employers guide to a group retirement plan

Employers Guide to a Group Retirement Plan


2 Thomond Asset Management

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Contents01.01

Ataglance

WelcometoThomondAssetManagement

Helpingyouremployeesplanforacomfortableretirement

WhyThomondAssetManagement’sGroupRetirementPlan?

Extensivebenefitsforbothyouandyouremployees

DesigningyourGroupRetirementPlan

Taxbenefits

Investmentoptions

OtherFunds

Retirementoptions

Protectionoptions

Plandetailsandcommunications

Frequentlyaskedquestions

Nextsteps

AboutUs



Objective

Cost

Service

Tax relief

Investment

Risk

Employee

Retention

Ataglance01.02

*Subjecttorevenuelimitsandapproval.

Astraightforwardpensionoptionforyouand

youremployees

Competitiveandtransparentcharges

Tailoredmemberservice

Onlineaccesstoviewplanforboth

employerandemployees

Employercorporationtaxreliefof12.5%

oncontributions*

EmployeetaxandPRSIreliefoncontributions*

Trusteeindemnityfrommemberfundselection

Widerangeofinvestmentfundsandmanagers

ThomondAssetManagementhelpsemployers

managetheirriskthrough:

• Trusteeindemnityfrommemberfundselection

• Approvedtrusteetrainingandsupport

• Corporatetrusteeservicetotakeresponsibility

fortrusteerole

Acompanypensionplanisavaluableemployee

benefitmakingyourcompanyanemployerofchoice



02.01 WelcometoThomondAssetManagement

A philosophy centred on client relationships. As one

of Munster’s most dynamic Wealth Management

companies, our aim is to provide our clients with

greater financial independence, security, and

peace of mind. To deliver on our commitment to

growing your wealth in a progressive yet secure

manner, we have assembled a team of dedicated

and accountable professionals with decades of

experience in all aspects of wealth management.

Our highly qualified and experienced directors and

portfolio managers understand that you‘ve worked

hard to grow your wealth and that you need an

organisation that understands your needs.

When founded, Thomond Asset Management did not

follow the path of our peers, a transaction-oriented

style of business based simply on “selling”products.

Instead we stress the importance of counselling

individual clients,understanding their needs and

concerns, and building customised financial plans.

Today, Thomond Asset Management continues to

embrace this philosophy,encouraging our clients to

focus on long-term investing and develop diversified

portfolios. Our objective is to help people plan for

life. Remaining sensitive to the changing needs

of our clients, we keep a watchful eye on today’s

complex financial marketplace and we offer a

comprehensive selection of wealth management

solutions to help meet our clients’ evolving needs.

We are dedicated to providing clients with complete

financial planning services and personalised,

professional assistance. Simply put, we believe our

business is people and their financial well-being.

Only when your specific expectations are met or

exceeded do we consider our result a success.



Importantinattractingandretainingthebestpeople

03.01Helpingyouremployeesplan

foracomfortableretirement

In today’s competitive business environment,

employee benefits are becoming increasingly

important in attracting and retaining the best

people. A good pension plan can form an important

part of any remuneration package in actively

encouraging employees to consider a long-term

future with your company.

While there is a legal requirement to provide

employees with access to some form of pension

provision (standard PRSA), you are not required to

make a contribution on behalf of an employee.

Instead of just providing a standard PRSA facility,

many employers are now taking the opportunity to

set-up some form of company pension plan to help

their employees save for retirement.

There are two company pension plan options

available to employers, a defined contribution Group

Retirement Plan or Group PRSA arrangement,

both of which are available from Thomond Asset

Management

This brochure will explain how a Group Retirement

Plan works, your obligations as an employer and the

benefits available to you and your employees.



Thomond Asset Management’s Group Retirement

Plan is a company pension plan, which offers a tax

efficient, flexible and accessible way to provide

financial security for your employees in retirement.

