# Great Christmas pension returns at Arnotts...



## Plek Trum (28 Nov 2007)

Just saw this on Skynews.com - seems a few people in Dublin will be having a very merry Christmas, good to hear!

http://news.sky.com/skynews/article/0,,30200-1294805,00.html

Fabulous timing, nice to hear a bit of good news


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## ClubMan (28 Nov 2007)

Why are they seemingly paying money out to pension scheme members even if they are not retired? How is this possible given that pension funds are normally locked away until retirement?!


> Arnotts, on Dublin's Henry Street, employs 1,200 people. Staff must be with the company for two years to receive the windfall, while those who are not members of the pension scheme will miss out.
> 
> But all former staff members who are members of the scheme will benefit, with the windfall likely to be distributed on the basis of members' contributions.


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## Flymask (28 Nov 2007)

But are they getting respect??!!

'Current and former *stuff *at Arnotts.....' First line of second paragraph of article quoted above!!


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## MMilken (28 Nov 2007)

In an occupational scheme, the company can take a refund if the scheme is overfunded (in the case of a Defined Benefit Scheme - like this one).

How the employer treats the surplus is up to the employer - distributing some or all of the surplus to employees is fine.

The payments will be taxed though!


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## ClubMan (28 Nov 2007)

Interesting - thanks _MMilken_. I thought that it might be something peculiar to DB schemes or something like that. Wonder why the _SKY _report was circumspect about the taxation issue?


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## niceoneted (28 Nov 2007)

Why are the shareholders getting it. Would have been nice to buy some shares there in the last week or so.


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## MMilken (28 Nov 2007)

ClubMan said:


> Interesting - thanks _MMilken_. I thought that it might be something peculiar to DB schemes or something like that. Wonder why the _SKY _report was circumspect about the taxation issue?


 
I doubt Sky employ many pension experts - the guy was probably hedging his bets!


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## MMilken (28 Nov 2007)

niceoneted said:


> Why are the shareholders getting it. Would have been nice to buy some shares there in the last week or so.


 
Because surplus accrues to the Sponsoring Company usually (well they are halving it with Members in this case) - and the shareholders own the Company.


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## holiday (28 Nov 2007)

What kind of payments though will employees actually recieve? I can't imagine them all getting 50k- would be nice but sounds too good to be true??


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## narky (11 Dec 2007)

does anybody know what kind of tax have to pay on the payouts?  some say 20 some say 41!! makes a big difference/


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## ClubMan (11 Dec 2007)

I would have assumed that whatever income tax rate applies to their income situation (normal income plus this windfall)? Unless it could somehow be classed as a capital payout in which I presume that _CGT _would apply?  Remember when_ First Active_ did a capital restructuring and made capital repayments to shareholders who were then liable for _CGT_? Could they also be liable for _PRSI_?


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## Conan (11 Dec 2007)

Not sure there is any precedent for this. The return to the Co. will be taxed as a Trading Receipt (as with normal refunds to the Co). 

Therefore should the payment to employees be taxed at their marginal tax rate (41%)?

On the other hand, refunds to employees who leave service and opt for a refund of personal contributions (with less than 2 years service) are taxed at 20%. 

If the funds were taken out as pension income (on retirement) then they would be taxed at marginal rate. So I cannot see a justification for a lower rate on distribution of the surplus. Pension funds dont pay CGT so I cannot see this being a rational basis (but you never know what agreement might be reached with Revenue).


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