We asked a 1000 people…

As an industry we know that:

• the current ratio of people working versus those in retirement will half over the next two decades,
• the pending pension burden is unlikely to be absorbed by the state,
• approximately 50% of people working in Ireland do not have a pension and
• life and pension sales according to the IIF (Irish Insurance Federation) 2012 annual report has fallen to “barely 40% of their 2007 peak”.

Unsurprisingly, pensions coverage is being debated ad nausem by the entire pensions industry. However, amongst all the various discussion, debates and column inches the view of the Irish public is often overlooked.

As a result of this, Independent Trustee Company commissioned a RED C survey to investigate why people are reluctant to invest in pensions. We surveyed over 1000 people with some interesting results;

Findings

• Whilst affordability is an issue, it is not the overriding problem, poor performance and access are also a major cause of concern.
• ‘A fear of losing money’ and ‘affordability’ were found to be the main concerns for female respondents.
• Male respondents were more likely to mention ‘retirement being too far off ‘ and ‘an overall lack of trust’ than their female counterparts.
• Middle-aged respondents were most likely to mention ‘a fear of losing some or all of the money’.
• ‘Affordability’ was most likely to be mentioned by people aged 35-54 years.
• Those over 65 years of age; and younger adults were most likely to say that ‘pensions are too complicated’.

We are still digesting these results but it is clear that the lack of pension investment cannot be dismissed as a problem caused by “the economy”. We believe these results have highlighted the need for transparent and secure pension products. Some industry “experts” would lead you to believe that we need to educate the public; this is rubbish, the industry needs to provide people with a product that is designed with them as the consumer in mind and not the other way around!

Michael Keyes

Sales & Marketing Director

How a Rolls Royce benefit has become a "clapped out banger”

The quickening end to Defined Benefit Pension Arrangements

New statutory requirements relating to funding defined benefit schemes have recently become law with the coming into force on 1st May of the Social Welfare and Pensions Act 2012. The new rules set down will inevitably lead to an increase in the wind-up of defined benefit pension structures. This is due, among other things, to the new requirement for a “risk reserve” (additional funding) to be set aside to act as a buffer against further economic turmoil. These new measures are of course going to add further pressure on company balance sheets and indeed we have already seen in the past week AIB and Independent News and Media announce their intention to shut down their company defined benefit schemes.

Defined Benefit schemes have long been considered the Rolls Royce of pension structures offering a guaranteed pension for life based on an employee’s final salary. However, in recent years these pension schemes have been under severe pressure due to volatile asset values and increasing liabilities which have been caused by bad investment performance, low German bond yields and increasing life expectancy. These issues coupled with a difficult business environment, increasing taxation and regulation, and a poor economic outlook have caused employers to consider restructuring their company pension arrangements. The new funding rules introduced by the Social Welfare and Pensions Act 2012 will now force employers to make decisions (as early as this December) they had been hoping to avoid with such decisions having an immediate impact on company employees.

Take an employee who has been a member of her company’s defined benefit pension for the past fourteen years. She has been contributing 6% of her gross salary every year of her employment with a matching contribution by the employer, but is still sixteen years from her retirement age. Unbeknownst to her, much of the contributions she has being paying in to the scheme have been used to pay the pensions of the retiring employees of her company. Over the past 14 years, she and her employer have each contributed approximately €42,000 to the scheme and she believed that she had amassed a fund of €84,000+ allowing for investment growth and charges. Her company have now decided to wind up the defined benefit scheme and transfer her benefits to a defined contribution arrangement. It is at this point she realises that not only does she have less in her pension than she originally thought she actually has less than her own contributions. One of the main reasons for this is the legislation governing defined benefits pensions require the scheme trustees to give 100% priority to retired members so some of the money she thought she was saving for herself actually went to people she’s probably never met (unless she attends the company’s annual retirement do). In essence her Rolls Royce benefit has become a clapped out banger.