As Thomond Asset Management’s Group

Retirement Plan is a defined contribution plan, it

allows employers to take control of their pension

costs by contributing a defined percentage of

their employees’ salaries to their retirement fund.

Usually the employee also makes a contribution to

their retirement fund at the same time, facilitated

by payroll deduction.

We will guide you through the setting up process,

help you decide the contribution level that best

suits you, and assist you in selecting appropriate

investment funds.

ATaxefficient,flexiblewaytoplanforyouremployee’sretirement

04.01WhyThomondAssetManagement’s

GroupRetirementPlan?



05.01Extensivebenefitsforboth

youandyouremployees

Benefitstotheemployer

Valuable Employee Attraction & Retention Tool Thomond Asset Management’s Group Retirement

Plan is a tax efficient way of rewarding your

employees for their service. Employers who make

a contribution to their employees’ pension benefit

from the valuable staff incentive, recruitment and

retention advantages it provides.

Tax Relief You also benefit from tax relief on any contributions

that you make to your employees’ pension plan

as these can normally be fully offset against

Corporation Tax as a business expense.

Investment Options You have the option of choosing from a wide range

of pension investment funds from over 14 fund

managers both national and international. This

Investment Solution offers your employees the

opportunity to choose from a range of investment

funds and strategies for their pension.

Protection Options Thomond Asset Management’s Group Retirement

Plan also allows you to avail of additional plan

benefits such as Life Cover, and Disability Cover.

(Subject to Terms & Conditions.)

Pension Scheme Online Thomond Asset Management’s Pension Online

service is a password-protected website which

enables you to easily monitor your company’s

Group Retirement Plan and where you and your

employees can view up to date information on their

pensions, including contributions paid to date,

individual fund values and choice of funds.



05.02

Benefitstoemployees

Extensivebenefitsforboth

youandyouremployees(continued)

Security Your employees will have the security of a pension

without having to arrange or administer the Plan

themselves.

Tax Relief Employees can normally avail of generous tax

relief on their contributions, tax-free growth on

their investment, and a tax-free lump sum at

retirement.

Retirement Options On retirement your employees can choose from

two options in terms of how they wish to benefit

from their retirement fund.

Pension Scheme Online Your employees can also avail of Thomond Asset

Management’s Pension Online service, which will

provide them with up to date information on their

pension funds.



When you set up a Group Retirement Plan, you

can design the Plan to suit your own needs and

circumstances. The issues that you need to

consider include the following:

Contribution Options One of the most important aspects to consider is

the level of contributions that you pay on behalf of

your employees. Most company pension schemes

operate on a full contributory basis where both

the employer and employee contribute a fixed

percentage of basic annual salary. A typical

contribution level for employer and employee

would be 5% each of basic annual salary.

Normal Retirement Age Every Group Retirement Plan must set a Normal

Retirement Age between the ages of 60 and 70.

In Ireland, most company pension plans set this

age at 65 years. This ties in with the state pension

which starts at 66 presently.

Eligibility Conditions As an employer you can decide the conditions that

must be met before an employee joins the Plan. For

example,employees could join the Plan once they

are over a certain age and have one year’s service.

Compulsory or Voluntary Membership You can decide to make membership of the Plan

compulsory for new employees. This means all new

employees must join and, if applicable, contribute

to the Plan. Alternatively they may be given the

option of whether they wish to join the plan. Any

existing employees must be given a choice as to

whether or not they join the Plan.

Additional Voluntary Contributions (AVCs) Thomond Asset Management’s Group Retirement

Plan provides the facility to enable members make

extra contributions (AVCs) to provide themselves

with additional retirement benefits. AVCs are

subject to the same tax relief rules and Revenue

limitations as normal employee contributions to

the Plan. Employees can avail of new retirement

options in respect of their AVCs.

