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Presentation to Presented by:- Noel Hackett (QFA, MIB, Dip Invest) New Ireland Assurance Senior Pensions Consultant Te

Presentation to Presented by:- Noel Hackett (QFA, MIB, Dip Invest) New Ireland Assurance Senior Pensions Consultant Tel: 086-8186163 Tony Delaney- Area Sales Manager New Ireland 12-13 APRIL 2011 . 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) New Ireland Assurance Senior Pensions Consultant Te

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  1. Presentation to Presented by:- Noel Hackett (QFA, MIB, Dip Invest) New Ireland Assurance Senior Pensions Consultant Tel: 086-8186163 Tony Delaney- Area Sales Manager New Ireland 12-13 APRIL 2011

  2. Benefits at Retirement • At retirement your benefits will come from:- • State Pension • NUIG Scheme • Personal Wealth / Savings

  3. State Pension • From 2011 • Single Person €230.30 per week • Married Couple €383.80 • Applies to all employees who joined since 1995

  4. NUIG Scheme • Defined Benefit Basis • For employees joining after 1995 :- • Pension Benefits based on Pensionable Salary • Salary less twice the OAP (In 2010 a deduction of €23,951) • Employees pay PRSI and qualify for OAP

  5. NUIG Scheme • Normal Retirement Date • Pre 2004 employees – From age 60 • Post 2004 employees – From age 65 • 1/200th pensionable service/pensionable remuneration to 3.33 times State Pension (39,918) Plus • 1/80th x pensionable service/pensionable remuneration in excess of this limit(change to normal integration rules on 1/1/2004) • Pension of 1/80th of Pensionable Salary per year of service, on integrated basis(less twice state) same for salary over €39,918pa • Tax Free Lump Sum of 3/80th of Salary

  6. Example • Employee on a salary of €50,000 joined NUIG in 2000 at age 30 • Service to age 65 is 35 years • Pensionable Salary is €26,049(€50,000 - €23,951) • Pension from 65 is 35/80ths of €26,049 – €11,396 p.a. • Tax Free Lump Sum is 105/80ths of €50,000 - €65,625

  7. Early Retirement • Was allowed but only as a deferred pension • Changes from 2004 • Existing employees from 50 • New entrants from 55 • Immediate pension payable • Early payment reduction • Change to normal integration from 1/1/2004

  8. Bridging the Gap - 2 Options • Purchase of Notional Years of Service • AVC Scheme

  9. Notional Years • Employee can buy “notional years” • Defined Benefit basis • Must buy year with all the “trimmings”

  10. Scope for AVCs • Will your benefits be on an integrated basis – i.e. joined after 1995 ? • Do you • Wish to retire early ? • Have short service ? • Want to provide a higher Spouses Pension

  11. AVC Scheme • No promised benefits – will depend on • Investment Returns • Annuity Rates – if pension bought at retirement • Can be more flexible than added years • Select a monthly contribution • Save for a specific benefit • ARF option • Lump Sum only

  12. Additional Voluntary Contributions • Government incentive through:- • Tax Relief • Generous contribution limits • ARF option – greater flexibility at retirement

  13. How much can I Contribute ?

  14. USC for self assessed under age 70 the 2011 ratesPart of aggregate income Rate of USCFirst €10,030 2%Next €5,980 4%Next €83,984+ 7%Income > €100,000 10%

  15. TAX CREDITS 2010 2011 € € 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

  16. Standard Rate Bands 2010 2011 € € 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 2011 Single €20,000 €18,000 Married €40,000 €36,000

  17. PENSION LEVY RATES: • First €15,000 Exempt • Next €5,000 @5% • Next €20,000- €60,000 @10% • Above €60,000 @10.5%

  18. Early Retirement Benefits Retirement Age 60 • Employee on salary of €50,000 joined after 1995 - early retiring at 55 • Service completed 22 years • Pension : 77.8% x 22/ 80ths x€26,049= €5,573 • Tax Free Lump Sum : 90.7%x 66/80ths x €50,000 = €37,414

  19. NUI Galway AVC contributions V`sOrdinary Deposit Savings Saving €1,000 pa/Interest rate of 3% pa/ DIRT 25%/term 20 Yrs Value in Savings A/c €24,450.10 Value in AVC Fund €40,961.12

  20. NUI Galway AVC contributions V`sOrdinary Deposit Savings Saving €1,000 pa/Interest rate of 3% pa/ DIRT 25%/term 10 Yrs Value in Savings A/c €11,324.88 Value in AVC Fund €17,475.50 N.B. : to save €1,000 you would need to earn €1,300 gross. Tax on tax.

