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Client Case Study
Name | Eoghan
Age | 36
Eoghan, 36 is a Senior Software Developer based in Dublin came to us at the end of 2020. His employer had asked him to find someone to organise a pension plan for himself and some other senior executives.
One of our advisors had a zoom call with Eoghan to discuss all potential options available. As Eoghan’s employer had agreed fund his pension contributions each month, an Executive Pension Plan was the best option for his situation.
His employer will also receive corporation tax relief on contributions made. We were also able to arrange Executive Pension Plans for Eoghan’s colleagues.
They will potentially be eligible for 25% tax-free retirement lump sum of up to €200,000.
These arrangements will also be transferrable should he or his colleagues change employment.
If you or your employer are considering potential pension schemes, feel free to contact our team today. We offer a no-obligation complimentary consultation
Client Case Study
Name | Alan
Age | 38
Alan approached Pension Support Line looking for information on starting a pension. He is a director of a company and wanted to assess the options available to him.
After discussing potential options with an advisor, Alan decided to go the route of an Executive Pension Plan. The company would be funding the contributions and Alan liked the fact this also had some benefits from a company point of view.
The fact contributions to the plan are deductible for Corporation Tax as a business expense was a plus. Alongside one of our advisors, Alan was able to choose a mix of funds and invest in a spread of assets.
If your situation is similar to either of the above and you would like to assess your options, feel free to contact our team.
As a director of a limited company, organising your pension may not be top of your list of priorities.
However, it is important you plan long-term and ensure you have the retirement you deserve.
It also a tax-efficient way for you to save for later in life.
Below we have gone through some of the questions you may have regarding a director’s pension scheme.
Table of Contents
What is an Executive Pension Plan?
An Executive Pension Plan is a scheme set up by a limited company for the benefit of company directors or employees.
Executive Pension Plans are often preferred over PRSAs due to the capacity for larger contributions. There may also be potential for a larger tax-free sum at retirement.
However, this will be scheme dependant and must be in line with pension legislation.
An Executive Pension Plan allows for both employees and the employer to make contributions. The final value of the fund will be dependent upon these contributions combined with the investment performance of the fund.
Who is eligible to take out an Executive Pension Plan?
Executive Pension Plans are usually reserved for senior executives or directors of a company who receive Schedule E remuneration.
However, employees are also technically eligible should the employer agree to contribute to the plan.
Who contributes to an Executive Pension Plan?
Revenue legislation states that an employer must make a ‘meaningful’ contribution to the plan.
At what age can I draw down Executive Pension Plan?
You will be eligible to access the benefits from your Executive Pension Plan from age 60. However, in certain circumstances, you can access your benefits from age 50 If you can no longer work due to illness or if you retire. It is also worth noting that specific occupations such as sports professionals may qualify for early retirement.
How can Executive Pension Plan benefits be withdrawn?
Essentially will have two options:
- A once-off lump sum of up to one and a half time’s final salary* &
- The balance of the fund must be used to purchase an annuity.
- A once-off lump sum of up to 25% of the value of the assets* &
- The balance of the fund must go down the AMRF/ARF route.
As per pension legislation.
Benefits of an Executive Pension Plan
An Executive Pension Plan allows for higher tax-deductible contribution limits along with the option of a potential drawdown from age 50.
Other benefits associated with an Executive Pension Plan are the following:
- Corporation tax-relief.
- Exempt from USC & PRSI on employer contributions.
- Can be funded entirely by company contributions.
- Potential 25% retirement lump sum.
- Can be transferred to a new company pension.
Tax relief on an Executive Pension Plan – Company contributions
One of the main benefits of an EPP is the ability to contribute larger amounts compared to a Personal Pension. The below shows the tax relief thresholds for a company making contributions to an Executive Pension Plan.
|Age||Maximum tax-deductible as % of salary|
|30||Up to 54% per annum|
|35||Up to 65% per annum|
|40||Up to 80% per annum|
|45||Up to 108% per annum|
|50||Up to 163% per annum|
Source: Standard Life
If we compare this to the maximum contributions on Personal Pensions, they are dramatically lower.
|Age Threshold||Percentage of gross salary|
|Up to age 30||15%|
Up to a maximum of €115,000.
How often can contributions be made?
Contributions can be made by the employee or employer either monthly or as a lump-sum.
Fund choices within an Executive Pension Plan
If you would like a more in-depth chat regarding an EPP, book your consultation today.
There are many benefits to starting such a plan and our advisors work alongside Ireland’s leading life insurance companies.
This will give you the benefit of having the choice of the market regarding any investment options available.
You will have the choice between low, medium, and high risk. The life insurance companies use a risk rating of 1-7 and align their products with this scale.
Review your existing Executive Pension Plan
If you currently have an EPP and would like it reviewed our team can assist. If you are thinking of having your plan review, it might be a good idea if you cannot answer the following questions:
- What are your annual management charges?
- How has your fund performed in the past 5 years?
- What asset classes is your fund invested in?
If you are not able to answer any of the above it might be worth contacting our team. Having an industry expert take an unbiased view of your plan is never a bad idea.
Can the company receive corporation tax benefits from contributing to an EPP?
A company is eligible to receive corporation tax relief on Executive Pension Plan contributions within certain limits.
These contributions may be allowed as a deduction against profits from trading activities for Corporation Tax. In the case of a Sole Trader, you may be eligible to receive income tax relief.
An advantage of Executive Pension Plans is the ability it gives a company to make significant contributions to the plan.
If you would like to discuss the benefits in more detail, please book a consultation with our team.
Speak to a pension transfer expert
Our advisors work alongside Irelands leading life insurance companies. Ensuring you get access to funds that suit you best.
With the right advisor by your side, you can enjoy the retirement lifestyle you deserve.
If you are self-employed and considering starting your pension it is important you seek professional advice before making any decisions.