Thousands of Business Owners are now locked out of Pensions!
| New EU rules mean existing arrangements are no longer compliant – regulator is threatening prosecutions. A recent Article in the Irish Times referred to the consequences of recent changes to Pensions Legislation. Simply put, those who have set up a small Occupational Pension scheme for themselves or their staff, with the Employer or Director as Trustee, will have major challenges to be compliant. The challenges to these schemes has meant that, following consultation with the Pension Authority, all Life and Pensions companies in Ireland (including Zurich, Irish Life, Aviva, New Ireland and others) have withdrawn their services. Legislation was promised by the Government to have a new fit-for-purpose replacement Pension, but this has been delayed “due to COVID”. Check Out: Should your Business be your Retirement Plan? Have we a solution for your Pension? There could be a reduction in funding levels. Under the prior arrangements, Directors and Employers had great freedoms in how much they paid into Occupational Pension Schemes – the normal rules of max 15%-40% of salary (depending on age) did not apply. In Occupational Pension Schemes, rules apply to how much you can take out of your Pension, not how much you can pay in, which allows Directors and Business Owners to catch up on contributions in later years, and help with Tax Planning.  Under alternative arrangements such as a PRSA, these people will be limited to the normal rules limiting how much they pay in to their pensions. This can have disastrous consequences to a business owner who has delayed paying into a Pension while building up their business. There is an Interdepartmental Pensions Reform and Taxation Group, which promises to amend PRSA rules to allow more flexibility on contributions. This is yet to happen. Check out: Can your Retirement Plan handle a Market Fall? Under the IORP II rules, from 1st July 2022, single-member Occupational Pension schemes, commonly called “Executive Pensions” will no longer be compliant. Insurance Companies, and the representative body of the Independent Brokers in Ireland, have been in discussions with the Pensions Authority, but have been warned off, having being told that what was suggested was “unlikely to meet the compliance threshold”. We will therefore need to notify those who hold these schemes (or who wish to set them up) that these pensions are no longer available. In the meantime, we can safely move prior schemes into PRSAs, either with Insurance Companies or Self-Administered, and solve the compliance problems. We have means to protect the existing funds (and Lump Sum entitlements) and remove the compliance obligations. For those who hope to use their Pensions to buy property, this is still available. We just have one or two more urules to follow. Feel free to talk to us about anything that concerns you. Joe Carroll Joe is Practice Director with Clevermoney and has substantial experience in Occupational Pension Schemes and Employee Benefits Programmes, as well as Personal Financial Planning for Directors and Professionals. Check out his LinkedIn bio for more details. |