So what are a member employees options now and what can they expect from their employer? All employers are required by law to ensure their company employees have some access to a pension arrangement so it cannot be a case of walking away from responsibilities. Companies will have to consider restructuring their pension offering which will involve establishing some type of defined contribution structure. Employers and employees are increasingly looking at other pension arrangement options such as one member pension trusts or Personal Retirement Saving Accounts (PRSAs) to avoid the risks of underfunding and to bring some sense of equity, fairness and transparency to their pension provision which they do not perceive as being possible under the defined benefit structure. These structures also allow an individual and employer to control the cost of pension provision.

The realisation that defined benefit is not a guarantee of benefits at retirement will be an unwelcome message for most employees, but it is better they know now rather than at the point of retirement when their options are restricted. The financial implications of such changes to their pension arrangements will be specific to each employee. Some of the differences include different methods of calculating tax free cash lump sums, making individual investment decisions if the employee wants to and decisions on what can be done with their retirement fund at retirement, such as reinvesting in an Approved Retirement Fund (ARF) or deciding when or what type of pension to buy.

The access to the ARF regime after retirement has been significantly widened recently for members of defined contribution pension arrangements. The ARF option allows someone who has retired to pass a capital sum to his or her family after their death. However, this option is not available to retired members of defined benefit schemes.  After retirement, the majority of members of defined benefit schemes are limited to taking an annuity which can prove to be expensive and inefficient for estate planning purposes. 

The switch of decision making and responsibility for funding to provide sufficient benefits for employers to employees has been occurring gradually, but the new funding rules for defined benefit pensions under the Social Welfare and Pensions Act will accelerate the change. This presents an opportunity to create flexible pension arrangements that will allow employers and employees fund for their retirement while giving control of how these are funded and drawn down to the employee.

Paul Gilmer
Solicitor
ITC Consulting

Aidan McLoughlin discusses upcoming regulation and future changes in the Irish Pension Market at EPI Summit

Aidan McLoughlin, Managing Director of Independent Trustee Company recently attended the European Pension and Investment Summit in the Netherlands. As a delegate at the event, Aidan was asked his opinion on upcoming regulation, the European approach to structuring pensions and future changes in the Irish pension market. You can view the full interview by clicking on the image below.

Independent Trustee Company

NEST: Protecting their young?

The UK government is making changes to encourage people to save for retirement. The Pensions Act 2008 introduced new duties on employers to provide access to a workplace pension scheme. All employees will be automatically enrolled into an occupational pension (unless they opt out) and where employers do not already have a scheme, people’s money will be invested in NEST. NEST (National Employment Savings Trust) will be a universal, defined contribution scheme, accumulating a fund during a workers life to purchase an annuity on retirement.  It is due to commence in October 2012.

Much scrutiny has been given to the investment choices that NEST will make available to their members. When it comes to the funds that NEST invests their members in in the early years this differs substantially to what is typically used in standard Defined Contribution Lifestyle funds in Ireland. 

NEST carried out extensive research and consultation and as a result they found that when it comes to younger members- those under 30- that they’re especially sensitive to volatility and loss and are most likely to act adversely in the face of such volatility.  NEST will invest younger members- in their 20’s - initially in funds that will target investment returns that look to match inflation after all charges have been taken out.  The next phase where members will spend the majority of their time circa 30 years, will target returns of inflation plus 3% after charges, the final stage is designed to manage the risk of shocks closer to retirement.

Niamh Quirke

Independent Trustee Limited

The Pensions Board publishes funding rules for defined benefit pension schemes

Yesterday, the Pensions Board published revised rules for defined benefit schemes and announced the deadlines by which trustees must submit funding proposals to the Board to deal with scheme deficits.

The full Press Release on the revised rules can be found on the Pensions Board website. 

Sovereign Annuities – How will they work?

The scale of the funding crisis in Defined Benefit Schemes has been a topic of much debate for the last number of years. One of the solutions proposed by government was to introduce a Sovereign Annuity option. As the yield on Irish Government bonds is higher than the yield on the bonds normally used to back annuity the effect should be to reduce the scheme’s liabilities. Thus a sovereign annuity is designed to ease funding pressures on a Defined Benefit scheme, provide a source of funds to the State and also to adjust the priority rules in a more acceptable manner.

