Pension-Director Ltd company

Hi all,

Looking for a bit of advice. I've set up a limited company of which I'm a director and sole employee. I have a pension of 30k that was set up by the company that I previously worked for. Now that I have my own company I want to transfer the 30k to a suitable pension. My existing pension is with Irish life and in a fund (consensus fund) I think. I'm looking to open a pension that will allow me to get money out of the company in the most tax efficient way going forward. Company will have annual profits in the region of 150k a year. I'm looking at a PRSA through someone like Davy as I like the idea of a self directed pensioning which I have control of the investments. Is a self directed PRSA from the likes of Davy a good option for someone in my position. All advice appreciated.

No, it’s an approach that doesn’t make sense for a number of reasons:

- With a PRSA, employer pension contributions are subject to the restrictive personal pension contribution limits, e.g. 20% of €115k or the actual earnings for a 38 year old; you should have an Executive/Occupational pension scheme where much larger contributions can be made
- By staying as a deferred member of a pension scheme for a former employment (i.e. where you’ve left your job), you retain the ability to access your pension assets at age 50, which you lose by consolidating pensions
- Dealing with Dawson Street is analagous to leaving your teenage daughter with Prince Andrew; she might be okay

An executive pension is the only structure you should be looking at as a director for the reasons outlined above and there are many ways of self-directing it.

Davy's online trading platform is excellent and gives the ability to make trades in real time.

Aviva also have an SDIO feature (Self Directed Investment Option) which gives you all the usual fund management capabilities of an insured arrangement with the added options of structured investments and trading accounts with Cantor Fitzgerald. Zurich also have a self-directed platform.

There are also a number of SSAP (Small Self Administered Pension) providers around too but these structures are more expensive to set up and run initially.

As with all of these things the right option will depend on what you're looking to do.

Kevin
www.thepensionstore.ie

Examine your reasons for going self-administered carefully. It tends to be more expensive to do than picking a fund or selection of funds. So presumably you believe that you have the ability to outperform funds to recoup the additional charges. If not, you could go with a lower cost index-tracking fund or selection of such funds.

Gordon Gekko said:

No, it’s an approach that doesn’t make sense for a number of reasons:

- With a PRSA, employer pension contributions are subject to the restrictive personal pension contribution limits, e.g. 20% of €115k or the actual earnings for a 38 year old; you should have an Executive/Occupational pension scheme where much larger contributions can be made
- By staying as a deferred member of a pension scheme for a former employment (i.e. where you’ve left your job), you retain the ability to access your pension assets at age 50, which you lose by consolidating pensions
- Dealing with Dawson Street is analagous to leaving your teenage daughter with Prince Andrew; she might be okay

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Thanks for your reply, are you suggesting that I should leave my current pension where it is and not bring the 30k over to a new executive/occupational pension scheme?

Yes if the fees are competitive and the investment options are okay.

These are the options as outlined by the broker of my old plan which is winding up with the company pension scheme

- To transfer to the Personal Retirement Bond (PRB) with Aviva

or

- To transfer to a Personal Retirement Bond (PRB) or PRSA of your choice. You may also be able to transfer to your current employer’s pension scheme

or

- If you are over age 50 then you may be able to take benefits on early retirement

or

- Cash refund of personal contributions if you have less than 2 years pension scheme service


Is it possible to instruct AVIVA to invest in a particular ETF as part of a PRB? As I previously mentioned I've set up my own company of which I'm an employee and looking to set up a new pension for myself. Is there anything advantage in transferring my old pension (30K) to a PRB and just setting up a new executive pension?

I have said this on numerous occasions on this site, you should not use a PRSA where you do not have to. A personal pension or an executive pension provides more choice and is cheaper.

As the OP is a company director, he should only make company paid contributions into a pension as contributions are allowed as a business expense. Whether you use an insurance company or a self directed option is dependent on what you are trying to achieve.

Having the choice of 5,000 different funds under a platform is a waste of time as you are going to use a handful. If you are interested in trading and having exposure to investments that are a bit different, you will certainly have access to them.


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

I spent a fair amount of time looking at this over the last month or so. My views are here: https://www.askaboutmoney.com/threads/in-search-of-a-low-cost-executive-pension.222807/