presentation to presented by:- noel hackett (qfa, mib, dip invest) new ireland assurance senior...
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Presentation toPresentation to
Presented by:-Presented by:-Noel Hackett (QFA, MIB, Dip Invest)New Ireland Assurance Senior Pensions Consultant Tony Delaney- Area Manager5th,8th & 9th April 2013. time11.00;13.15;15.00
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Benefits at Retirement
At retirement your benefits will come from:-
– State Pension– NUIG Scheme– Purchase Notional yrs– Additional Voluntary Contributions ( AVCs )– Accumulated wealth/savings/inheritances
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NUIG Pension Scheme
Defined Benefit Scheme
Scheme provides– Pension– Lump Sum ( Gratuity )– Spouses Pension– Increases during course of payment– Death in Service Benefit
Actual benefits depend on when you joined
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Key Dates
1995 Future employees pay PRSI and receive– State Pension– Lower pension from NUIG
2004 Future employees have minimum RA of 65 Immediate early retirement pension available -– Existing employees from 50– New employees from 55
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NUIG Scheme – Pre 2004.
Normal Retirement Date is age 65.– but can retire from age 60 onwards
Pension– 1/80th x Pensionable Service x Pensionable Salary– State Pension not payable (pre 95!)
Lump Sum– 3/80th x Pensionable Service x Pensionable Salary
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Example – Pre 1995
Employee on a salary of €50,000 joined NUIG in 1990 at age 30
Service to age 60 is 30 years
Pension from 60 is €18,750 p.a.– 30/80ths x €50,000– State Pension not payable
Tax Free Lump Sum is 90/80ths of €50,000 - €56,250
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NUIG Scheme – Post 1995
Normal Retirement Date is 65, BUT can retire…. – Pre 2004 employees – From age 60– Post 2004 employees – From age 65
Pension– 1/200th Pensionable Service x Pensionable Salary
Plus– 1/80th x Pensionable Service x Pensionable Salary– State Pension also payable
Lump Sum– 3/80th x Pensionable Service x Pensionable Salary
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Example – Post 1995
Employee on a salary of €50,000 joined NUIG in 2000 at age 30
Service to age 65 is 35 years
Pension from 65 is €11,396 p.a.– 35/200ths x €40,040 = €7,007 pa– 35/80ths x €9960 = €4,357 pa– State Pension also payable–
Tax Free Lump Sum is 105/80ths of €50,000 - €65,625
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State Pension
From 2012– Single Person €230.30 per week– Married Couple €383.80
Applies to all employees who joined since 1995
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Early Retirement
Was always allowed but only as a deferred pension
Changes from 2004– Existing employees from 50– New entrants from 55– Immediate pension payable– Early payment reduction
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Early Retirement Benefits – NRA 60
Employee on salary of €50,000 joined before 1995 - early retiring at 55
Service completed 25 years
Pension : 77.8% x 25/ 80ths x €50,000 = €12,156
Tax Free Lump Sum : 90.7%x 75/80ths x €50,000 = €42,515
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Employee Contributions
Contributory for new Entrants post April ’95 Total Contribution Rate is 6.5%
Lump Sum 1.5% Pensionable Remuneration
Pension 3.5% Net Pensionable RemunerationSpouse/Civil Partner & children’s pensions 1.5% Pensionable
Remuneration
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Bridging the Gap - 2 Options
Purchase of Notional Years of ServiceThrough NUI Galway Pensions Office
AVC SchemeThrough New Ireland Assurance
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Notional Years
Employee can buy “notional years”
Defined Benefit basis
Must buy year with all the “trimmings”– Pension– Gratuity– Spouses Pension– Pension Increases
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AVC Scheme
You can pay into the AVC Scheme
No promised benefits – will depend on– Investment Returns– Annuity Rates – if you buy a pension at retirement
Can be more flexible than added years, you can– Select a monthly contribution– Save for a specific benefit - lump sum only– ARF option
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Scope for AVCs
Did you join after 1995 ?– Pension lower than Revenue will allow
Do you – Wish to retire early ?– Have short service ?– Want to provide a higher Spouses Pension
Is your– Pension & Lump Sum based on your final (cut) salary– Scope to enhance this -
• “Revenue Final 10 year salary rule”
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Additional Voluntary Contributions
Government incentive through:-
– Tax Relief, at source
– Generous contribution limits
– ARF option – greater flexibility at retirement
NB – Pension Fund levy of .6% of fund will cease in 2014
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Employee Tax Relief Limits (including AVCs)
AgeAge % of Remuneration% of Remuneration
Up to 30 15%30 – 39 20%40 – 49 25%50 - 54 30%55-59 35%60 Plus 40%
An earnings cap of €115,000 (2013) will apply to Employee Pension Contributions for the purpose of tax relief.The above limits include contributions to NUIG Pension Scheme
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Tax Relief
Monthly Contribution €400.00
Tax Relief €80.00 €164.00 Net Cost €320.00 €236.00
Contributions and tax relief operated at source
USC for self assessed under age 70 the 2013 rates
Part of aggregate income Rate of USC
First €10,030 2%Next €5,980 4%Next €83,984+ 7%
Income > €100,000 10%
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TAX CREDITS 20132010
2013
€€
Employee Tax credit 1,830 1,650
Personal tax credit-single 1,830 1,650
-married 3,6603,300
Widowed bereaved in yr of ass. 3,660 3,300
One parent family tax credit 1,830 1,650
Home carer tax credit 900 810
Dependant relative 80 70
Blind person credit-single 1,830 1,650
both blind -married 3,660 3,300
Additional credit widowed pers 600 540
Age credit-single 325 245
Age credit married 650 650
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Standard Rate Bands2010 2013
€ €
Single/Widowed 36,400 32,800
Married-one income 45,400 41,800
*Married-two incomes 72,800 66,500
One parent/Widowed 40,400 36,800
» With a max transferability between spouses of €45,400 in 2010 and €41,800 in 2011
»AGE EXEMPTION LIMIT2010 2013
Single €20,000 €18,000
Married €40,000 €36,000
Unchanged for 2013.