The first sovereign annuity product is due to be launched in the coming weeks. Initially, this sovereign annuity product will be based on Irish and French bonds. It is expected that this will mainly be of interest to schemes which are in wind up and in some cases where the employer company is also in liquidation. It is estimated that the total value of the sovereign annuity market will be approximately €2-3 billion.

However this sovereign annuity product will only be available to pensioners and not to active and deferred members. This causes a dilemma for the trustees: are you disadvantaging pensioners (by linking their pensions to sovereign annuities) to improve the position of other member classes (by increasing the amount of the fund available to pay for their benefits)?

So it remains to be seen how sovereign annuities will work in practical terms. It will be interesting to see how trustees and pension scheme members will react to this new and long awaited product.

Aisling Daly

Independent Trustee Limited

Is the State likely to provide your pension expectations?

At the recent IAPF Annual Defined Contribution Conference some of the findings of the IAPFs Financial Literacy and Pensions Research Report (April 2012) were announced.  This report revealed that almost half of all adults (47%) believe the state pension will be their main source of income in retirement. When asked how much of their current income they think they will require in retirement below were the responses.

Level of current income required in retirement	Percentage of respondents
Less than 30%	11%
31-50%	22%
51-70%	31%
More than 70%	23%
Don’t know	12%

The current state pension is just shy of €12,000 per annum or about one third of the average wage(€35,849, CSO 2011).  The findings from the IAPF report highlight the huge gap between what people expect to have in retirement and what the State will actually provide. This gap is likely to get wider with increasing pressure on the State to reduce costs. 

This means that people will either have to make a reduction in their post retirement income expectations or increase their private pension savings dramatically.

Niamh Quirke

Independent Trustee Limited

ITI Annual Conference Main Tax Points

As mentioned in our previous post, ITC recently sponsored the Irish Tax Institute Annual Conference. The Conference provides an opportunity to discuss issues that other advisors come across with their clients. 

One topic of conversation was the change in language in the latest update of the EU/IMF Programme of Financial Support for Ireland published in February. Previous versions have proposed the reduction of private pension tax reliefs as one of its revenue-raising measures, but the February update omits any reference to such a reduction. This coincides with previous comments, so it seems that marginal rate tax relief on pension contributions is safe, for now at least. That is very good news for those making personal pension contributions.

A couple of other themes that came up time and again with advisors, whether speaking from the podium or in private, were:

     1.    Inheritance Tax

Clients are realising that inheritance tax is now for everyone.  Well, “for everyone” was the phrase used by one practitioner and it is somewhat exaggerated, but inheritance tax affects far more people than it did four years ago. 

You can see the massive differences for someone with an estate of €3 million with three children.  The respective tax bills are:

2008 tax bill:                €287,000

2012 tax bill:                €675,000

Additional tax:             €388,000

That’s a hike in the tax take of over 130%!  It’s certainly enough to get people considering estate planning when a few years ago they would not have considered it was for them.

      2.    Capital Gains Tax

One of the more interesting aspects of the Budget last December, which has since been enshrined in the Finance Act, was the CGT exemption for property.  It seems that people are just not familiar with it as it was not highly publicised, but it provides excellent opportunities, including in the family context.

What the exemption means is that, for a property acquired between 7^th December 2011 and 31^st December 2013 and held for more than 7 years, on the sale of  that property no CGT will be payable on the gain attributable to that 7 year period.

A couple of interesting points: 

• The exemption applies to any property within the EEA, i.e. the EU, Norway, Iceland and Liechtenstein.  A particular popular destination for property purchasers at the moment is Germany – the exemption would work there.

• The exemption also applies where there is a gift element in relation to children.  If consideration is paid of 75% or more of the value of a property by a child to a parent, the gain over the 7 year period will be CGT free to the child.  Of course, stamp duty has to be factored in, but it is now at much more favourable rates.

Despite the recurring uncertainties in which we live these days, the certainty of tax does at least throw up some opportunities for advisors.

