Help please with one person pension options

Hi, I had posted this in another thread but was at risk of hijacking the thread so just asking it here instead as a standalone question. Would really appreciate some advice.

In light of recent IORP ii regulations it appears very difficult to create one person company pensions now (such as EPP) and I am clueless and looking for advice on alternatives to EPP which could work for me.

With a PRSA as a self employed person is there any reason why i cannot transfer a lump sum of 40k from company account into a PRSA and then say 600 monthly as well if it falls within income tax limits (25% of net i believe BUT I haven’t paid into a pension for many years now) and then at least I’ll have something up and running while we await news of what happens with EPP’s and the likes?
Or is there any obvious flaw with this plan?
Would it affect my tax credit on my wages etc?
Thanks in advance, i’m just desperate to get something up and running and this IORP EPP issue floored me.

Also if PRSA’s are not suitable for the above then can anyone suggest an alternative as it seems the range of options is shrinking fast for those of us in this position now.

The issue with the PRSA is that if the total contribution exceeds your personal limits then there is a BIK charge on the employer contribution above the limit. This is one of the issues that they are trying to address with a revamped PRSA.

None of the insurers are offering EPP's and none of my self-administered providers are either. However, most providers seem to be working to a September/October timeline for the introduction of a new retail master trust arrangement which would effectively be a group arrangement for one person schemes.

The main issue with a retail master trust seems to be that investment options might be much narrower than what was offered on EPP's but this is just speculation at the moment.

Kevin
www.thepensionstore.ie

Thanks a million Kevin for the reply! A september/october wait for that master trust wouldn’t be the end of the world, I’d be happy to wait til then rather than go down the PRSA route if that ends up happening. Are you fairly confident that it will? And then i’d be able to use the lump sum from the company that I mentioned which would be fantastic.
I also have a 32,000 PRB from a decade ago that i wanted to combine with the new scheme so i’d ideally prefer something that allows me to do that, im guessing a PRSA won’t let me do this.

Would you hold fire until sept/oct so if you were in my shoes? Or would you go with the PRSA?

With the PRSA is there leeway given if you haven’t paid into a pension for x amount of years? By that i mean for the personal limits can i backdate my personal limits for the past number of years where I didn’t pay into a pension at all, in order to allow me to put in a large lump sum from the business now to avoid BIK charges?

You can usually add a few months to an insurance company's declared timeline for anything but they do seem to be confident that their respective propositions will be market ready by Sept/Oct. As such, and for all the reasons you mention, I would be more inclined to wait and see what the new retail master trust looks like before doing anything.

Kevin
www.thepensionstore.ie

Thanks Kevin! I really appreciate the advice, thank you!

Aviva have just announced the introduction of their master trust product. They've obviously been working on this from beforehand. I haven't studied the details of it yet so can't comment on it just yet.
...it appears to be open to schemes with a minimum of 3 members.


Interestingly, I heard the Pensions Authority had been warning life companies about the amount of EPP cases being written going back well over a year. There were just too many of them. In the year since they warned the life companies...13,000 new EPP cases were written!!


Steven
http://www.bluewaterfp.ie (www.bluewaterfp.ie)

@ Steven - Thats really encouraging news! Some hope so that they (or another insurer) might do single person options soon then?

Redder Than Red said:

@ Steven - Thats really encouraging news! Some hope so that they (or another insurer) might do single person options soon then?

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I have been told that a one person option is pretty complex. An "employer" PRSA has been talked about. This would be favourable for the Pensions Authority as they get a cut of the management fee. Not good news for investors as the charges are much higher. Each PRSA on the market has to be pre approved by the Pensions Authority. If every provider is looking to roll out a new PRSA, you can expect it to take at least a year for approval. It moves that slowly.


Steven
http://www.bluewaterfp.ie (www.bluewaterfp.ie)

Steven Barrett said:

I have been told that a one person option is pretty complex. An "employer" PRSA has been talked about. This would be favourable for the Pensions Authority as they get a cut of the management fee. Not good news for investors as the charges are much higher. Each PRSA on the market has to be pre approved by the Pensions Authority. If every provider is looking to roll out a new PRSA, you can expect it to take at least a year for approval. It moves that slowly.


Steven
http://www.bluewaterfp.ie (www.bluewaterfp.ie)

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Thanks Steven! In light of that would it be worth considering starting a PRSA now to get contributions started and then hopefully there may be scope to transfer this into an employers PRSA if/when they become available?
My fear here is doing nothing and basically losing a years worth of contributions under my personal allowance (25%) by the time a new option surfaces.
It’s such a hard call to make when nobody knows for certain what is going to happen.
Do i have until end of December to start a PRSA without losing this year's 25% personal allowance if contributing directly from my company? Or is it a specific date in the year?
Just making sure I don’t miss the boat here.
Thanks !

Steven Barrett said:

Not good news for investors as the charges are much higher.

Steven
http://www.bluewaterfp.ie (www.bluewaterfp.ie)

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Not sure about that.

Maybe within the confines of this forum because of the size of contributions mentioned, but the reality in the total market is probably somewhat different.

My best guess would be that the avergage AMC for a one-(wo)man scheme would be greater than 1% , in the total market.

There is no disclosure on EPPs. There's up front factory-gate pricing with full disclosure on the PRSA.

There's also the fact that (on some of the popular multi-asset funds) that the Other Ongoing Costs are lower for PRSAs than they are for 'Pensions'. That means that the margin for the provider can be smaller by circa 0.10% pa when you factor in the Pension Authority 0.05%.

Gerard

www.prsa.ie

Redder Than Red said:

Thanks Steven! In light of that would it be worth considering starting a PRSA now to get contributions started and then hopefully there may be scope to transfer this into an employers PRSA if/when they become available?
My fear here is doing nothing and basically losing a years worth of contributions under my personal allowance (25%) by the time a new option surfaces.
It’s such a hard call to make when nobody knows for certain what is going to happen.
Do i have until end of December to start a PRSA without losing this year's 25% personal allowance if contributing directly from my company? Or is it a specific date in the year?
Just making sure I don’t miss the boat here.
Thanks !

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Unless you year end is 31/07, I would wait a bit and see how this pans out. It is still very early days. Your company year end is your deadline date.

GSheehy said:

Not sure about that.

Maybe within the confines of this forum because of the size of contributions mentioned, but the reality in the total market is probably somewhat different.

My best guess would be that the avergage AMC for a one-(wo)man scheme would be greater than 1% , in the total market.

There is no disclosure on EPPs. There's up front factory-gate pricing with full disclosure on the PRSA.

There's also the fact that (on some of the popular multi-asset funds) that the Other Ongoing Costs are lower for PRSAs than they are for 'Pensions'. That means that the margin for the provider can be smaller by circa 0.10% pa when you factor in the Pension Authority 0.05%.

Gerard

www.prsa.ie

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I think it varies on the provider too Gerard. I know some providers, while still providing the high allocation, high charge option, do diminishing amounts of business under these contracts as it moves to lower charge contracts.

I hear you on the non disclosure on EPPs. There are some very successful brokerages who play on this and don't disclose the massive fees that they charge and are very reluctant to disclose them when asked. They are still charging 5% on every contribution.

Steven Barrett said:

Unless you year end is 31/07, I would wait a bit and see how this pans out. It is still very early days. Your company year end is your deadline date.

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Thanks very much for this! I hadn’t realised it would be my company year end, Yes that actually gives me good time to see how it pans out so. Cheers for that!