaranteed. If a scheme’s assets are not sufficient to pay the benefits, and the employer is not in a position to meet the shortfall (and is NOT obliged to), the pension promised to you may have to be reduced. Consideration therefore needs to be given to the financial health of the Scheme and the future financial health of your former employer – in so far as this can be determined.

 

  1. The Hurdle Rate

This is all about calculating the assumed level of investment growth required on the transfer value, to provide you with the same level of benefits that the Defined Benefit Scheme promised to pay.

 

  1. Cashflow position

By retaining ownership of the pension capital value, you retain greater flexibility to structure future income streams, and aim to stay within the 20% income tax rate. In this context savings and/or the Tax Free Lump Sum can be used to complement income levels.

 

  1. Legacy

With a Pension transfer the balance of your unused fund value will be retained by your family. Under a DB arrangement, depending on the scheme terms your spouse or children up to a certain age, may receive a % of your promised income, normally 50%. As you know there are no absolutes in life, with DB’s the phrase “A bird in the hand is worth two in the bush”. In my experience, this is the overriding reason why my DB clients retained ownership of their transfer value. The promise of €?? p.a. v’s the lump sum transfer now. Your current health status will play a key factor in your discussions. having ill health or reduced life expectancy makes the decision to take the transfer option more compelling for most.

 

  1. The Lump Sum

An additional advantage in taking a transfer payment to a Defined Contribution arrangement relates to the options available at retirement. Defined Benefit Schemes only offer the option of an annual pension and/or a lump sum at retirement. Lump Sums are calculated by a formula relating to final salary and service, with a maximum lump sum payable of 1.5 times final salary. This Lump Sum is normally required to be commuted from your quoted annual pension, usually at a rate of 9:1, therefore reducing your annual pension and spouses’ pension.

All Defined Contribution arrangements (including Personal Retirement Bonds) now have access to an additional set of options. In addition to the option of an annual pension, Defined Contribution pensions can pay Lump Sums of 25% of the accumulated fund at retirement and invest the remainder in an Approved (Minimum) Retirement Fund (A(M)RF) post retirement. An A(M)RF is a personal asset.

 

  1. Investment

The long-term expected return on equities and property is unknown but it is common to project on the basis of a 5% p.a. (the Society of Actuaries in Ireland) return before charges. We generally expect Alternative Assets to generate a return somewhere between cash/bonds and equities/property over the long-term.

As part of our overall risk assessment process we assess your capacity to take measured risk, your attitude to risk and through our Fact find and discussions, your overall asset profile i.e. (current savings & Investments – 25% Pension tax free)

If you take the transfer value, you will carry the investment risk. Our Investment strategy helps to avoid “sequence risk” (investment underperforms in the short term relative to expectations) , the 5-year income plan (held in the Cash Fund), provides a buffer to market volatility.

 

  1. Health

We have seen an increase in requests for an additional Health Declaration form by the Trustees of DB schemes. This form is required to be completed by the pension holders GP to confirm members health status. The reason for this is that some DB Trustees are not willing to allow any member with ill health or impaired life expectancy to take their transfer value. The view of the Trustees is that permitting such transfers is not in the interest of the remaining members. It would be reasonable to suggest that the transfer option from DB schemes may not continue to be available for everyone in the future.

What are your next steps?

As mentioned earlier, this is a complex and important decision. If you have a substantial DB pension, it is likely to make up a significant portion, if not the majority of your wealth in retirement, so your next steps are vital. Here are some suggestions:

  1. Request up-to-date pension statements and information
  2. Engage a qualified adviser, like Murray & Spelman
  3. Bring your family into the discussion
  4. Take your time and consider all your options

Group Pensions

Group Risk and Pension Scheme Benefits

Offering your employees Death in Service, Income protection and Pensions benefits will help retain staff and enhance employee satisfaction.

One of the main challenges for businesses is to attract and retain good staff. Having a comprehensive employee benefit package, such as pension, death-in-service, and income protection benefits, can really put you ahead of the competition.

Proposition

At Murray & Spelman Financial Services we have the track record and experience to ensure the management of the Pension Scheme runs smoothly for your Business, the Management team and Employees.

We will arrange an initial comprehensive presentation followed by periodic presentations to scheme members to explain how their pension plan works, their investment options and the other employee benefits provided by your Business.