Jeremy Mitchell

Director

ITC Consulting

ITI Annual Conference. Fund your Bucket List with an ITC Pension

ITC were proud to sponsor the Irish Taxation Institute Annual Conference last weekend in Galway where over 370 delegates attended. Bucket List's were a hot topic throughout the Conference as we invited delegates to share their's with us in the hope of winning a New iPad. 


An ITC Pension can ensure that you make the most out of your retirement. Our bucket will be seen at many more events in the coming months so be sure to have your list at the ready. A sample of some of the  entries we received:

"To dance the Argentine Tango with Antonio Bandero"

"To become the No. 1 Formula One Driver"

"To star in a musical on the West End"

"To visit the 7 Ancient Wonders of the World"

The seminar topics ranged from a general update on the 2012 Finance Act to more specific topics such as Capital Taxes, Business Taxes and Property Taxes.

One of the more interesting topics for the delegates from ITC was the Pensions seminar. Most of the key take home points have been the subject of ITC Blogs over the last number of months, and the top five to consider are:

1. Fund to SFT as soon as possible

Individuals whose pension fund is currently less than €2.3m should consider funding their pension to €2.3m (taking account of a buffer for future investment returns within the fund up to retirement) in light of announcements to decrease tax relief on pension contributions and other potential changes that may be introduced in the future. 

2. Consider de-risking pension if close to SFT

For individuals that are close to the SFT, consideration should be given to reducing investment risk (employing a de-risked pension investment strategy – e.g. cash/bonds), with increasing urgency depending on how close one is to the SFT.

3. Critical that pension funds are monitored re SFT ceiling

Advisors should consider putting a tracking system in place to determine when an individual’s pension fund may be coming close to the SFT so that alternatives can be considered in advance.

4. Maximising lump sum at retirement remains attractive – 13% effective tax up to €575K. Tax credit up to the amount of tax paid on the lump sum is available against tax payable on any chargeable excess over SFT. 

5. Employer Pension Contributions – Incorporation of business can increase the level of pension contributions allowed and can involve family members in the business.

We will provide worked examples of these main points in the next few blog posts.

All great changes are preceeded by chaos - Deepak Chopra

Over 100 advisors around the country participated in our recent webinar which focused on the future of the pensions industry in Ireland and ideas on how to adapt your business to meet the changing environment.

During the webinar, we surveyed the attendees on topical industry issues which produced some interesting results.

• 71% of advisors feel asset security is most important to their clients.
• 60% of advisors feel that there will be 5-6 Life Companies left in the Irish marketplace within the next 5 years. 30% believe there will be less than 5.
• 20% of advisors feel that they have a well planned business strategy in place. 65% are constantly reviewing their business.

If you would like to view the webinar please click here or if you would like to attend our next webinar please mail JustAsk@independent-trustee.com.

Michael Keyes
Sales & Marketing Director

Pension Vehicles and Enduring Power of Attorneys

We all know the importance of having a will in place (at least I hope we do!), but what happens in the event of illness or disability? Normally, in the event of incapacitation, the individual’s assets are frozen and no activity is permitted until the person recovers from the illness or disability. The only way assets can be unfrozen is by the time-consuming and potentially expensive process of having the person appointed a ward of court and then going back to the court whenever a decision has to be made.

Increasingly, we are seeing advisors become frustrated that they are unable to take instructions from their clients regarding investments in retirement vehicles due to reasons of ill health. In our experience, the advisors can come under pressure from the client’s family for perceived inaction and the pension provider’s hands are also tied in the event of the client being unable to give instructions.

Ideally, all clients who are in post-retirement vehicles should be advised to put an enduring power of attorney (EPA) in place. An EPA is a legal instrument executed by a person (the Donor) when they are in good mental health. It allows for the appointment of another (the Attorney) to take actions on the Donor's behalf in the event of incapacity.

In planning ahead and making an EPA, a person is able to give their instructions whilst they are of sound mind, in anticipation of the possibility of not being capable at some future date of managing their affairs as they would otherwise wish. Obviously, it is difficult for someone to contemplate that they may ever lose their ability to manage their affairs.  However, an EPA can ensure that, if this does happen, a person’s financial affairs will be looked after by someone they themselves have chosen and trust.

