Personal Pension Plans

These are private pension policies managed by life assurance companies and investment firms. You must have non pensionable employment income or be self employed to buy one of these plans. The level of contributions made and the investment growth determine the level of retirement benefit
received in retirement.

BENEFITS:

• Tax relief on contributions at your marginal rate
• Any investment growth is also tax free
• Flexibility; you decide how much to contribute to your pension
• Stop and restart contributions at no extra cost.

Personal Retirement Savings Account (PRSA)

A PRSA is a specific type of personal pension policy designed to be more flexible than the traditional Personal Pension Plan. Anyone up to age 75 can take out a PRSA. You don’t have to be earning an income (although you won’t get tax relief on your contributions unless you have an income). Your employer can contribute to your PRSA, unlike a personal pension plan where employers cannot make contributions. The level of contributions made and the investment growth determine the level of retirement benefit received.

BENEFITS:

• Tax relief on contributions at your marginal rate
• Any investment growth is also tax free
• Flexibility; you decide how much to contribute to your PRSA and you can take your PRSA with you when you move jobs
• Stop and restart contributions at no extra cost.

Additional Voluntary Contributions (AVC’s)

Additional Voluntary Contributions or AVCs are extra contributions you can make alongside your existing pension plan to increase your pension fund. Anyone currently paying into a pension scheme can make an AVC, including public servants who wish to increase their retirement benefits.

BENEFITS:

• Can be used to maximise the income tax and PRSI relief on contributions
• Investment growth is tax free
• Choose from a wide range of pension funds
• Increase your projected pension benefits
• Extra options on retirement including ARF access

Occupational (Group) Pension Scheme

An occupational pension scheme is a pension scheme provided by an employer for its employees

BENEFITS:

• Tax advantages for employers and employees
• Employers can retain and reward good staff in a tax efficient way
• The pension scheme can be tailored to provide cost effective life assurance and disability benefits.
• A Group AVC scheme can be set up so employees can make additional contributions to improve the benefits they receive on retirement.

Company / Executive Pension Scheme

A pension scheme designed for company directors and owners.

BENEFITS:

• Tax free pension plan contributions
• Matured growth is tax free
• Both company and executive can contribute to the pension plan
• Take a tax-free lump sum depending on length of service, salary and fund size

Buy out Bonds

A retirement buy out bond lets you take your pension entitlement with you when changing job without having to transfer to your new employer’s group pension scheme.

BENEFITS:

• No need to transfer to your new employer’s group pension scheme
• Choose the fund that your money is invested in
• Choose when to take your benefits
• Any investment growth is tax-free

Self-Directed Pension Scheme

A self-directed pension allows the beneficiary of the pension to take complete control of his/her pension investment decisions. The pension provider will still provide the pension structure (personal or executive pension) but the pension beneficiary takes the driver’s seat, in terms of investment decisions.

BENEFITS:
The self-directed option allows the pension investor to create a tailored investment portfolio. As well as the providers standard pension funds, there is opportunity to buy equities direct, buy property within the pension fund and to access some private investment schemes that may be offered exclusively to members of self-directed pensions.

Annuities

You can purchase an annuity with your pension fund when you retire. This is an agreement from a pension provider to pay you an agreed regular income for the remainder of your natural life. Your pension arrangement will transfer the agreed value from the accumulated pension fund, to the provider in return for the pension annuity contract.

BENEFITS:

• Guaranteed income in retirement
• No risk of exhausting your retirement fund
• Level or increasing payment options; choice of guaranteed periods; spouse’s pension of up to 100%, these options will reduce the risk of the contract completely lapsing in the event of premature death of the retiree.
• Peace of mind!

The pension annuity contract will provide security of knowing that you will receive a retirement income for life. As you a purchasing an income stream for life, there are no investment decisions to make.

Approved Retirement Funds (ARF)

You can invest the proceeds of your pension fund in an Approved Retirement Fund (ARF) after you retire. The transfer of a matured pension fund into an ARF is an option for holders of personal pension plans, proprietary directors, PRSA owners and also members of defined contribution (DC) occupational pension schemes.

BENEFITS:

• Regular income from the Approved Retirement Fund
• Control over your investments
• The funds in your ARF are available to your family after your death

Before being able to purchase an ARF, it is a requirement that the individual has some other source of guaranteed pension income. As per the Finance bill 2013, the minimum level of guaranteed pension income has reverted to €12,700. If applicable the state pension can be used in calculating this income level.

If your guaranteed annual income is under €12,700, you must take out an Approved Minimum Retirement Fund (AMRF) first. €63,500 is invested in an AMRF and the remainder is invested in an ARF. Please note that these limits are due to revert to an income of approximately €18,000 (1.5 times the contributory State Pension) and an AMRF investment of €119,800 (10 times the contributory State Pension) in 2016. There is investment risk with an ARF and the risk that with regular withdrawals the retiree will withdraw too much too soon from the ARF leaving funds short in their later retirement years.

Additional Voluntary Contributions (AVC’s)

Additional Voluntary Contributions or AVCs are extra contributions you can make alongside your existing pension plan to increase your pension fund. Anyone currently paying into a pension scheme can make an AVC, including public servants who wish to increase their retirement benefits.

BENEFITS:

• Can be used to maximise the income tax and PRSI relief on contributions
• Investment growth is tax free
• Choose from a wide range of pension funds
• Increase your projected pension benefits
• Extra options on retirement including ARF access

Approved Minimum Retirement Funds (AMRF)

Additional Voluntary Contributions or AVCs are extra contributions you can make alongside your existing pension plan to increase your pension fund. Anyone currently paying into a pension scheme can make an AVC, including public servants who wish to increase their retirement benefits.

BENEFITS:

• An ARMF is very similar to an ARF, the primary difference is that no withdrawal can be taken from the initial capital invested until the retiree has reached 75 years of age.
• Withdrawals can be taken at any time from any investment gains made within the AMRF.
• An AMRF automatically converts to an ARF when the retiree reaches 75 years of age or upon death of the retiree.

The decision to invest funds in an AMRF versus purchasing an annuity to produce a minimum retirement income to meet the conditions to invest in an ARF will depend on individual circumstances.