IFG Pensions - Individuals FAQs

Individuals FAQs

Individuals FAQ

Director / Executive FAQs

Self Employed FAQs

Individuals FAQ

When should I start a pension?: Immediately! The size of your pension income when you retire is affected by the amount of time the money is invested for. Obviously the longer you have been investing the larger your pension is likely to be. You may have other priorities such as a car loan, holiday loan etc. but do participate to some extent.

What are the main benefits of starting a pension?: Apart from the peace of mind of knowing you will be financially secure in retirement, you can get income tax relief on your payments into a pension plan. This means that the government will not tax money being paid into a pension plan so long as it does not cross certain limits. The growth you make on your money while it is invested is also tax‐free.

What happens when I leave the company?

If you leave the company, there are a number of options available. You can:

Make your pension plan deferred (leave the money in the Pension Plan);
Take a refund of your own contributions to the plan; or
Transfer the value of your entitlements to a new Pension Plan.

However, they cannot receive a refund of their own contributions after they have been in the company pension plan for more than two years.

What are my options when in come to my pension if I am made redundant?

You have three choices assuming your pension scheme is an Occupational Pension Scheme ("Company Scheme").

Leave it in the current scheme, where it will continue to be invested, and then draw your benefits at retirement. You will need to contact the scheme trustees when you want to retire
Transfer it to another Occupational Pension Scheme if you are/become a member of another one. Check up on charges and fund choices on both sides before deciding to do this.
Transfer to a Personal Retirement Bond ("Buy Out Bond") with a provider of your choice. You choose the provider and the fund and have control over the investment of the pension fund thereafter. If you do this, you no longer have to maintain contact with the scheme trustees. Again, check up on charges and fund choices on both sides before deciding to do this.

What are the Contribution limits?

The maximum contribution that you can make which qualifies for personal tax relief in any tax year depends on your age. These limits are outlined below and apply to your total contribution to the company’s plans (in other words, employee’s ordinary pension contributions and any AVCs).

The current maximum contribution a member can make in one year, being the total of your contributions plus AVCs is as follows:

Age % of Taxable Earnings

Up to age 30	15%
Age 30 to 39	20%
Age 40 to 49	25%
Age 50 to 54	30%
Age 55 to 59	35%
60 years plus	40%

What is an AVC?

AVC stands for Additional Voluntary Contribution.

AVC's are typically made by individuals who already are members of a Pension scheme but choose to make an additional contribution into a Pension to increase their Projected Pension benefits.

Why take out an AVC?: Because AVCs qualify for tax relief at the highest rate of tax, you can actually reduce your income tax payments now, while you avail of a good investment opportunity. In addition any investment returns recorded are also tax free. In summary, you pay less tax now, and enhance your financial security for your retirement

What can I use my AVCs for?

AVCs can be used for the following, subject to Revenue rules:

Increase basic pension or provide benefits based on non‐pensionable pay;
Increase tax‐free lump sum, if possible;
Provide or increase dependant’s provisions;
Provide or increase cost of living provisions; and
Provide additional benefits on early retirement.

Is my pension protected if my company goes into liquidation?

The assets of your pension plan are totally separate from the assets of the company and completely safe. In most cases, if a company goes into liquidation, the company pension plan will be wound up. The trustees of the pension plan are responsible for winding up the pension plan, according to the rules of the plan and current law.

You have a number of options that are similar to those available to you if you leave the company but they do depend on the terms of the Pension Plan winding up.

Can I retire early?: If your employer and Pension Plan trustees agree, you can retire at any time after you reach 50. However, the pension you would receive will be based on the accumulated fund value at that point which will be lower than at normal retirement.

What happens if I have to retire early because of ill health?: If the Revenue Commissioners, your employer and the trustees approve, you can retire early because of ill health and take your pension benefits immediately. The pension may be low because your contributions are stopping at an earlier age and the pension will have to last longer as you will be retiring early.

If I join my company pension plan, will I still get a pension from the state?: You will get the State Pension from age 65 as well as your own private pension when you retire, provided you have made the required number of PRSI contributions throughout your working life.

What happens to the money I have paid into my pension plan if I die before I retire?: The value of your plan at that time will be paid to your dependants should you die before retirement.

Can I use my pension plan as security for a loan?: You cannot transfer the rights to your pension plan to a lending agent because pension plan entitlements cannot legally be used for collateral purposes.

Do I have to pay tax on my pension?

Under current law, when you retire you can take a substantial part of the fund as a tax‐free lump sum. The maximum amount you may receive is one and a half times your final salary provided you have completed 20 year’s service. You will have a number of options as to how you can use the rest of your pension fund, and the tax treatment will vary depending on which one you choose.

If you choose to buy a pension for life, your income will be taxed as income in the normal way.
If you invest in an approved retirement fund, you will have to pay income tax on any withdrawals that you make.

