Target pension within income tax exemption limits on retirement
These figures are based on a typical customer and you should seek professional tax advice as the information given is a guideline only and does not take into account your personal circumstances.
This quote is based on the Complete Solutions 1 product with 96% net client allocation, 0.75% base AMC + 0.25% plan charge.
Gross fund growth of 4.3% per annum before charges; Premiums increasing by 2.5% per annum; Inflation rate of 2.5% per annum; These charges may change depending on the products and options chosen. The annuity rate used is a long term average rate and is not guaranteed.
This quote does not include the pension levy and exit penalties may apply on exit. You need to do a detailed quote if this is not the plan you wish to sell.
Under current legislation, the maximum pension fund allowed for tax purposes is €2,000,000. The relevant maximum will apply to the aggregate value of all pension provision held by an individual. Any fund in excess of this amount will be liable to a once-off income tax charge at the 40% rate on retirement.
Current State Pension (Contributory)
The state pension (contributory) is always included in this calculation. This is included even if it will not actually commence until after the selected normal retirement age.
State Pension (Contributory) is based on full rates for a single person or for married is based on full rate for a person plus an adult dependant (over 66). Actual state pension will depend on your client's own particular circumstances including the number of PRSI contributions made by you and your spouse or adult dependant.
It is assumed that your client will receive no other income in retirement.
Depending on your client's age the State Pension (Contributory) will commence: at age 66 for those born between 1949 and 1954, at age 67 for those born between 1955 and 1960 and at age 68 for those born in 1961 or later.
Individual Income Tax relief Limit
Income tax relief is available on payments up to a certain percentage of your net relevant earnings, subject to an earnings limit of €115,000 per year. The percentage changes depending on your age. You can only claim income tax relief within this limit. Entitlement to income tax relief is not guaranteed.
Company Pension Annual Contribution
It is important that you review your client's pension plan on a regular basis to ensure that overfunding does not occur.
Employer Annual Premium
Tax relief is claimed in the company financial tax year in which contribution is made. There is no option to backdate a contribution to a previous financial tax year.
The inflation rate over the term of your client's pension plan is assumed to be 2.5% per year. The estimated values when your client retires have been discounted by this rate to give values in today's terms.
Current income tax thresholds
Income tax threshold aiming for no income tax applying is based on income tax exemption limits for single people over age 65 or a married couple where either spouse is over age 65. Income tax thershold aiming for standard rate income tax applying is based on the single income tax standard rate cut off point or the married one income standard rate cut off point or, where higher, based on the income tax exemption limits for single or married over age 65.
USC and PRSI may still apply to income that is below the income tax threshold.
Income in retirement
Income tax and other tax will be due on any pension income your client receives when they retire. Pensions are long term savings plans that your client can only take when they retire.
Maximum retirement lump sum
Retirement lump sum based on 25% of pension fund value.The maximum tax free retirement lump sum you can receive is €200,000. Retirement lump sums between €200,000 and €500,000 will be subject to standard rate income tax. Both the €200,000 and €500,000 limits include all retirement lump sums your client has received since 7 December 2005.
This quotation is valid until your client's circumstances change.
Information is correct as at May 2016.