Trusteeship In order to qualify for the valuable tax benefits

available, a defined contribution Group Retirement

Plan must meet certain conditions and in

particular the plan must be established under

Trust. In establishing your Group Retirement

Plan under Trust, it is necessary for Trustees to

be appointed and there are a number of options

available to you in this regard.

Tailoredtosuityouandyouremployees’needs

06.01 DesigningyourGroupRetirementPlan



The options available to you are:1. The employer can act as the Trustee of the

Group Retirement Plan and this tends to

be normal practice in small to medium size

pension schemes.

2. Individual Trustees can be appointed and can

include the senior management of the

employer as well as an employee.

3. A Corporate Trustee may be appointed.

4. Where there are more than 50 members in a

defined contribution Group Retirement Plan,

the plan members are entitled to elect 50% of

the Plan’s Trustees.

Trustee Training It is important to note that recently introduced

legislation requires Trustees to receive formal

training in relation to their duties and obligations

and this training will need to be carried out every

two years.

General Investment Trust Thomond Asset Management offers a Corporate

Trusteeship facility. This service can reduce the

potential risks facing company directors because

the Trustee role is taken over by a professional

trustee company.

This means that directors of the company:• Do not require Trustee training.

• Are not liable for potential Pensions Board

Trustee fines.

• Do not have any Trustee responsibilities under

the Pensions Act. Ongoing Trustee support

to employers is provided to enable them to

understand and comply with all of their pension

obligations.

Tailoredtosuityouandyouremployees’needs

06.02 DesigningyourGroupRetirementPlan(continued)



Both you and your employees can enjoy

considerable tax relief on contributions made to

the Group Retirement Plan, subject to Revenue

limitations.

Employer tax advantages Your payments to the Plan can normally be fully

offset against Corporation Tax as a business

expense. The net cost of a company contribution of

€1,000 is effectively €875.* This makes the Plan a

tax efficient way of rewarding employees.

*Note: Based on 12.5% Corporation Tax rate for

non-manufacturing companies.

Employee tax advantages• Employer contributions to the Group

Retirement Plan are not considered Benefit In

Kind (BIK), and are not classified as part of an

employee’s income.

• Unlike other savings methods, your employees’

pension fund will grow free of Income Tax and

Capital Gains Tax.

• At retirement, part of your employee’s

accumulated fund can be taken in the form of a

tax-free lump sum.

• If an employee makes a contribution to the

Plan, he/she can benefit from Income Tax

and PRSI relief (subject to Revenue maximum

limits). In the case of regular contributions,

deductions will be taken directly from the

employee’s gross salary, thereby allowing tax

and PRSI relief at source.

07.01 Taxbenefits

Taxreliefforyouandyouremployees



08.01 Investmentoptions

Thomond Asset Management Investment Choice solution offers:1. Trustee indemnity from fund selection

responsibility provided certain conditions are met.

2. Choice – we offer a wide range of funds from

which you can tailor an investment choice to offer

to your employees.

3. Flexibility – members can pick from a suite

of pre-selected pension investment funds.

1. Why investment choice is so important One of the most important factors that will

affect the success of your employees’ pension

is the investment return that is earned on the

contributions. Contributions to the pension are

invested in order to build up a fund that your

employees can use to provide benefits when

they retire including a pension and tax-free lump

sum. The rate of return earned on both your

contributions and your employees’ contributions

directly affects the size of their fund when they

retire – even an extra 1% p.a. investment growth

can make a significant difference in the long-term.

That’s why choosing the right fund in which

to invest both you and your employee pension

contributions, can make such a difference to the

success of your employees’ pension. As a trustee

you can decide where pension contributions are to

be invested, or as is becoming the norm, you can

offer employees a range of funds from which they

can select.

2. Member Investment Choice Thomond Asset Management have designed a

suite of funds which Trustees can offer to scheme

members. These funds provide members with a

wide range of investment managers and allow for

different attitudes to risk.