An individual can opt to appoint more than one attorney, and if they do, they must decide whether they are to be able to act jointly (that is, all act together and not separately), or jointly and severally (that is, all act together but also act separately if they wish). This ensures there is the possibility of a collective decision.

The EPA can be drafted in a manner that limits the assets over which the EPA takes effect. For instance, the EPA can be limited to investment decisions over the donor’s retirement vehicles. This is particularly useful where the client wants to segregate decision making in the event of his incapacity.

The EPA legislation provides for a number of safeguards for the Donor such as the requirement for a medical practitioner to sign off on the donor’s capacity both at the time of making the EPA and at the time of enforcing it.

The completion of an EPA does not restrict an individual’s right to go on looking after their own affairs for as long as they are capable. But what it does do is give them comfort that their affairs will be managed in the event of their incapacity.  It may never be required and can also be revoked at any time by the Donor provided they are in good mental health.

Overall, a very useful piece of paper to have in place…

Paul Gilmer 

Buying Property through a Self-administered Pension

A report issued on Monday 26th March from the Central Statistics Office confirmed that residential property prices fell by almost 18 per cent in the year to February. Recent surveys have estimated that property prices have actually fallen by 55 per cent to 60 per cent from the peak.

While property prices have fallen dramatically, a recent CSO report has shown that Irish residential rents are continuing to rise 3% annually. This presents an opportunity for individuals who are fortunate enough to have cash in their companies and wish to invest in property. How this can be achieved in the most tax efficient way is the next question.

                                                                 CSO Report. Residential Property Price Index. [Image Online].Available at: http://namawinelake.wordpress.com/2012/03/15/cso-reports-irish-residential-rents-continuing-to-rise-3-annually/. [Accessed 26/03/12].

There are three obvious ways of doing this:

• The cash could be extracted from the company by the shareholder of the company and the property purchased by the shareholder after paying income tax,
• the property could be purchased by the company or
• the property could be purchased through aself-administered pension.

The self-administered pension can be the most efficient route of achieving this for the reasons set out below.

Extracting cash and then buying the property

Extracting funds directly from the company to purchase the property personally would give rise to significant income tax and potentially company law problems, so that generally will not work. 

Buying property through the company

If the property is bought through a company, there will be corporation tax on rent received (as well as a close company surcharge). In addition there will potentially be corporation tax on chargeable gains, if the property is sold, although the new relief from CGT on sales of properties held for 7 years could help here. However the same tax problem described above when sales proceeds are extracted from the company will apply. It should also be noted there are anti-avoidance provisions which prevent cash extraction at CGT (rather than income tax) rates which could also come into play. Furthermore purchasing an investment property in a company can adversely impact on the availability of CGT retirement reliefs and  CAT business property reliefs which may be relevant in due course.     

Buying property through a self-administered pension 
The alternative is to purchase the property through a self-administered arrangement. On the basis that the required contribution can be made (which involves a funding assessment),

• a corporation tax deduction would be available for the company’s contribution and 
• the rent could be received tax free in the pension.
• there is no CGT on sale of Irish residential property by a pension

On retirement 25% of the fund can be taken tax-free by the client with the first €200,000 tax free with the balance from €200,000 to €575,000 taxed at 20%. The property could be transferred in specie to an ARF post retirement and could continue to generate a post retirement income.   

This illustrates how the self-administered route still makes sense as a tax efficient way to buy property.  

Barry Kennelly
Associate Director Solicitor AITI TEP
ITC Consulting

Why PRSA's are still relevant

The introduction of imputed distributions announced in November’s budget caused some concern to fans of the PRSA. The Memorandum published by the Department of Finance immediately after the Minister’s Budget speech proclaimed that income tax should now be paid on 5%/6% of PRSAs post retirement but also that the tax should be calculated on the aggregate value of all of an individual’s PRSAs once benefits were taken from just one of them. 