Can I take money out of my Pension Plan?: Once you have been a member of the pension plan for more than two years you cannot take money out of the plan before you reach retirement age unless you have to retire early because of ill health. If you leave your company you can transfer your entitlement to another approved company pension plan.

What can happen to my Pension as a result of separation or divorce?

The pension entitlements of an individual and his spouse arising from occupational or personal pension arrangements may be adjusted on separation or divorce. The Family Law Act, 1995 sets out the treatment of pensions in cases of judicial separation, and the Family Law (Divorce) Act, 1996 does likewise in relation to divorce proceedings.

The Family Law Acts require pension benefits to be taken into account in arriving at a financial settlement in the case of a judicial separation or divorce. The Courts can decide whether or not to regulate a couple’s financial affairs by splitting pension rights and making a Pension Adjustment Order or, alternatively, by making an adjustment in respect of non-pension property.

Why should I talk to IFG about my pension scheme?

IFG Pension Investment and Advisory services offer a full range of innovative pension services. Our primary aim is to help our clients understand pensions.

Across our 3 pensions divisions we offer a wide range of products and service to suit all out clients needs. Services that may interest you include:

Independent Financial Reviews
Financial planning services
Retirement Planning Solutions
- Personal Services
- Executive Services
Investment Portfolio Advice and Management
Business Protection and Advisory Services
Executive Retirement Planning
SSAS set up and administration Services
SIPP set up and administration services

How often should I conduct a financial review?

An annual financial review can benefit everyone, especially in this ever changing economic climate. It is essential to secure a future we all deserve and conducting a financial review with one of our financial advisors can assist you in providing for all of life’s eventualities.

Whatever your financial priorities, it takes planning to accumulate the funds necessary to achieve your goals and the earlier you start the easier it will be and the less it will cost in the long run.

Director / Executive FAQs

What is a Small Self-Administered Pension Scheme (SSAS)?

A Small Self-Administered Pension Scheme is established under trust by your employer, for the benefit of directors and key employees.

The SSAS allows individuals greater flexibility and financial freedom than standard corporate schemes. Clients can manage their pension assets personally rather than having them invested in a pension policy with an Insurance Company.

What is a Self-Invested Pension Plan (SSIP)?: A Self-Invested Pension Plan is an alternative to a traditional pension fund where the fund manager makes all the decisions. In a SIPP, you can play a more active role in investment decisions, including the selection of exactly what assets to hold, thereby allowing you to plan for your individual circumstances.

Who should consider a SSAS / SIPP?

Senior executives and proprietary directors should consider a SSAS / SIPP as their number one choice for retirement planning.

A SSAS / SIPP is suitable for anyone who wishes to be set apart from the main company pension scheme on grounds of confidentiality, control and flexibility.

What are the tax benefits of a SSAS / SIPP?

There are substantial tax benefits to these pensions. Firstly, tax is saved at the marginal rate on any contributions to the pension. As such, there is a reduced cost of investment, as the assets are purchased gross of tax. Secondly, any rental income, dividends, deposit interest or capital gains all operate within a tax-free environment.

A tax-free lump sum on retirement of up to 25% of the fund will be available to self-employed individuals and proprietary directors. For employees, the tax-free portion is calculated based on years of service and final salary. The balance may then be used to purchase an Approved Retirement Fund (‘ARF’) or an annuity.

What investments are permitted?: The choice of investments is ultimately down to the individual and can include property, quoted equities, bonds/fixed interest stocks, investment/unit trusts, insurance company funds, deposit accounts. The above list is not exhaustive and IFG will review all potential investments to ensure compliance with Revenue guidelines.

Self Employed FAQs

I am self employed, what are my options when it comes to a pension plan?

A Personal Pension/ Personal Retirement Savings Accounts (PRSAs) is designed as a tax efficient investment plan for those who wish to save towards a more rewarding retirement. Saving via a pension plan gives investors access to generous government incentives that are not available via other savings or investment plans. Pensions can be one of the most efficient vehicles to use when investing your surplus income over the longer term.

You have to set up this type of plan yourself, arrange to pay your own contributions and claim tax relief yourself each year.

Who would a Personal Pension suit?

This plan is available to those who are self employed or those in non- pensionable employment and those who;

Wish to invest a % of their disposable income over the longer term
Wish to maintain their standard of living in retirement
Wish to invest their long-term savings in the most tax-efficient manner
Want to invest in a range of equity, property based funds &/or secure funds
Want more control over access & investment options of their accumulated pension funds in retirements

IFG - Pensions, Investments and Advisory Services

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Individuals FAQs

Individuals FAQ

Director / Executive FAQs

Self Employed FAQs

Individuals FAQ

Age % of Taxable Earnings

Director / Executive FAQs

Self Employed FAQs

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