Company Pensions

Company/ Directors Pensions

There is now probably no better method of converting company monies into personal wealth than through a Director's pension scheme.

HIGHLIGHTS:

• Contributions deductible against corporation tax.
• No benefit in kind implications for the employer
• Pension fund grows tax free
• 25% tax free cash at retirement
• Early retirement from age 50 onwards
• Lump sum death & disability benefit may be included

 
How much can a Proprietary Director invest into a Pension Fund?
A common misconception pertains to the level of pension investment allowable by Revenue. The self-employed are limited to a maximum of 40% of net relevant earnings, depending on their age.
However, the amount of money a company can contribute to a director's pension on behalf of a proprietary director (5% + shareholding) can be substantial.
The chart below shows the maximum contributions an employer could make and get full tax relief on these payments. The figures assume no existing pension provision and 10 years pensionable service at age 60.

Tax Relief
Your contributions qualify for tax relief at your highest rate of tax, therefore if you invest €1,000 into a pension plan and you pay tax at 41% then the actual cost to you is reduced to €590.
In addition the growth on your pension fund is not subject to any Capital Gains, Income Tax or Dirt Tax.

Retirement Options
You can avail of your retirement benefits on or after your 50th birthday, wherein you will decide how to use the retirement fund that you have accumulated. You will have a range of different options available to you including taking 25% of your retirement fund as a Tax Free Lump Sum. The balance of the fund can be used to provide you with an income for the remainder of your lifetime.

In the unfortunate event of your death in retirement, the remaining balance of your fund will be returned to your next of kin.

As a result of recent changes in legislation, there is now far greater flexibility in the way that you can take your pension benefits i.e. you have total control over your pension fund.

Investment Options
Pension plans offer a wide range of world class investment options, because everyone has a different needs and views on how they would like to invest their pension payments. Your contributions purchase units in your selected pension funds. These funds are invested in assets such as shares, property, government bonds and cash in various combinations.
The investment performance will depend on the performance of these assets. Pension funds are also known as Exempt funds, as they grow tax free. It is vitally important to obtain independent advice in helping you to make an informed decision as to which Exempt Pension Fund to invest your premium in.
You can choose to invest in high-risk funds with the potential for higher returns, medium-risk funds or lower-risk funds with lower potential for returns.

For information, advice or a quotation please use the contact us form here or email info@ppsdelaney.ie.