Executive Pension Plan
Exclusive protection for the enterprising entrepreneur
How it Works
An Executive Pension Plan is taken out by an employer specifically to provide for the retirement of executive and key employees. They are set up under trust and your employer would normally act as trustee.
The difference between this and a normal Personal Pension is that BOTH you and your employer make contributions into the fund: it is a Revenue requirement that an employer HAS TO make a meaningful, ongoing contributions (defined as 10% of total contributions).
The option to make bigger contributions, and enjoy enhanced tax-saving benefits come retirement, also set Executive Pension Plans apart. An Executive Pension Plan is a very TAX-EFFICIENT tool as you can personally contribute as much as 40% of your earnings into your fund and this amount qualifies for RELIEF FROM INCOME TAX. This therefore reduces your taxable income and the cost of your pension contributions.
Of course, you also enjoy the peace of mind of owning your own secure financial asset upon retirement, over and above any State pension to which you may be entitled.
- Control your investment risk – an Executive Pension Plan means that the funds are invested in, and spread across, a wide range of high-performing investment funds – as well as low-risk investments, as security in times of stock market uncertainty.
- Tax-free growth – yany growth your investment achieves is TAX-FREE, yours to enjoy in retirement.
- Cash plus income for life – when you retire (normally between the ages of 60 and 70), the FULL ACCUMULATED VALUE OF YOUR PENSION is paid out to you as retirement benefits: a CASH LUMP SUM plus a monthly income for the rest of your life through an annuity.
- Built-in flexibility – you can transfer funds from other pension providers if you wish to. These might include retirement bonds, other occupational pension schemes, Personal Retirement Savings Accounts (PRSAs) or any retirement funds set up outside of the State.
- Boost your investment when you want to – you are free to make extra contributions (Additional Voluntary Contributions) into your plan whenever you want to.
- Add-on peace of mind – you can choose to add additional life cover to your Executive Pension Plan (a company’s contribution to this are also tax-deductible).
Quick Q and AQ. I work for myself as a sole trader – am I eligible for an Executive Pension Plan? A.Technically, an employer is needed to set up an Executive Pension Plan. But you can become eligible by incorporating your activities eg. John Brown Limited. Q. How much of my/my employer’s contribution is invested? A. 100% of the contributions both you and your company make are invested in the fund. No contribution charges apply – which means all of the funds going into your pension are working hard for your future. Q. When can I access the funds? A. You can normally start taking benefits from age 60 – and up to age 75 if you are still working. There are certain circumstances in which benefits can be taken earlier eg. if a serious illness or disability meant you could no longer work. Q. What happens when I retire? A. In terms of drawing on the funds, you have a number of choices. If you wish to, you can choose to take some of the capital as a cash lump sum – which is TAX-FREE up to the value of €200,000. The rest of the funds can then be used to:
- buy a pension (or annuity) for life – an income paid each month in place of a salary.
- invest in a fund called an Approved Retirement Fund (ARF). Money can then be withdrawn from this Fund whenever your employee chooses (certain limits apply).
- draw a taxable cash sum.