We have a few clients in this position in their mid 40s
With contributions alone they are going to break the 2m limit.
So effectively they have an asymmetric pay off from investment risk.
A good solution is to split the pension into two funds with the excess being a PRSA. Defer this beyond age 75 and it effectively turns into a whole of life assurance plan for the family.
Leave it to a spouse and there is no income tax on the death benefit.
For personal assets, If we buy equities outside of a pension structure and use Warren Buffet's holding period (forever) there is no Capital gains tax on death.
So my only friction is the income tax drag on dividends.
If I buy US equities, because of the credit for DWT on ROS my effective rate of tax is about 40%.
Assume a 2% yield that's 80bps pa.
Compare the costs, the difference in fund charges is greater than that so it really isn't clear cut.
With contributions alone they are going to break the 2m limit.
So effectively they have an asymmetric pay off from investment risk.
A good solution is to split the pension into two funds with the excess being a PRSA. Defer this beyond age 75 and it effectively turns into a whole of life assurance plan for the family.
Leave it to a spouse and there is no income tax on the death benefit.
For personal assets, If we buy equities outside of a pension structure and use Warren Buffet's holding period (forever) there is no Capital gains tax on death.
So my only friction is the income tax drag on dividends.
If I buy US equities, because of the credit for DWT on ROS my effective rate of tax is about 40%.
Assume a 2% yield that's 80bps pa.
Compare the costs, the difference in fund charges is greater than that so it really isn't clear cut.