Tel: 074 912 4366
57 Port Road, Letterkenny, Co. Donegal

Retirement Planning

Pension plans are simply tax efficient savings plans that provide a fund for you to enjoy in your retirement.


There is a lot of complicated jargon, and many rules and regulations surrounding Retirement Planning and we can guide you through the maze. Tax relief is available on contributions, funds growth is tax free and, at retirement, a portion of the fund is available tax free. Below are some examples of the types of pension plans available.

 

 

 

Executive or Company Directors Plans

This type of plan is generally established by employers for company directors or senior employees. They offer the controlling director a tax efficient opportunity to provide personal funding from company funds. There is no benefit in kind for the director and his company gets tax relief. The maximum pension a direct can fund for is 2/3 of his or her Final Salary assuming they have 20 years salaried service at normal retirement age. The director can also fund for 1.5 times his final salary and a reduced pension. There are ever changing Revenue rules and regulation relating to these plans and it’s very important to keep a close check on the amount of funding being made by the company on the director’s behalf.

 

Personal Pension Plan and PRSA Pension Plan 

Both of these types of plans are suitable for Self Employed People and people who do not have a pension from their employer. The individual makes the contribution themselves and then claims tax relief. These plans offer various benefits including:

• Provide a guaranteed income in retirement for you and your spouse

• Tax relief on all pension contribution up to certain limits

• Any investment growth is also tax-free

• 25% tax-free lump sum from age 60 onwards

• Flexibility – you decide how much to contribute to your pension If you are a member of an occupational pension scheme, then you may be in a position to improve the benefits you receive on retirement by making AVC, (Additional Voluntary Contribution)

 

Group Pension Scheme 

This type of pension is for people in employment and taxed under Schedule E where the employer is willing to make a contribution. Revenue rules require that the employer makes a meaningful contribution, normally 10%, into your group scheme. In many cases, the employee is required to contribute to the plan also. A group scheme is established by your employer and trustees are appointed to manage the benefits on your behalf. If you happen to leave your employment whilst a scheme member, either through redundancy or taking up another job, please contact us to discuss your options.

 

Retirement Bonds

When you leave your employment with a right to future retirement benefits, the funds to which you are entitled may be transferred into a retirement bond. A retirement bond is a single premium policy provided by an assurance company. The bond will be invested by the assurance company and the proceeds will be used at retirement to provide retirement benefits. This may also be suitable if have been made redundant and wish to transfer your pension benefits from your previous employer.

 

Self Administered Pensions (SSAP)

These plans are for company directors who wish to take control of the investment of their funds rather than leave it to an insurance company fund manager. Generally the investments would in stock and shares, individual property, property syndicates, and deposits. An SSAP provides a tax-efficient environment in which a company’s profits can be invested to provide retirement benefits for directors. As the fund grows it can work for the member and still be free from creditors should the company go into liquidation. An SSAP gives company directors the opportunity to maximise their pension funds prior to retirement by giving them control over their investments. Unlike other pension schemes the director’s can control and choose their investments. Since the introduction of the Finance Act 2004 the trustees of single member SSAPs can now also borrow money in order to invest for the members benefit.

 

What happens when I retire?

When you retire, you will have a number of options available to you, depending on the type of pension plan you have.  You will generally have the option of taking part of the fund tax free. If you were in a Personal pension you can take 25% of the fund tax-free. If you were in a Group Scheme, subject to certain restrictions, potentially you can take 1.5 times your final salary tax free. Your remaining options will depend on your financial situation and legislative restrictions when you retire. These options include:
• Taking an annuity
• Approved Retirement Fund (ARF)
• Minimum Approved Retirement Fund (AMRF)

 

Please contact us for more precise details.