TFLS calculation from pension

[Dan Murray]

Hi to all,

......but most particularly to anyone with a specialist knowledge of the calculation of the TFLS from an occupational pension plan!

Here's what I'm puzzled about....

Background
Normally, the TFLS is calculated on the old 3N/80th or uplifted scale - whereby benefits in excess of the TFLS must be taken in pension form
or
The TFLS is 25% of the Fund and you can more or less do what you like with the remaining 75%

Question
What happens - as is likely to occur more and more - where someone has both a DB pension and a DC fund from the one employment? What are the rules here and where are they written down (i.e. from what I can see the Revenue's pension manual is silent about all this)?

It may be easier to answer by just calculating the TFLS in the following scenario:

- Individual retiring at normal retirement age
- All benefits from the same employer
- DB pension of €5,000 p.a.
- DC assets (say no AVCs!) of €800,000
- Salary (say also final remuneration) of €60,000
- Company service of 30 years

 

[North Star]

Good morning Dan,

Unfortunately there is no clear definitive answer here for your query. This issue of a mix of DB and DC benefits is going to become much more common due to the demise of DB schemes. Revenue has provide what many would view as contradictory guidance on this issue. The result means that each case is open to interpretation and the final decision can come down to the decision of the scheme administrator - which can lead to different conclusions and different treatments. Look at this article on page 20 of the IAPF magazine http://www.iapf.ie/OnlineMagazine/Autumn2016/index.html
I will email you on some communication from Revenue which will illustrate some of the potential inconsistencies re TFLS with a mix of DB/DC benefits.

So in practice we have deal with each situation on a case by case basis, and engage with the scheme administrator to determine the TFLS treatment - which is as I'm sure you will agree highly unsatisfactory for a lot of reasons. Give me a shout if you want/need more info.

All the best Vincent

 

[Dan Murray]

Hi Vincent,

Those Revenue folk are so......helpful.

On a serious note, thanks a million for explaining all this - very much appreciated. Fair play to you for being so au fait with these particular developments - I know my question was a bit of an "anoraky" one!!