1. Lucas Financial Consulting Ltd
James Caron
BA, LLB, QFA, FLIA, MIIPM, RPA
jamescaron@lucasfc.com
087 648 6081
GMS Scheme

2. The GMS who it is for and what it is
 Scheme for GP’s who have GMS Income
 Automatically enrolled, transfers not allowed
 Not Superannuation/PPP/OPS/Trust RAC
 What it is though is complicated
 Administered by Mercer
 Investment Options are
 Main GMS Fund, bonus applied 31/12 which is a % of average value throughout
the year and calculated by reference to gains/losses averaged over 4 years. From
age 55 can switch out at end of quarter but cannot switch back.
 Other funds are Cash/Bond available from 55

3. The GMS who it is for and what it is
 HSE pays 10% of Capitation Fees only per month (not total GMS Income)
 This HSE 10% is not taxable income so not in tax return
 Member pays 5% of Capitation Fees only per month (not total GMS Income)
 AVC’s allowed to relevant limits either privately or through GMS.
 But amount of AVC that can be paid is the difference between % of Net GMS
Income and 5% Capitation Fees (see later)
 If AVC’s to GMS Scheme 2% deducted to cover admin charges.
 Each member has their own account
 95% of HSE contribution invested with balance used to pay Death in Service,
Ill Health Retirement Benefits and costs of administering Scheme.
 All of members 5% invested
 No refund of contributions and no transfers in or out (except PAO’S).

4. Retirement Options
 Normal Retirement Age 65 but can work beyond this
 Can go early from 50 onwards IF they have given up GMS practice
 Ill Health early retirement at any time and choice of taking benefits
immediately or at a later date. Pension Pot size based on either current value or
formula involving age/service/average capitation fees and member service.
 For Death in Service what’s paid is greater of fund value or a % of members
annual Capitation Fees over previous 5 years plus refund of members own
contributions with interest. But 4 times salary rule applies.
 Normal Retirement what benefits are available are based on size of pot.
 Benefits are subject to Revenue Limits.
 Can take 25% tax efficient lump sum from main scheme
 Balance to purchase an Annuity (from Scheme or Life Co) or ARF
 Then what to do with any AVC Fund?

5. Retirement Options cont’d
 GMS Scheme is a hybrid scheme so both personal and company pension plan
rules apply.
 Thus the option also applies to take the equivalent of 1.5 times final salary as a
tax efficient lump sum if 20 years service at normal retirement age.
 But if this option is chosen then the balance of the main GMS Fund MUST be
used to purchase an annuity.
 It is possible that any AVC Fund in existence may be used to augment the tax
efficient lump sum available under this route.
 The example on the next slide will hopefully clarify this.

6. A quick example
GP about to retire:
 GMS Scheme: €350,000
 AVC: €100,000
 Age 65 with >20yrs service
 Net GMS Final Remuneration of
€125,000
Considers the ‘new options’:
 Take 25% tax efficient lump sum
€112,500
 Balance to buy an annuity
 Or ARF/AMRF route
 Or taxed cash (subject to criteria)
 Or a combination of all above.
Or maybe the ‘traditional route’:
 By using the 1.5 times final salary
method now a tax efficient lump sum
€187,500
 But now must use the residual fund
of €262,500 to buy an annuity
AVC fund was used to increase tax
efficient lump sum entitlement.

7. What is Net GMS Remuneration?
Tax Briefing 28 October 1997
“Income derived from the GMS Scheme Contract
less any expenses set against such income for
the purpose of assessing the members liability to
tax”

8. Here’s how it is done
 Then pro rata expenses/capital allowances across both incomes = Net GMS
remuneration
 Worked examples in the Tax Briefing
Profit net of capital
allowances
* Capitation fees + non-capitation fees = Total GMS income
Total
GMS
Income*
Private
Practic
e Inme
Expense
s
Capital
Allowances

9. Dual Income Revenue Ebrief 62/2010
GMS & Private Practice
 In the past, they figured out their max tax
relievable contribution and paid it to a
personal pension plan
 Revenue issued Tax briefing 11 in 2010
outlining how it’s supposed to work
 Have to look at “tranches of income” either
GMS or Private then pension into the relevant
products
 GMS Income must be considered first

10. Dual Income Example
 GP aged 58 Net GMS Remuneration €100K (€80K Capitation), Private Practice
Income (NRE) €100K (assumed expenses, capital allowances have been
apportioned appropriately).
 GMS contribution of €4K made (5% of €80K)
 GMS AVC scope is €31K (€100K @ 35% less the €4K GMS contribution).
 Private Practice NRE €100K but contribution limited to €5,250 (35% of €15K as
€100K GMS Remuneration already pensioned)
 Total funding €36,250 (AVC €31k & PPP €5,250)

11. Recap
 GMS Remuneration must be pensioned first by AVC
 Include 5% GMS contribution already paid by GP in any calculations.
 If Net GMS Income over €115K no PPP contributions possible
 If retiring from GMS consider all options to include
 Traditional Route, would 1.5 times tax efficient lump sum be more
advantageous?
 Could AVC Fund top up the tax efficient cash?
 But Annuity purchase from balance of main fund now compulsory.
 But residual AVC Fund (if any) could purchase an ARF
 The 25% tax efficient route and ARF option
 Careful planning required.

12. Important Note
 The preceding was a brief overview of some of the issues encountered by
Client’s/Advisors.
 It is not, nor was it intended to be an exhaustive analysis but rather an
introduction to these areas.
 While great care has been taken in its preparation, this presentation is of a
general nature and should not be relied on in relation to a specific issue
without taking appropriate financial, insurance, investment or other
professional advice.
 The content of this presentation 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.
 Lucas Financial Consulting is regulated by the Central Bank of Ireland.