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Pgm Pensions Newsletter 2011


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Pgm Pensions Newsletter 2011

  1. 1. January 2011TALKING PENSIONS...IT’s your reTIremenTIntroductionYour retirement savings plan is the most important Pension advice has never been more important. Manysavings plan you will ever contribute to. It can provide significant tax benefits remain and a Pension is still theyou with the security of a regular income to provide for a best value savings plan available today. You now havecomfortable standard of living for the rest of your days. a window of opportunity to take full advantage of the attractive tax benefits of saving into a pension in 2011.Following the recent Finance Budget for 2011, thetax benefits of saving into a Pension have changed To maximise your pension savings, it is important thatto varying degrees for those in different employment you seek professional pension advice tailored to yourcategories. In this newsletter, we have outlined how personal circumstances now.these changes may affect you.summary of Budget changesFollowing the announcement of the Finance Budget 2011 there are a number of changes to the area of retirementsavings which may affect you depending on:n your personal financial circumstancesn your employment categoryn your term to retirementPre-reTIremenT PosT reTIremenTn No change to maximum 41% income tax relief on n Introduction of ARF (Approved Retirement Fund) personal pension contributions flexible option for employees of defined contributionn Removal of PRSI and Health levy relief on pension pension schemes contributions for employees n Increase in ARF annual imputed distribution to 5%n Reduction of annual earnings cap for purposes of per annum personal pension contribution tax relief to €115,000. n New retirement tax-free lump sum cap of €200,000 Contributions paid before the self-assessment n Reduction of Income Tax exemptions for those over deadline of 31 October 2011 to be offset against 2010 65 years to €36,000 p.a. for a married couple must be in line with the new earnings cap n Reduction in Pension Standard Fund Threshold to €2.3 million. This includes any benefits taken since December 2005 1
  2. 2. PensIon CHeCKLIsT APPLICA BLE TO E VE R early retirem Half-your-age rule: YONE ent: APPLICA BLE out half If you want to TO E VE R You should be saving ab retire at age 60 YONE your could have a ga , you of your current age as a percentage of p of up to 8 ye 30, you should be you are eligible ars before income. So if you’re age r for the State P ension.* saving 15% of your annual income. Fo You could brid ge this gap by 00 that’s about €500 your pension no topping-up someone earning €40,0 €295 w. a month but co uld actually only cost you ief. *National Pens after higher rate tax rel ions Framewor k 2010 Late starter: APPL IC TO E V A B L E APPLICA Depending on your age, ERYO BL NE E save up to 40% of your you can Check your expected TO E VE R YONE personal income into Pension Income: a pension and get full tax relief so even if can you’re starting your pens What level of pension and lump sum ion late, there’s still you currently expect at retirement? Will this time to catch-up! to 25 be enough money to last you for up years in retirement? FOR Bridge the Gap employer Pension: EMPLOY EES : FOR PUB LIC yer has At the momen S E C TO R Check wh ether your emplo t the absolute WORKER eme. You could maximum pens established a pension sch S ion you can ge nity to have 3 sources public sector pe t from your be missing the opportu nsion scheme ment (your employer, grade salary an is half your help you save for retire d that’s if you ) into a plan with only credited with at work / are the government and you least 40 full ye ars service. 1 beneficiary - you! But you can m aximise your pe at retirement nsion benefits by topping up an AVC (Additi your pension w onal Voluntary ith Contribution). Late starter: FOR S ELF- EMPL Depending on your age, O YE D you can save up to 40% of your personal income into FOR COM a pension and get full tax PANY relief so even if Tax savings: DIRECTO you’re starting your pens RS ion late, there’s still time to catch-up! Avail of this amazing tax saving y could opportunity - currently your compan tax-free pay up to 4 times your salary income into your pension, every year until retirement.* retiring at age 60, provided he *Based on a married male age 55, has no other pension benefits. Applies only to Executive Pension Plans.2
  3. 3. I am approaching retirementThe recent Finance Budget announcements for 2011 will have a direct impact on your pension planning. To maximiseboth your pension savings before retirement and your pension benefits in retirement, it is important that you seekprofessional pension advice tailored to your personal circumstances now.For example, the Finance Budget announcements may change the way in which you save into a pension plan and theway you plan to take your retirement benefits. So now is the time to discuss how this will affect your personal situationand decide on an appropriate action. PensIon CHeCKLIsT: Check your expected Pension Income: early retirement: What level of pension and lump sum can If you want to retire at age 60, you could you currently expect at retirement? People have a gap of up to 8 years before you are are living longer - will this be enough eligible for the State Pension.* Why not money to last you for up to 20 years in bridge this gap by topping-up your private retirement? pension today so that you can choose your retirement date. Plan your retirement Date: Recent Government proposals may impact Company Directors: on how you plan to take your retirement Avail of this amazing tax saving opportunity benefits, so now is the time to discuss how - currently your company could pay up to this will affect your personal situation and 4 times your salary income tax-free into decide on any appropriate action. your pension, every year until retirement.** maximise your tax-free Pension savings: Check your Pension Fund: Now is a good time to meet with your Now is also a good time to review your fund Financial Adviser to ensure your pension choice, especially if you are considering fund is on track. Depending on your age you opting for an Approved Retirement Fund can save up to 40% of your income into a (ARF) at retirement. pension and get full tax relief! Check employer & previous Pension Top-up Pension Payments: Arrangements: Do you need to increase your AVC What benefits, if any, will you receive contributions for the next 5 to 10 years to from your current or previous employers at reach your expected retirement fund? retirement?* National Pensions Framework 2010** Based on a married male age 55, retiring at age 60, provided he has no other pension benefits. Applies only to Executive Pension Plans. 3
  4. 4. "Our business grows by referral; do you know a friend, relative or business colleague who would benefit from our advice?" PGM Financial Services  Patrick McEntee QFA, FLIA (Dip)  10 Histon House  Cornelscourt Village  Dublin 18    Phone: +353 1 2897400 | Fax: +353 1 2897405 |  Mobile: +353  086 2570975  | Email:  PGM Financial Services Ltd is regulated by the Financial Regulator.   Directors: P.G. McEntee (Managing) S. McEntee  Registered in Ireland No: 394505  Revenue limits, terms and conditions apply. It is important to note that tax relief is not automatically granted; you must apply to and satisfy the Revenue requirements. Your benefits at retirement may be subject to tax. While great care has been taken in its preparation, this newsletter is of a general nature and should not be relied on in relation to a specific issue without taking appropriate financial, investment or other professional advice. The content of this newsletter is for information purposes only and does not constitute an offer or recommendation to buy or sell any investment, or to subscribe to any investment management or advisory service. If there is any conflict between this newsletter and the policy conditions, the policy conditions will prevail. The information contained in this newsletter is based on our understanding of current and intended legislation, and Revenue practice as at January 2011. WArnInG: THe FIGures ConTAIneD In THIs neWsLeTTer Are esTImATes onLy. THey Are noT A reLIABLe GuIDe To THe FuTure PerFormAnCe oF your InvesTmenT. WArnInG: THe vALue oF your InvesTmenT mAy Go DoWn As WeLL As uP. WArnInG: your InvesTmenT mAy Be AFFeCTeD By CHAnGes In CurrenCy exCHAnGe rATes. January 2011 3017034