3. Default Investment Strategy While it is important to offer a choice of funds,

in some cases your employees may not wish to

make an investment decision. To cater for this it

is necessary for a company pension plan to have

a default investment strategy. If your employees

do not select an investment fund then their

contributions will automatically be invested in

the default investment strategy.

Tailormadeinvestmentoptions



09.01 OtherFunds

Other funds?While the standard default strategy will meet the

needs of most trustees and members, Thomond

Asset Management also offers access to funds

from 14 different investment managers for you

to choose from. This extensive fund range caters

for all investors preferences and attitudes to risk

including regional equity, indexed funds and ethical

funds.



Whenyouremployeesretire,theycan

usetheirretirementfundineitheroftwo

ways:

Retirementoptions10.01

Taking Benefits• Your employees will usually retire at the

Normal Retirement Age you have set for the

Plan.

• Employees, with your consent, can also retire

early or late between the ages of 50 and 70.

Option 1 They can take a tax-free lump sum of up to a

maximum of 1.5 times their final salary (depending

on their service) and then use the balance of their

fund to buy a Pension.

Option 2 They can use their entire fund to buy a Pension

(called an Annuity) which provides a regular secure

income, paid for the rest of their lives. Employees

who make Additional Voluntary Contributions

(AVC’s) to their retirement fund or a 5% Proprietary

Director will have additional options available to

them at their retirement.

Which option is best for my employees? Your employees don’t have to choose which option

suits them best now. The important thing is that

they have built up a sufficient fund to enable

them to enjoy their retirement. We recommend

that your employees speak to their Thomond

Asset Management Adviser when thinking about

retiring and he/she will advise them on the options

available.

Employeeretirementoptions



You can also decide to provide protection benefits

for employees. This can include life cover,

a spouse’s pension and disability cover.

Life Cover A life assurance benefit is frequently included as

part of a Group Retirement Plan. Depending on

the age profile of your workforce, this can be a

relatively inexpensive benefit to provide and will

be highly valued by your employees. Most life cover

policies will simply provide a lump sum payment

on death. Under current Revenue guidelines it is

possible to provide a lump sum of up to 4 times

a person’s salary on death. It is also possible

to provide additional pension benefits for an

employee’s dependants.

Disability Cover (Income Protection) The objective of disability cover is to provide an

income, after an initial period, to an employee who

is totally unable to pursue their normal or a similar

occupation as a result of long-term illness or

injury, while not engaged in any other occupation.

A typical disability benefit would be two-thirds of a

person’s salary less the benefit they would receive

from the State.

Premium Protection Cover This benefit is designed to pay your employee’s

pension contributions plus life cover premiums, if

any, after an initial period, should they be unable to

work due to illness or injury. Any AVC contributions

your employee is making will not be covered

under this benefit. Disability Cover and Premium

Protection Cover are provided under a separate

arrangement with the employer. If you would

like more information on any of these Protection

Benefits, please speak with your Thomond Asset

Management Representative.

Protectionoptions11.01

AdditionalBenefitsforyouremployees



A pension is a long term investment and your

employees will need to review their Plan regularly

as to the retirement fund they will need. We

recommend that your employees review their

pensions at least once a year, especially if their

circumstances change.

Pensions Online Thomond Asset Management’s Pension Online is

a password protected website, where you have

instant access to your scheme’s information

including membership details, payments history

and members’ pension accounts.Because our

Pension Online service is interactive, you can also

use the website to update member’s salaries, or

notify us when a member is leaving service. In

addition, you can allow members of your Group

Retirement Plan to view up to date information on

their individual pension accounts.

Employer Benefits• Immediate access to your scheme

details online.

• Enables you to view your employees up

to date pension account details.

• Ability to update your employees’ salary

details in a more efficient manner.

• Easily allows you to notify us when an

employee leaves service.

• You can view information on the

payment history of the scheme.

Employee Benefits• It provides your employees with up to date

information on their pension accounts,

such as contribution history, fund value and

choice of funds.

