More correctly known as an Occupational Pension Scheme, this is a tax efficient way for a company to provide pension benefits for its directors or key employees. The company must make a contribution to the plan and can claim tax relief against its Corporation Tax liability.
A contribution from employees is optional but tax relief can be claimed at their highest rate and they can also reduce their PRSI providing their contribution is paid for through the payroll system.
A company pension plan is set up under a trust by the employer so that it is separate from the assets of the company. Death benefits or income protection benefits can be included in the plan. Contributions can be made on a regular basis or on a single premium basis.
Employees who are not 5% directors can take a tax-free lump sum (current maximum is 1.5 times final salary) and the balance of their fund as a regular pension.
A 5% director at retirement has the option of taking monies (as per the employee option above) or taking 25% of the fund as tax-free cash and purchase an income for life with the balance. More cash can be taken but would be taxed at the highest rate beyond the 25% sum.
There are many pension products in the market place with different charging structures and fund choices. framework financial can advise as to the most suitable option that would suit individual circumstances and highlight the different options available at retirement.
For more information about how framework financial can help you with your financial planning, or to arrange a consultation, pleaseclick here
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