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Presentation to Presented by:- Noel Hackett (QFA, MIB, Dip Invest)

Presentation to Presented by:- Noel Hackett (QFA, MIB, Dip Invest) New Ireland Assurance Senior Pensions Consultant Tony Delaney- Area Manager 5 th ,8th & 9 th April 2013. time11.00;13.15;15.00. Benefits at Retirement. At retirement your benefits will come from:- State Pension

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Presentation to Presented by:- Noel Hackett (QFA, MIB, Dip Invest)

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  1. Presentation to Presented by:- Noel Hackett (QFA, MIB, Dip Invest) New Ireland Assurance Senior Pensions Consultant Tony Delaney- Area Manager 5th,8th & 9th April 2013. time11.00;13.15;15.00

  2. 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

  3. 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

  4. 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

  5. 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

  6. 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

  7. 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

  8. 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

  9. State Pension • From 2012 • Single Person €230.30 per week • Married Couple €383.80 • Applies to all employees who joined since 1995

  10. 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

  11. 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

  12. 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 Remuneration Spouse/Civil Partner & children’s pensions 1.5% Pensionable Remuneration

  13. Bridging the Gap - 2 Options • Purchase of Notional Years of Service Through NUI Galway Pensions Office • AVC Scheme Through New Ireland Assurance

  14. Notional Years • Employee can buy “notional years” • Defined Benefit basis • Must buy year with all the “trimmings” • Pension • Gratuity • Spouses Pension • Pension Increases

  15. 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

  16. 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”

  17. 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

  18. Employee Tax Relief Limits (including AVCs) • Age% 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

  19. 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

  20. USC for self assessed under age 70 the 2013 ratesPart of aggregate income Rate of USCFirst €10,030 2%Next €5,980 4%Next €83,984+ 7%Income > €100,000 10%

  21. TAX CREDITS 2013 2010 2013 € € Employee Tax credit 1,830 1,650 Personal tax credit-single 1,830 1,650 -married 3,660 3,300 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

  22. Standard Rate Bands 2010 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 LIMIT 2010 2013 Single €20,000 €18,000 Married €40,000 €36,000 Unchanged for 2013.

  23. 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

  24. Actual AVC Member – Example Mary Murphy Retired in April 2010. 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 = €21,075.30 Net cost, after tax relief for Mary was€10,620.00 that she paid TAX free lump sum from AVCis €21,075.30 Could have been €24,337.50 from AVC if it was in her fund. Tax free LUMP SUM approved by Revenue is €88,500

  25. 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

  26. 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

  27. 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

  28. 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

  29. 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

  30. 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

  31. IRIS Glide Path – Default Fund

  32. IRIS Performance – to 1st March 2013

  33. Other Investment Options Low Risk Cash Fund IRIS- 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

  34. 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

  35. 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

  36. Other Information - New Ireland Website • www.newireland.ie • Click on • Pension • I have a pension • Public Centre • Popular forms and booklets

  37. Contact: Pensions OfficeNUI Galway Ph 091-495028 ext: 5028 Email : pensions@nuigalway.ie Or: Noel Hackett, QFA, Pensions Consultant New Ireland Assurance Tel 061312166; Mobile 086-8186163 Email: Noel.hackett@newireland.ie What Should I Do Next?

  38. Individual Consultations Available Noel Hackett will be in available for Individual Consultations of 45mins duration (09.00 – 17.00) Pensions and Investments Office 8 Lower Newcastle Road 10th, 11th 12th 15th and 16th April 2013 Contact Ann Cormican or Jacqueline Joyce in Extn 5901/5028 to reserve time. Email: ann.cormican@nuigalway.ie Jacqueline.joyce@nuigalway.ie

  39. Any Questions? Thank You for attending

  40. Cost Neutral Early Retirement Factors to calculate reduced Lump Sum and Pension (Age 60)

  41. Cost Neutral Early Retirement Factors to calculate reduced Lump Sum and Pension (Age 65)

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