Personal Pension Fund
7th May 2011
Does your pension fund exceed €2.3m?
Have you secured your Personal Fund Threshold?
Time is running out.
Act now!
The Standard Fund Threshold (SFT) reduced from €5.4m to €2.3m with effect from 7 December 2010.
For some, however, the effects of this decrease can be avoided if action is taken now.
Any personal pension funds in excess of the SFT will attract an upfront tax charge of 41% for the pension fund. When the net after-tax excess is drawn down, this withdrawal amount will also be liable to tax in the hands of the pension scheme member, therefore resulting in a net tax charge of up to 72%
Example:
A civil servant in the defined benefit scheme on a salary of €200,000 could expect the following retirement package (with full service):
|
Amount € |
Capitalised € |
|
| Pension on Retirement | 100,000 | 2,000,000 |
| Lum Sum on Retirement | 300,000 | 300,000 |
| Capitalised Fund | 2,300,000 |
So, any additional personal pension funds over this amount are in excess of the PFT and will attract up to 72% tax on withdrawal.
If your pension fund exceeded the reduced €2.3m threshold on 7 December 2010 it is possible to claim exemption on the excess (up to €5.4m) – but an application to the Revenue Commissioners must be completed BEFORE 7 June 2011.
Baker Tilly Ryan Glennon, in conjunction with Chartered Financial Solutions, would be happy to discuss this and any other pension queries you may have and identify methods of mitigating any potential liability using current pensions legislation.
