Life Cover Through The Company

Who is it for?

Life Cover through the company is suitable for both a director of a company or an employee. You can also avail of it if you are a member of a group occupational pension scheme and your employer has set up a group AVC scheme.

Life Cover through the company (also known as Executive Pension Term Insurance) has been approved under Section 785 of the Taxes Consolidation Act, 1997.

Premiums paid into Life Cover through the Company are eligible for tax relief at the appropriate corporate rate, subject to certain limits.

Features of Life Cover

Life cover through the company can be taken up to normal retirement age of maximum age of 70. The policy must be set up under trust where typically the employer will act as a trustee.

If you are a member of occupational pension schemes, the maximum amount of life cover that is allowed by the Revenue Commissioners is four times your salary plus an allowance for dependents’ pension.

There are no Benefit-in-Kind implications for the policy holder (life insured) if premiums are paid by a company on your behalf.

The expiry date or term of your Executive Pension Term insurance plan cannot go beyond your normal retirement age (NRA) of your company pension plan. In other words the term of the life cover must correspond to the normal retirement age of your company (occupational) pension scheme. Also, if you leave employment earlier than your NRA, the cover will cease at that date.

What are the restrictions?

Due to the generous tax relief available on premiums, The Revenue Commissioners have imposed a number of restrictions:
• The policy can not be used as security for a loan and can not be assigned.
• Can not be taken out in a joint or dual life capacity i.e. policy can only be taken out in a single life capacity.

Value Investing – Economic Outlook by Dr Constantin Gurdgiev

Value investing has been a mainstream cornerstone of investment management industry and retail investors’ Holy Grail for designing strategic allocations of capital since the mid-1960s through the early 2000s. Launched on foot of the work by Benjamin Graham, the father of modern factor analysis, who in the 1930s formulated the basic principles of value investing. Graham was a mentor of Warren Buffet, and Buffet famously took the mantle of value investing king, leading the world of factor based asset management since then. In the 1990s, another disciple of value investing, Joel Greenblatt and his hedge fund Gotham Capital have set all-time records for the investment industry in terms of investment returns. Gotham Capital launched with USD7 million investment back in 1985. Between 1985 and 1994 (the year Gotham was closed to new investors), the fund managed a gross annualized return of 50 percent and a net of fees return of 30 percent. In other words, the original investment of USD 1 million in Gotham Capital at the start of its inception would have earned its partners just over USD38.4 million within the span of nine years which included one major stock market crash and a recession.

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Are you considering voluntary redundancy? How will you know if you should waive or not?

Are you considering a voluntary parting offer from your current employer or are you being made redundant?

If so, you may be trying to wade through the sometimes complex options that are available to you. Changing employment can be a challenging event at any stage in your career, but when it is linked to a redundancy it can be particularly stressful.  With so many changes happening at once, many people fail to take sufficient time to consider their options fully and in particular often overlook the effect that a redundancy claim can have on their accumulated pension benefits. Worse still, the manner in which the various options are sometimes presented can be confusing and even misleading in some cases. At Cathedral Financial Consultants Ltd we have often come across options that are actually incorrect!

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Investing pension in property

Have you ever thought about investing your pension in property? Here are some reasons as to why you should consider it:

REASONS

• You can pick the property you wish to purchase with your pension, residential, commercial, and industrial or a combination of each can be held with the fund
• Income tax relief on contributions made to fund the purchase are at the higher rate of tax
• There is no income tax on the rental income and no Capital Gains Tax (CGT) on the eventual sale of the property
• Upon retirement, you can take 25% of the value of the pension fund as a lump sum, of which €200,000 is tax free. The property can transfer in specie to a self administered ARF and the rental income can contribute to your income in retirement (draw downs are subject to PAYE)
• You have control over every aspect of your pension
• If available, gearing can be used to assist in purchasing the property
• If you are purchasing a commercial property the fund can be registered for VAT if required

HOW CAN I FUND IT?

• Transfer existing pensions in to a self administered pension (where appropriate)
• Personal Contributions, restricted to a percentage of NRE cap €115K
• Company Contributions – your company/employer can contribute to a pension on your behalf

ARE THERE RESTRICTIONS BUYING PROPERTY THROUGH PENSION?

Yes, but they are not too onerous and include:

• The vendor must not be related to you, your employer, it’s directors and associated companies
• The property cannot be sold or let to relatives, your employer or its directors and associated companies
• Personal use of the property is prohibited
• The development of a property with a view to its disposal is not allowed

CAN I BORROW TO FUND THE PURCHASE?

Yes, but the loan must comply with certain rules including:

• “Limited Recourse” – the lender can take security over the property only
• Max. loan term of 15 years or NRA if sooner
• Subject to bank’s lending criteria
• The pension scheme cannot borrow retrospectively
• Banks currently looking at commercial property with strong lease covenant and residential property in urban areas (10,000+ population)

ADVANTAGES OF INVESTING PENSION IN PROPERTY

• Generous tax reliefs on funds to purchase property
• All purchase costs are met by the pension
• Rental income is exempt from income tax, PRSI and USC
• There is no Capital Gains Tax on the sale of the property
• You can transfer the property in specie in to your Approved Retirement Fund (ARF) at retirement

If you would like to talk to us about investing your pension, call us on 1890 606 570.

Budget 2021: The Covid-19 Budget

BUDGET OVERVIEW

A truly historic Budget involving Fianna Fáil, Fine Gael and the Green Party is marked by huge spending increases. A record Budget of €17.75 billion has been announced with nearly half of all spending going on Covid-19 supports which has been framed by the pandemic and the prospect of a no-trade deal Brexit.

The coronavirus pandemic has been the greatest challenge to face the country since it gained independence, Minister for Finance Paschal Donohoe said as he unveiled Budget 2021. Businesses hit by restrictions will get rebates along with measures for the hospitality sector and homebuyers. There were very few changes on the personal tax front, something many will be grateful for given the ongoing uncertain economic outlook. There was an increase in the earned income credit for the self-employed from €1,500 to €1,650 to bring it into line with PAYE workers.

If you would like to read an online issuu of this article click here

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