• It is easy to use.

Plandetailsandcommunications12.01

Makingiteasytotrackyourfund



12.02

Annual Benefit Statements Thomond Asset Management will produce annual

benefit statements for each member to allow them

to monitor the progress of their retirement fund.

The statements will show:• Contributions paid in respect of each member

over the previous year.

• Details of any life cover and disability benefit.

• Current value of the employee’s plan.

• A projection of the estimated benefits that the

employee will receive at retirement.

Annual ReviewAn annual review date will be agreed for your Plan

to ensure that all data in relation to membership is

fully up to date.

Trustee Annual Report Thomond Asset Management will also produce a

draft Trustee Annual Report to assist the trustees

of the Plan comply with their obligations. This

will show the total contributions paid during

the previous year together with an investment

report showing how the funds in which the Plan is

invested have performed during the year.

Plandetailsandcommunications(continued)

Plancommunications



13.01

What happens if an employee leaves my employment? If an employee leaves your employment before

Normal Retirement Age, there are a number of

options available to them concerning their pension

rights, as laid down under the Pensions Acts 1990

(as amended). The options available to an employee

depend on the length of time they have been a

member of the Group Retirement Plan. If they have

been a member of the scheme for less than 2 years,

then their only legal entitlement will relate to the

value of their own contributions. Members of more

than 2 years will be entitled to the value of both the

employer contributions and their own contributions

to the Plan.

Will my employees be eligible for the State Pension if they contribute to a Group Retirement Plan? The State Contributory Pension will not affect

benefits received from the Group Retirement Plan.

All employees who have made the required number

of Social Insurance contributions will qualify for the

State Contributory Pension.

What happens if an employee dies before they retire? The value of an employee’s pension fund becomes

payable on death before retirement. This is in

addition to any life cover benefit that may be

payable under the Plan.

Frequentlyaskedquestions

EnsuringPeaceofMind



Nextsteps14.01

As you are already aware, you are now required

by law to provide your employees with access to a

suitable form of pension provision.

With the introduction of the National Pensions

Framework more people are becoming pension

conscious, making the Group Retirement Plan

an even more powerful aid to recruiting the high

quality staff your business needs. It gives your

employees one less thing to worry about, and one

more reason to join or remain with your company.

We recommend you speak with your Thomond

Asset Management Representative, who will

ensure that you have all the relevant information to

make a considered and educated decision that best

meets your needs and the needs of your employees.



Thomond Asset Management82 O’Connell Street

Limerick

Tel: 061 462024

Fax: 061 312033

Email: [email protected]

www.thomondam.com

Regulatory Status with the Central Bank of Ireland

FOLK Asset Management Ltd. t/a Thomond Asset Management (“the Firm”) is regulated

by the Central Bank of Ireland as an Authorised Advisor under Section 10 of the Investment

Intermediaries Act, 1995 and as an insurance intermediary registered under the European

Communities (Insurance Mediation) Regulations, 2005. The Central Bank holds registers of

regulated firms. You may contact the Central Bank on (01) 224 4000 or alternatively visit

their website on www.financialregulator.ie to verify our credentials. Our Investment Firm

Intermediary Number is C52926.

Disclaimer This document does not constitute an offer and should not be taken as a recommendation from Thomond Asset Management. Advice should always be sought from an appropriately qualified professional.

The case studies are not real people and are for illustration purposes only.

Whilst great care has been taken in its preparation, this newsletter is of a general nature and should not be relied on in relation to specific issue without taking appropriate financial, insurance or other professional advice. The information contained in this newsletter is based on our understanding of current and intended legislation and Revenue practice as at September 2011.

Warning: - The income you get from an investment may go down as well as up. - The value of your investment may go down as well as up. - Benefits may be affected by changes in currency exchange rates. - Past performance is not a reliable guide to future performance

AboutUs15.01

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