Pensions

 

Will you have a pension gap?

BUDGET PENSIONS CHANGES IMPORTANT INFORMATION FOR ALL PENSION HOLDERS

There may be some changes in the Finance Act but these are the proposed changes as per the Budget.

Key Pension Budget Changes

1. Max Limit for Self Employed and Paye workers Reduced

Annual Earning Limit is being reduced from €150,000 to €115,000 , this will affect anyone who is Self Employed or anyone who is a PAYE and investing AVC.

Talk to us in relation to this , if you are self employed and are earning say €200,000 you will only get tax relief if you invest into your pension plan up to €115,000

2. Max Pension Reduced

The Standard Fund Threshold is being reduced to 2.3m from 5.4m , this is very important for anyone with a pension with pension funds in excess of this amount or with funds approaching this level.

If you have a fund in excess of 2.3m then you have 6 months from the date of the budget to claim a Personal Fund Threshold to the revenue commissioners.

We would recommend that if you have a very large pension fund and you are considering retiring then you need to contact us.

3. Tax Free Cash Reduced

The max Tax Free cash lump sum that you can draw from your pension has been reduced to €200,000. This affects anyone who has a pension fund greater than €800,000.

If you have a pension fund greater than €800,000 then call us on 047 38 600

If you had a pension fund say of 1m , normally you could draw down 250k tax free but this is reduced to 200k and the difference that is 50k will be taxed at the lower tax rate , that is 20%

4. Employee Pension Schemes [Occupational Pension Scheme}

It now looks like that New Retirement Options will now apply to employees in Defined Contribution pension schemes but this advantage will be offset set by having to meet a min annual pension income of €18,000.
This is both good news and bad news for employees the new retirement options are welcome but somewhat offset by the fact that before you can benefit from them you must prove that you have a pensionable of €18000 annually , this can include State Pension.

5. Employee's in Occupational Pension Schemes

Paye relief is unchanged but from 1st of January 2011 Employee contributions will be subject to PRSI relief and the new Universal Charge

This means that if you are paying into a Company pension scheme you will still get the full PAYE relief but not the PRSI RELIEF as before.

6. Employers reduced PRSI exemption

If an Employee makes a contribution to an Occupational Pension scheme the employer got Employer PRSI Relief on this amount , this has been reduced by 50%.

7. Approved Retirement Fund

The inputted distribution from Approved Retirement Funds has been increased from 3% to 5%. If you currently have an Approved Retirement fund the minimum draw down required was 3% and this has increased to 5%.

NB

There important changes have a major impact on the following
Any Employee coming close to Retirement
Anyone with a Pension of 800k or more
Anyone who currently has an Approved Retirement Fund
If you are one of these just call me and I can explain the impact of the new changes on you.
For full information on all of these and their impact on your pensions why not contact for a free consultation

Harry Dwyer
Moneycare, 3 Dawson Street,
Monaghan, Co. Monaghan

Call 047 38 600 | Email info@moneycare.ie