The proposal led some advisors to state that the PRSA was no longer a useful vehicle to hold pension benefits. The clarification provided by Finance Bill 2012 that the imputed distribution would only apply to post retirement assets brought some relief.

However, for many reasons we still see the PRSA as a useful and flexible vehicle for pension planning, even after the introduction of the imputed distribution. Here are a few reasons why:

1. There is no imputed distribution where the PRSA investor has not drawn down benefits.
2. Income from UK property held in a PRSA, as opposed to an ARF, can be taken tax-free.
3. Where no benefits have been accessed, the fund goes to the PRSA holder’s estate tax-free. In the same circumstances, benefits of an occupational pension scheme have to be spent buying an annuity for dependants.
4. The PRSA allows you to consolidate personal pensions and frozen occupational benefits and facilitates the transfer of benefits from a personal pension to an occupational pension scheme.
5. The PRSA offers statutory protection against creditors, the ARF does not.
6. The PRSA allows you to split benefits which allow significant planning opportunities.
7. A PRSA investor who is also a 20% director and who wishes to retire before Normal Retirement Age is not compelled to sell his/her shareholding of the employer company.
8. A PRSA investor can continue to contribute until age 75, no matter whether benefits are taken or not.
9. The PRSA is the most carefully regulated pension product in the country, thus meeting the demands of the ever more attentive pension client.
10. The PRSA is still the only pension vehicle which allows all types of contributors; the employed, the unemployed, those without Schedule D or E income.

We will of course continue to keep you updated with developments in the Pension’s area as the finance bill runs through the houses of the Oireachtas.


More information on ITC's PRSA here.

Women taking 'huge financial risks' by relying on partners for support

Thursday 8th March marks International Women’s Day. This day has been observed since the early 1900s and since then we have witnessed a significant change and attitudinal shift in both women's and society's thoughts about women's equality. With more women in the boardroom, greater equality in legislative rights, and an increased critical mass of women's visibility as impressive role models in every aspect of life, one could think that women have gained true equality.

Why then has a new academic study found that a majority of females rely on their partners to pay for their retirement?

Less than one in three women who are entitled to a state contributory pension qualify for the full €230 a week payment, a study by academics from NUI Galway and Queen's University, Belfast, found. A majority of men, by contrast, end up with the full state pension when they retire.

Women have inferior pensions compared with men because they are mainly engaged in low-paying jobs or only work part-time and do not earn enough to qualify for a full state pension, with most of them not paying into a private retirement fund.

The fact that the primary role of many women is caring also accounts for poor pension provision among women.

The study, 'Older Women Workers' Access to Pensions', found that many depend on their partners' or husbands' incomes for a secure future, even though they may well outlive them as women tend to have longer life expectancies. This is a high-risk strategy because they could be left with nothing in the event of a separation, divorce, widowhood, illness or redundancy.

Women only tend to become aware of the importance of having a personal pension late in life when it becomes too expensive to fund for an adequate pension.

With an aging population and the Trioka having already signalled that state benefits to pensioners should be reduced, the notion of a state sponsored retirement is a high risk strategy. Supplementary pension coverage and contributions through private pensions must be increased to improve adequacy of incomes in retirement. 

They say life begins at retirement and for many women while it will be nice to get out of the rat race, without an adequate private pension they have to learn to get along with a lot less cheese. 

Emer Kirk

Independent Trustee Company



You saw them here first!

For those of you who attended our Knowledge Forum in November 2010, you will remember Niall Harbison of Simply Zesty who spoke to us on 'Building your Brand through Social Media'. It was announced today that Simply Zesty have been acquired by UTV for £1.7 million. We would like to wish Niall and his team the very best of luck for the future. You can read the full article here.

Simply Zesty co-founders Niall Harbison and Lauren Fischer

Our next Knowledge Forum is taking place on Wednesday 14th March at 8.00am in the form of a webinar. The webinar titled 'What the Advisor needs to Know' will cover a 'Pensions Update' by Aidan McLoughlin, Managing Director of Independent Trustee Company and a presentation on 'Adopting your Business in a Changing Market' by Executive Coach John Murphy of John Murphy International.