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Example
Employee aged 45 on a salary of €60,000 who joined post 1995
Maximum AVC contribution is:- 25% of €60,000 €15,000
Less 1.5% of €60,000 € 900
Less 3.5% of €60,000 - €23,951 € 1,262
Scope for AVC €12,838
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29yrs service. Age 65. Salary €59,000
NUIG Pension €12,705.38p.a.NUIG Tax free lump sum €64,162.50
AVC Fund built up in 5 yrs @ €300pm = €21,075.30Net cost, after tax relief for Mary was€10,620.00 that she paidTAX free lump sum from AVC is €21,075.30Could have been €24,337.50 from AVC if it was in her fund.Tax free LUMP SUM approved by Revenue is €88,500
Actual AVC Member – ExampleMary Murphy Retired in April 2010.
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Options at Retirement
Tax Free Lump Sum ( Up to €200,000 ) Ongoing Pension– Personal– Spouses
Approved Retirement Fund ( ARF)– Minimum income of €12,700– Invest €63,500 in AMRF– Free to invest as you wish– Withdrawals taxed as income
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AVC Drawdown
For next 3 years– Draw down up to 30% of AVC Fund– Tax payable at your marginal rate– Only one “ opportunity” to make a drawdown
Care needed before drawdown considered
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Making it easy to track your Fund
Pensions Schemes Online Password protected website Information on – premium history– fund value– Estimated fund at retirement
It is free and easy to use Review yearly – especially if circumstances
change
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Investment Options
– There are13 funds available to Invest in including the Default Fund
• The IRIS Retirement Fund
– Strongly recommend all members to review their fund choice with Noel Hackett
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Default Investment Strategy
Your AVCs will be invested in the default strategy if you don’t chose a fund
The Default Strategy is the Individual Retirement Investment Strategy ( IRIS )– The longer the term is to retirement, the higher
the proportion invested in equities and other growth assets
– As retirement approaches, the purchasing power of the fund is protected by switching into Fixed Income Assets/Cash
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Improvements to IRIS
Improvements implemented in December 2012
Part of the equity content replaced by a Target Return Strategy
Two Key Benefits– Greater diversification– Greater flexibility
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IRIS Glide Path – Default Fund
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IRIS Performance – to 1st March 2013
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Other Investment Options
Low RiskCash FundIRIS- Default Fund- Lifestyle Fund.
Medium Risk• Pension Gilt Fund BNY Mellon – Elements – Protected Assets
Medium to High– Pension Managed – Consensus Managed – Ethical Managed – Evergreen Fund
High Risk– Pension Equity Fund– Innovator
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Performance Figures FUND past 12months 3yrspa 5yrspa
Cash Fund(L) 0.2% 0.7% 1.6% Gilt Fund (M) 7.7% 5.1% 5.8% BNY Mellon(M) 8.8% 3.6% n/a Elements (M) 4.4% 4.6% n/a Protected (M)assets(M) 4.3% n/a n/a Managed(M-H) 12.5% 9.1% 3.1% Consensus(M-H) 12.8% 9.5% 2.9% Ethical (M-H) 11.8% 9.3% 3.4% Evergreen (M-H) 9.4% 7.7% 1.0% Equity Fund(VH) 14.5% 10.5% 3.4% Innovator (VH) 7.7% 6.3% -1.9% Funds are updated each day. L-low risk M -Medium risk H- High risk VH -Very high risk
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Investment Information - New Ireland Website
www.newireland.ie
Click on– Pension– I have a pension– Public Centre– Investment Choice and Performance
Up to date fact sheet for each available fund\– performance of each fund over various time periods– asset splits, fund size etc
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Other Information - New Ireland Website www.newireland.ie
Click on– Pension– I have a pension– Public Centre– Popular forms and booklets
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What Should I Do Next?
Contact:
Pensions OfficeNUI Galway
Ph 091-495028 ext: 5028
Email : [email protected]
Or:
Noel Hackett, QFA, Pensions Consultant
New Ireland Assurance
Tel 061312166; Mobile 086-8186163 Email: [email protected]
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Individual Consultations Available
Noel Hackett will be in available for
Individual Consultations of 45mins duration(09.00 – 17.00)
Pensions and Investments Office8 Lower Newcastle Road
10th, 11th 12th 15th and 16th April 2013Contact Ann Cormican or Jacqueline Joyce in
Extn 5901/5028 to reserve time.Email: [email protected]
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Any Questions?Any Questions?Thank You for Thank You for attendingattending
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Cost Neutral Early Retirement
Age Pension % Lump Sum %50 62.4 82.2
51 65.1 83.9
52 67.9 85.5
53 71.0 87.2
54 74.3 88.9
55 77.8 90.7
56 81.6 92.4
57 85.7 94.3
58 90.1 96.1
59 94.8 98.0
Factors to calculate reduced Lump Sum and Pension (Age 60)
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Cost Neutral Early Retirement
Age Pension % Lump Sum %
55 58.2 82.4
56 61.1 84.0
57 64.1 85.6
58 67.4 87.3
59 71.0 89.0
60 74.8 90.7
61 79.0 92.5
62 83.6 94.3
63 88.5 96.1
64 94.0 98.0
Factors to calculate reduced Lump Sum and Pension (Age 65)