Showing posts with label Jennie Faughnan. Show all posts

Tuesday, November 19, 2013

Important Pension Change - Act Now

Budget 2014 reduced the standard fund threshold (SFT) from €2.3m to €2m.

This means that, when an individual accesses their pension benefits, if the value of all pensions held by that individual exceeds €2m, the excess will be subject to an effective rate of tax of up to 70%!

While a fund of €2m may seem quite large, it in fact equates to an annual income in retirement of around €50,000 so it may affect more pension savers than you would initially imagine.

In a recent survey conducted by Independent Trustee Company, 75% of the advisors polled said that securing the €2.3m PFT for their clients was of high importance. There is a window of opportunity available, but you must act quickly.

Where an individual has existing benefits in excess of €2m at 1^st January 2014, Revenue will allow them to apply for a personal fund threshold (PFT) and that threshold will apply to them instead of the SFT. The maximum PFT available is €2.3m. Depending on your clients’ circumstances, it may therefore make sense for them to contribute to their scheme before the end of the year in order to secure a PFT for the full value of their benefits. Contributions made after 1^st January 2014 cannot be included in the calculation of the PFT.

The key is to act now, before the 31^st December, while the opportunity for your clients is still available.

For further information, please contact one of our consultants in ITC Consulting:

Barry Kennelly on (01) 6148068 or at barry.kennelly@independent-trustee.com

Jennie Faughnan on (01) 6035140 or at jennie.faughnan@independent-trustee.com

Tuesday, June 18, 2013

What is the Value of a Promise?

It is estimated that 90% of defined benefit schemes in Ireland are in deficit and that the pension schemes of 200,000 individuals are in danger of collapse with the new rules regarding funding requirements. You will most likely see more of your clients coming to you asking what to do next.

The defined benefit scheme was the holy grail of pension schemes for a long time. You were guaranteed a certain level of pension in retirement based on your years of service and salary. What you effectively have is a promise and now you must ask yourself what value you can put on a promise from a scheme which is in deficit. When advising clients who are considering exiting a defined benefit scheme, you must take particular care. The client is considering giving up what could be a very valuable benefit, if the scheme can deliver on the promise. However, if there are doubts as to the ability of the scheme to deliver or even survive, you would need to consider whether the client would be better off taking a transfer value now and putting those funds to work for them.

When an individual ceases employment or leaves a company pension scheme, or the company pension scheme is wound up, there are a number of options available to them. Taking the transfer value to a buy out bond is becoming increasingly popular among clients. The trustees of the existing company pension scheme will establish a buy out bond in the individual’s name and transfer the value of their benefits to the bond. The aim is to put the individual in control of their pension benefits. The buy out bond has fewer restrictions with regards to investments and often more favourable costs than a PRSA. The buy out bond can also provide greater flexibility when accessing benefits.

Independent Trustee Company has recently launched their new Buy Out Bond. To find out more about ITC’s BOB download our Brochure & Terms and Conditions.

Written by Jennie Faughnan

ITC Consulting

For further information contact our team to discuss:

Michael Keyes (01) 614 8045 / michael.keyes@independent-trustee.com

Sean Mc Loughlin (01) 614 9220 / sean.mcloughlin@independent-trustee.com

Martin Glennon (01) 603 5130 / martin.glennon@independent-trustee.com

www.independent-trustee.com

Thursday, June 6, 2013

Show me the Money

The need to trace pension monies is becoming more and more acute

Increased worker mobility, separation and divorce and the high profile collapse of some large company pension schemes. This is the reality of the world we are operating in and something that we are seeing an increasing number of queries about in recent months. The days of being in a job for life and paying into your company pension scheme for 40 years to receive a pension at the end of it all are long gone. In these changing times, employees require a wider range of pension options that allow them to take control and put their pension to work for them.

A recent survey in the UK found that almost a quarter of employees have lost track of one or more of their workplace pensions. This was attributed to the increasing number of jobs that an individual will have in their lifetime and the number of small pension benefits that may be built up and forgotten about. It was also in some cases down to the fact that people could not locate paperwork to claim these benefits when the time came. Having one place where you can hold all of your pension benefits together and take control of them is a solution that would appeal to many clients and their advisors.

The buy out bond is a natural fit for those who have already demonstrated a desire to take control of their circumstances. A self-administered buy out bond can provide a greater level of control by allowing the client along with their advisors to direct how the funds are invested. In a group company pension scheme, the individual members have little or no control over the investment strategy. A self-administered buy out bond would allow the individual together with their advisors to create an investment portfolio that meets their specific needs rather than meeting the needs of a large group of members all with differing requirements.

While a buy out bond can only accept benefits from one pension scheme, it may be possible to set up a number of individual self-administered buy out bonds in the one place and use those buy out bonds to co-invest in a product or to purchase a property, for example. While the benefits can not be merged, the funds can all be used to create a portfolio of investments of the client’s choosing.

The flexibility offered by a buy out bond together with the level of control it gives to individuals make it an attractive option for clients and their advisors in these ever changing times.