Should I have a Company Pension?
Currently, there is no legal obligation on a company to set up a company pension plan even with Auto-Enrolment coming in 2022. In the meantime, however, it is perceived to be a ‘given’ by job candidates that a basic part of any employment package includes a Company Pension Scheme whereby employers will pay a % of salary and the employee will pay a matching or greater percentage.
Can I have a Personal Pension Plan and a Company Pension Plan together?
You can have a Personal Pension Plan if you are employed, self-employed or unemployed. You can have this at the same time as having a Company Pension Plan. For more information on Personal Pension Plans visit our Pension Page.
How does a Company Pension Plan Work?
The paragraphs below explain the different types of Company Pension Plans that are available. Defined Contribution Pension Schemes are where your own contributions and your employer’s contributions are both invested and the proceeds used to buy a pension at retirement. The level of your pension will depend on the amount invested, the return on your investments and the cost of your pension at retirement.
Your contributions to a company pension plan will normally be paid through payroll. As a result you will receive immediate and automatic tax relief together with relief from PRSI and the health levies from Revenue. You do not have to claim this relief. The maximum contribution rate (as a percentage of total pay) on which you can receive tax relief is:
|Highest age at any time during the tax year||Rate|
|50 or over||30%|
For tax relief purposes these contributions are limited to earnings up to a maximum of €254,000 in any tax year.
Employer Pension Contributions
You are not taxed on any employer pension contributions paid to a company pension plan.
You would benefit from independent advice on Additional Voluntary Contributions (AVCs) as your employer will normally only recommend the existing scheme. Don’t forget it’s your money – choose your own outcome Investments All funds invested in a company pension plan roll-up free from income tax and capital gains tax.
Defined Contribution Plan – Investment of Contributions
If you are a member of a Defined Contribution Plan you may be provided with a range of investment options. You should carefully review the information provided on any option offered before making any decisions. It is especially important that you periodically review any investment decision taken, this is very important in the years running up to retirement as you may wish to protect any investment gains made.
SDIO Pension (Self Directed Investment Option):
What are the Benefits of an SDIO Pension:
- Control – You have some Control where your pension fund is invested. You can invest in Property, Funds, Shares and Bank deposits etc.
- Access – You decide when you access your pension – normal retirement ages is 60 but early retirement in certain circumstances, is available from age 50.
- Contributions – You control how much you contribute to your pension – you can contribute more in years where there are profits in the company or you have a received a bonus.
- Costs – At times, you have control over the costs associated with your pension
Who can avail of a Self Administered Pension Plan?
- A Company Director.
- A Senior Executive or Manager (if your employer agrees to set it up on your behalf).
If you are unsure about your Company Pension – give IFC Finance a call and we will give the best advice available. Contact us for a Free Initial Discussion about your Pension requirements:
- Tel: 01-6601 016
- E: firstname.lastname@example.org