Pensions

Choosing to start a pension is a very important step in your life. With the State Contributory Pension for 2018 at just €243.30 we all acknowledge that this is not enough to maintain a decent standard of living in retirement. Paying into a pension will go a long way towards securing your future and the lifestyle you have planned for yourself once your working life is over.

We advise on a range of pension solutions to suit your own personal situation.

Personal Pension

This type of pension is for those who don’t have access to a company pension scheme or are self-employed. This plan is paid for by the individual. The purpose of this plan is to accumulate a fund which will provide an income when you retire. Your get tax relief at your marginal rate on your premiums.

Retirement can be taken anytime from age 60 and up to age 75. At retirement you have the option to take a tax-free lump sum of up to 25% of the fund value and the balance must either be used to fund a regular payment pension (annuity) or invest in post retirement funds (ARF).

For more information on your options at retirement please see our Retirement page.

PRSA

A PRSA is a Personal Retirement Savings Plan. Anyone can take out and contribute to a PRSA and those in non-pensionable employment or who are self-employed can claim tax relief on contributions.

There are two types of PRSAs:

• Standard PRSAs, which will have maximum permitted charges of 5% of each contribution and 1% pa of the fund value and
• Other non Standard PRSAs which do not have capped or management charges but often have access to a greater range of investment funds.

No charge or penalty can be levied on either type of PRSA on termination, suspension, recommencement of contributions or when transferring to or from a PRSA.

Employee Group Pension Plans

As professional impartial Brokers we pride ourselves on being the experts to SME’s for their employees’ benefits packages. Benefit packages include Group Death in Service, Group Pension plans and group income protection. We provide these benefits to companies from Waterford to Dublin to Kerry.

If an employer wishes to assess the structure of providing such a benefit to employees, we provide a tender document that sets out both the benefits and costs from the outset. Company Pension schemes are set up as defined contribution schemes, with the contribution from the employer and employee being defined from the outset. On retirement a fund accumulates to provide each employee with pension benefits under revenue rules and regulations.

It is a tax efficient way for you to help ensure your employees are financially secure in retirement as it offers employees the opportunity to avail of tax-relief against contributions.

Providing a benefits package to employees helps attract new staff and retain existing employees.

Ronan McCarthy Life and Pensions will play an active role in engaging your employees both in terms of the initial meetings and annual reviews of benefits. We see this process a journey that will constantly change throughout the employees working life. Our service will provide the necessary information to each member regarding any changes in legislation changes that may affect their pension.

AVCs

If you are a member of your employer’s pension scheme you will be paying a set amount, usually a percentage, into your pension. Whilst this is great this income may not be enough to maintain the standard of living you expect in retirement. By making AVCs or top ups to your main pension this can make a really big difference to your retirement income.

You will have the option of making regular AVCs, where they are deducted from your salary with your regular pension contribution and so you benefit from tax relief at source. Alternatively you can make once off AVCs and tax relief would need to be claimed from Revenue. Again AVCs for tax relief purposes must be within the age related tax relief limits.

Personal Retirement Bond

A Personal Retirement Bond (PRB), also known as a Buy Out Bond, is taken out when an employee transfers the benefits from their company pension scheme to a policy in their own name. The transfer needs to be authorised by the Trustees of the scheme and they ‘buy’ the new policy for the member. The value can be transferred to a Buy out Bond where the scheme member leaves the scheme due to:

• the member leaving employment, or
• the scheme closing down, or
• the member deciding to leave the pension scheme

With a PRB the individual retains the rules of the original scheme such as retirement age and options at retirement. Benefits from the bond can usually be taken any time after age 50, provided that you are not working with the employer from whom the scheme transfer came and even if you still work elsewhere.

Executive Pension

This type of pension is one that is part or fully paid for by your employer. It usually involves the employee agreeing to contribute a regular sum into their pension. The employer must also make a reasonable contribution to the pension. There are additional benefit options available under this plan such as Life Cover, Serious Illness Cover and Disability Benefit Cover. In each case comparisons should be made with PRSAs.

Self Directed Pension

This type of pension can be set up on a personal or executive basis. The life company owns the assets that your money is invested in. You as the beneficiary are the legal owner of the policy – it is the value of the assets that are yours.

What is allowed in your pension fund is decided by the life company and different providers have different allowable investments so it is important to check this out before setting up a self directed policy.

Generally you are allowed to invest in

• Structured investments (with other life companies)
• Open Stockbroker Accounts – to trade from permitted stock exchanges, online trade etc
• Deposit Accounts
• Other assets such as shares, Government bonds etc

While the life company gives you the member the authority to select these assets and in some cases the authority to deal with a third party – such as a stockbroker for share dealing – it is important to note that the life company owns the assets at all times.

You do not have the option of transferring these assets to another life company. Self Directed can be part of a bigger policy with the life company so you can split your pension fund between the Self Directed and a regular executive pension operated by the life company.

Most funds within the Self Directed policy would be classed as high risk and so if you are interested in Self Directing you could adopt a combination of both to reduce your overall risk exposure.

Small Self-Administered Pension or Small Self Administered Scheme

A Small Self-Administered Pension (SSAP) or Small Self Administered Scheme (SSAS) is a corporate pension scheme with 12 or fewer members. A SSAP is established under trust by a company’s directors. They are the “members” and the “trustees” of the scheme.

Unlike other pension schemes the directors can control and choose their investments. The range of investments is extensive and includes property, direct investment in stocks and shares, banks and building society deposits….

Contributions made by the company qualify for Corporation tax relief and members’ personal contributions qualify for tax relief.