The key elements in the delivery of this service are proposed as follows:

Employee / Member engagement

We will design an engagement plan which will include the following advisory services:

  • Employee Benefit Package – we will actively promote the Pension Scheme and associated benefits to all members of staff through group presentations, video calls and one to one meetings. We will help members to engage and understand their retirement planning process to enable them to better prepare for their retirement.
  • Pension Funding Review– we can analyse members pension position, by looking at member target pension, contribution level and pension investment performance.
  • Financial Wellbeing / Personal Financial Reviews – when requested by the members, we will advise on their day to day personal financial arrangements to ensure their goals will be achieved. This includes, pensions benefits accrued from previous employment, Life & Serious Illness cover, Mortgages and Savings/Investments.
  • Joining the Pension Scheme – when new members are joining the pension scheme we will engage with and advise the member as to how the scheme works and the benefits.
  • AVC Investment– we will advise and encourage Additional Voluntary Contributions (AVC’s), in addition to member pension scheme contributions. Illustrations on how AVC payments can enhance member retirement benefits will be explained.
  • Leaving Service Options– when leaving service, we will advise on member leaving service options.
  • Retirement Advice – when members have reached their retirement age, we will engage with them on the retirement options available to them, maximising their Tax-Free Lump Sum, advantages/disadvantages of Annuities v’s Retirement Funds. The purpose here is to cut through the jargon, to empower the member to choose the best option for them based on their circumstances.
  • Risk Benefits – these benefits are generally undervalued and misunderstood by employees until they are needed (family benefits on death and disability).

It is important that we assist employee understanding of the pre and post retirement planning issues with pensions. It will contribute to the feeling of financial wellbeing.

New or Existing Schemes

Issues to consider when setting up or accessing existing schemes

  • Vesting Rights
  • Employment Categories
  • Risk Benefits
  • Trusteeship
  • Pension Pricing
  • Bundled 0r Unbundled
  • Provider Assessment
  • Emerging Legislative Obligations – IORP II, (Auto Enrolment)

Group Risk

Employers can provide Group Risk Benefits to their employees under three heading:

  1. Group Life Insurance (Death-in-Service) ensures that an employee’s family or dependents will be financially provided for in the event of the employee’s death. Payment to the employee’s dependents can be made via Lump Sum, Spouse’s Pension or Children’s Pension.
  2. Group Income Protection, (Permanent Health Insurance – PHI) protects your employees from loss of income due to long-term illness or injury. Income Protection is designed to provide an income for employees if they are unable to work for a prolonged period of time due to illness or injury. Payment begins once a predetermined period called the “deferred period” has passed since the onset of the condition leading to the claim.
  3. Group Serious Illness Cover pays a lump sum to employees if they are diagnosed with one of a number of specified serious illnesses. A serious illness payment will be made only once. It provides a lump sum (and, sometimes, a dependent’s pension benefit) on the death of a member of a scheme.

Why would an employer set up Group Cover for their employees?

  • As an employer you can write off the full cost of providing the benefits against corporation tax.
  • Recruitment and Retention of employees
  • It is an attractive benefit to offer current and future employees.
  • The underwriting requirements for group life assurance are much less stringent than for individual life assurance cover.
  • Some employees who may not qualify for individual cover, may qualify group cover
  • As cover is organised on a group basis, costs are significantly lower than equivalent individual life assurance cover.
  • Administration much more straightforward than purchasing equivalent life assurance cover policies for each individual employee.
  • Employer contributions to a pension are treated as a business expense and are not subject to Employer PRSI
  • Employer contributions do not count towards the individual’s Revenue limits

Auto-Enrolment

The Irish Government is planning to launch an auto-enrolment pension scheme from 2022. Automatic enrolment in Ireland is being mooted as a measure that, if introduced, could bridge the pension gap.

The State pension retirement age has been in the news a lot lately. Will the qualifying age be extended upwards or be reduced back down?

Pension Time Bomb
You may have heard the above term in the news. What does it mean and why should it concern you? It’s all down to Irelands demographics! For every, one person who retired in 2019 there were five workers – by 2050, for every one person retired there will be only two workers!

If introduced, automatic enrolment would oblige employers to introduce a workplace pension scheme and automatically enrol their employees into the scheme. Employers would then be obliged to contribute a percentage of an employee’s salary to help fund their retirement.

The Government is also supporting this idea to bridge the pension gap. This gap exists and will certainly continue to grow because the State pension will not be sustainable in the future due to increasing life expectancy and an ageing population.

Transferring UK Pensions

Qualifying Recognised Overseas Pension Scheme

QROPS is a Personal Retirement Bond approved by HMRC. (UK Authorities)

QROPS Personal Retirement Bond can accept transfers from UK Occupational Pension Scheme’s (DB or DC), UK Personal pensions and UK Section 32 Buy Out Bonds.

There are several criteria that need to be considered as part of this process. Transfers may seem daunting and complicated but once the necessary steps to avoid any negative tax consequences are taken, the process is quite simple. It is essentially the transfer of benefits from one insurer to another.

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