Here at John Neville Insurances Limited we offer independent advice on planning long term investments for your retirement. We have compiled some information surrounding executive pension planning to make it clear and concise for you.
What is an executive pension plan?
- An executive pension plan is usually set up by your company to offer pensions for executives and key employees of the company. Both employees and employers can make contributions to the pension plan, with employers normally contributing up to 5% of the total contribution.
Benefits of arranging an executive pension plan
An executive pension is an extremely tax efficient way to save for your retirement.
- Your company's contributions to the plan are fully tax deductible for Corporation Tax at a rate of 12.5%.
- The employee doesn't have to pay Income Tax, PRSI or the Universal Social Charge (USC) on the company's contribution to the plan
- The growth of the fund is tax free
- You can take your retirement benefit at the Normal Retirement Age (between your 60th and 70th birthday)
How can I take benefits from my executive pension?
You will have a number of options when it comes to taking your retirement benefits from your executive pension.
With the accumulated fund, you have two options: you can take a lump sum of up to 25% of your fund or you can take a lump sum amounting to 1.5 times your final salary at the company (provided you have worked for the company for over 20 years).
|Lump sum amount (25% of fund)||Rate of tax|
|Up to €200,000||Tax free|
|Next €300,000||Standard rate (currently 20%)|
|€500,001 and over||Marginal rate (currently 41%) plus PRSI and USC|