Exgratia & Net Present Value

[skcimp]

Hi all,

I'm looking for some clarification. I was made redundant recently with my redundancy payment due in the December payroll.

My exgratia payment is €144,854 & I have informed my employer that I wish to retain my right to a future lump payment from the company pension plan.

SCSB
Payment	Waives Pension Lump Sum	Retains right to Pension Lump Sum
Statutory	€21,672.00	€21,672.00
Ex Gratia Tax-Free	€92,375.13	€75,659.32
Ex Gratia Taxable	€52,478.68	€69,194.49
Tax on taxable element	-€25,189.76	-€33,213.35
Ex Gratia Tax Free + Taxed Amount	€119,664.04	€111,640.45

Current Pension Value x 25% = €16,751.75

When I filled in the application form for Net Present Value calculation I was asked for Retained Pension lump sums.
I have a PRB from a previous employment €109, 000. Retained Benefits amount based on 25% of the PRB.

These are the numbers they sent back
Retained Benefits - € 27,309.50

a. Net Present Value of Lump Sum based on salary and service - € 34,724.81
b. 25% of the current scheme value (based on below values) - € 16,751.75

Can someone explain what influence the Retain Benefit amount has on the deduction from my tax-free amount of the exgratia payment (if any)?

And from the above figures, what will be the actual deduction from the €92,375.13.

Thanks.

 

[DB74]

I am open to correction here but my understanding is that under the circumstances the Retained Benefit of your previous employment has no bearing here. I think that they were looking for that figure to see if your potential tax-free lump sums were already more than €200k which they are not. Hence the €27,309.50 has no effect on the calculations

Have you got another job lined up to start in January? If not then it could be worth your while asking if the redundancy can be dated 01/01/2025, depending on your employment plans for 2025

If you had nothing else planned then you could end up getting a lot of the taxable amount tax-free or at least taxed at the 20% rate

 

[skcimp]

Thanks very much for the reply.

My official finishing date was the end of November and I received 3 months PILON.
The wheels are in motion for the payment to be in the December payroll so I doubt the January date is an option.

Nothing is lined up for January, so I'm taking the opportunity to take some downtime.

Is it usually the employer's or the employee's responsibility to get the NPV details?
I had to chase my employer for them to adjust the tax-free amount of the exgratia as they hadn't sourced the NPV details and were not going to make the NPV deduction.

I am open to correction here but my understanding is that under the circumstances the Retained Benefit of your previous employment has no bearing here. I think that they were looking for that figure to see if your potential tax-free lump sums were already more than €200k which they are not. Hence the €27,309.50 has no effect on the calculations

Have you got another job lined up to start in January? If not then it could be wirth your while asking if the redundancy can be dated 01/01/2025, depending on your employment plans for 2025

If you had nothing else planned then you could end up getting a lot of the taxable amount tax-free or at least taxed at the 20% rate

 

[DB74]

Not sure whose legal responsibility it is TBH but I wouldn't be leaving it to an employer to do.

It's your money so I would be double-checking eveything where possible

 

[JoeRoberts]

The company arranges the npv with the pension advisors. Is that not what they have already done above ?

 

[skcimp]

Not sure whose legal responsibility it is TBH but I wouldn't be leaving it to an employer to do.

It's your money so I would be double-checking eveything where possible

Thanks, I have it all sorted now.