An application for 1.5 hours of CPD will be made.


There are still a limited number of spaces available, please click on the link below to register.

Lobbying the Oireachtas Committee - Part 4

In the fourth part of our video blog series on the presentation to the Orieachtas, Aidan McLoughlin discusses an innovative idea that would allow early access to tax free lump sums.

Lobbying the Oireachtas Committee - Part 3

In the third part of our video blog series on the presentation to the Orieachtas, Aidan McLoughlin discusses the recent announcement that the government are to review the costs of pensions. Could applying international standards improve the pensions industry?

Lobbying the Oireachtas Committee - Part 2

This is the second of four video blogs where Aidan McLoughlin outlines the main points raised in the presentation to the Oireachtas Committee. Here Aidan outlines the impact that the 4 year plan has had on pensions.

Lobbying the Oireachtas Committee - Part 1

Aidan McLoughlin was part of a group of IBA Committee members who presented to the Oireachtas this week on Wednesday 8th February. Over the coming weeks, we will have a series of video blogs highlighting the main points discussed, the first of which can be viewed here.

Trustee Training Deadline is tomorrow 1st February

As the deadline for Trustee Training is upon us, Trustee Manager, Elma Fox, discusses the last chance to comply with the deadline with Ian Guider on Newstalk's Breakfast Business.

The deadline for trustee training is tomorrow, 1st February 2012, and there is a concern that many due to complete the training are unaware of their obligations. We have developed on-line tools to help define the requirements and to complete the training. More information can be found at www.trustee.ie.

Listen to Elma's interview with Ian Guider here, at 07:56. 

New Years Resolution!

Complete trustee training and avoid €2k fine!

Almost two years ago, the Pensions Board introduced a requirement for all pension scheme trustees to complete trustee training. For any trustees appointed prior to that date they have two years to complete the training so the 1^st February 2012 is the deadline for many.   

The concern is that many who are due to complete the training have not yet done so because of lack of awareness of their obligations. 

3 Common Misconceptions

·      There is an assumption that this training is for bigger pension schemes only but that’s not the case.  If the employer fail to provide training to all the relevant parties they may be prosecuted. In addition a trustee who does not undergo the training may be subject to an on-the-spot fine of €2,000 by the Pensions Board.

·         One or two person company pension schemes where the employer is the trustee.  Many of these employers may not realise they are still officially the trustees of such schemes particularly where the scheme was established for an employee who has since left the company.  However,  the employer remains as the trustee and must comply with the requirements.

·         Directors must receive training even if the scheme is only established for one of them. The key point is that; if the employer is the trustee (as is normal for one person schemes) then ALL the directors must complete the training.

Independent Trustee Company have developed an on-line tool to help those who are unsure of their requirements find out if they are actually required to complete the training.  It’s a quick process and can be found on www.trustee.ie

Revenue discover 115,000 pensioners

Following on from our previous post, Aidan McLoughlin was interviewed on Morning Ireland about the shock revelation from the Revenue that 115,000 pensioners have been underpaying tax on their Social Welfare pensions. The reason apparently is because the Revenue didn't know they were in receipt of Social Welfare pensions and therefore hadn't factored this extra income into their tax allowances.

Listen to the podcast here.

Could the pensions levy have been prevented?

The announcement by Revenue that 115,000 pensioners have been underpaying their tax will come as a shock to many. The reason apparently is because the Revenue didn’t know they were in receipt of Social Welfare pensions and therefore hadn’t factored this extra income into their tax allowances.

 

The Revenue press release on this matter indicates that the tax payable could exceed €4,000 for a single person or €8,000 for a married person. Taking the lower figure as an average it would seem that the tax foregone could amount to €460m – about the amount collected by the pension levy. Its begs the question whether or not the pensions levy could have been prevented?

 

Amazingly there is no suggestion that previous underpayments will be collected. The Revenue's focus will be on getting it right from now on. Other pensioners who paid their tax in full and are now paying a pension levy on top can only look with envy at their peers who have neither exposure.