  21. 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 TAX free lump sum from AVC is €21,075.30 Could have been €24,337.50 from AVC if it was in her fund.

  22. How much can I contribute ? • Maximum Income in 2011 €115,000 • (Max income in 2009/10 €150,000) (max income 2008 €275,239) • Income is taxable earnings • Less any contributions being paid to NUIG Scheme

  23. Example • Employee aged 45 on a salary of €60,000 who joined post 1995 • Maximum 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 AVC amount is €12,838 • Periodic contributions of pay equal to 1.5% xpensionable remuneration PLUS 1% of reckonable pay at death/retirement (each year 1.5% not deducted)

  24. Tax Relief • Monthly Contribution €200.00 • Tax Relief €40.00 €82.00 • Net Cost €144.00 €102.00 • Lump sum can be made to AVC before 31st October 2011 and tax rebate cheque and PRSI relief will be granted. • Contributions and tax relief operated at source

  25. Investment of Contributions • Individual Retirement Investment Service • Plus 13 alternative pension choices

  26. Individual Retirement Investment Service • New Ireland’s unique lifestyle investment option • A single fund can’t provide the right strategy for all members • Removes the need for the member to make complex investment decisions

  27. How does IRIS Work ? Two Simple Rules • The longer the term to retirement, the higher the proportion invested in equities. • As retirement approaches, benefits are secured by switching into fixed income assets and cash.

  28. Example –Progression of the IRIS Fund 2018 (asset split) • Member continues to invest in the same fund • Asset mix of fund gradually changes as retirement approaches

  29. New Funds Added: Medium Risk • Response to requests from Trustees and Members • Requirement for equity participation with lower risk / volatility • Protected Assets Fund • BNY Mellon Global Real Return Fund

  30. Protected Assets Fund • Growth Potential • 98% of fund invested in equities and cash • Equity / Cash allocation actively managed to minimise volatility • Protection • 2% of fund buys the guarantee • Fund cannot fall by more than 10% in any calendar year • Protection level increases during year • Protection reset every year on 1st of January

  31. Example • 01/01/2011: fund starts at 100 • Protection is 100 x 0.9 = 90 • 01/07/2011: fund has grown to 115 • Protection is 115 x 0.9 = 103.5 • 01/10/2011: fund falls back to 108 • Protection is still 103.5 • 01/01/2012: fund is still at 108 • Protection for 2012 resets to 108 * 0.9 = 97.2

  32. Back - testing I

  33. Back - testing II

  34. BNY Mellon Global Real Return Fund • Key Features • Absolute Return Fund • Objective to achieve EURIBOR +4% over rolling 5 year period • Equity participation with reduced volatility • Based on successful track record in UK

  35. Elements & BNY Real Return funds – successfully smoothing out the current fluctuations of the market. Volatility management of Elements and BNY clearly providing a smoother investment Journey for clients over a testing 3 months . Source New Ireland

  36. Options at Retirement • Tax Free Lump Sum • Ongoing Pension • Personal • Spouses • Approved Retirement Fund ( ARF) • Minimum income of €12,700 • Free to invest as you wish • Withdrawals taxed as income

  37. Making it easy to track your Fund Pensions Schemes Online • Password protected website • Information on premium history • Information on fund value • Information on fund choice • It is easy to use • It is free • Review yearly – especially if circumstances change

  38. New Ireland Website • www.newireland.ie New Ireland Investment Centre http://fundcentre.newireland.ie • Up to date price\performance information • Monthly factsheets – include asset split, fund size etc • Graph performance of funds

  39. New Ireland Website • www.newireland.ie New Ireland Pension Centre http://www.newireland.iepensionscentre.newireland.ie • Comprehensive source for all New Ireland pension material

  40. Contact: Ms Triona Lydon Pensions & Investments NUI Galway Ph 091-524411 ext: 5028 Email : Triona.lydon@nuigalway.ie Or: Noel Hackett, QFA, Pensions Consultant New Ireland Assurance Eyre Square, Galway Tel 091-563023; Mobile 086-8186163 Email: Noel.hackett@newireland.ie What Should I Do Next?

  41. Individual Consultations Noel Hackett will be in NUI Galway for Individual Consultations of 45 mins (9 a.m. – 5 p.m.) on Monday 18th April 2011 and Tuesday 19th April 2011 CONTACT: Anne Cormican Extn:5901 Caroline Flannery Pensions Office Extn 5028 to book time.

  42. Any

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