Personal Pension Plan
Regardless of an individual's age, appropriate retirement
planning or contributions to pension plan is quintessential to ensure a secure
living after retirement. As a nation, Ireland people live for a longer period
and hence the need for a realistic retirement plan cannot be understated. Apart
from this, in 2014, the State Transition Pension was abolished and thereby
increased the age for pension to 66. Also, the age for state pension is likely
increase to 67 in the year 2021 and by 2028 it would be
68 years. Now, with all these facts in place, there isn't a better time to
begin or review one's pension.
Personal Pensioncash
balance plan- Defined
Personal pension plan refers to the individually organised
pensions by the employed or self - employed people of Ireland that do not have
any pension scheme. In the recent years, the rules governing personal pension
plans have changed significantly. Personal pension schemes are not under the
purview of the Pensions Authority anymore instead they are subject to tax law
and financial services legislation (even for general law on insurance). Tax
exemption can be availed for personal pension Retirement Plans for self employedwhile the amount of relief
availed are based on the age of beneficiary. From 27th March, 2013 the
beneficiaries can withdraw a maximum of 30% of the value of Additional
Voluntary Contribution (AVC) done to the occupational pension schemes. This is
applicable for 3 years only (till 27th March, 2016). Here are some of the rules
pertaining to a Personal Pension Plan in Ireland.
Rules
Personal pension profit sharing plans policies and insurance
policies are similar in most of the cases in Ireland, with the main difference
being the tax relief component. Contributions to pension schemes attract tax
relief unlike insurance policies provided the required conditions are met.
Insurance companies invest the premiums paid by its
customers in an investment fund. The customer cannot mobilise the funds and
invest in other sources until the time of maturity. Even upon reaching the
specified age, the policy holder is obliged to utilise the accumulated funds to
buy an annuity. But after 1999, the policy holder is no longer obliged to buy
an annuity and can mobilise between various funds with a considerable amount of
flexibility.
Tax relief for Pension Contribution
For authorised personal pension agreements, an individual is
eligible to avail tax relief for pension contributions. The older an individual
is, more generous is the tax relief. Below is the amount qualified for tax
relief based on the contributor's age applicable since January 2011.
Age of the beneficiary
% of Amount eligible for availing tax relief
Less than 30 Years
15% of net appropriate earnings
30 - 39 Years
20%
40 - 49 Years
25%
50 - 54 Years
35%
60 and above
40%
For certain professions and occupations that include
professional athletes also, the maximum amount is applicable to them as well. A
limit of €115,000 on the earnings is taken into consideration. This eliminates
the option of buying annuity from the proceeds of the individual's pension
policy, but not compulsory. This is not applicable generally for occupational
pensions but for Additional Voluntary Contributions (AVCs) contributed by
people in occupational pension schemes.
No comments: