pension fund for self employed with artists tax exemption

I want to set up a retirement fund for myself but I dont know the best way about it, as my circumstances are unusual.

I am 39 and self employed with artists tax exemption so I wouldn't be entitled to the tax benefits of a normal pension fund. I am thinking of investing €200 a month and because it isn't a very large amount I would be willing to put it into a risky/aggressive fund, as long as I have control of when I cash it in, as I really enjoy my work and could ride out a stock market fall (health prevailing). I don't have any assets.

Thanks in advance for advice on this.

Re: pension fund for the tax exempt

I'm not sure I understand the question. If you are simply looking for a pension with a high equity content, high risk/reward fund then there are lots out there to choose from including some with very low charges. Lots of other threads on this already. If you are not entitled to any tax/PRSI relief through not paying any in the first place then there's nothing that can be done about that. Not sure what you mean about control over when you can cash it in since most pensions require you to reach 60+ before you can access the funds. You should probably get independent, professional advice one way or another.

Re: pension fund for the tax exempt

Thanks for the reply. What I want to know is, are there any benefits of going with a pension scheme in my situation? As regards to control I was under the impression that a pension scheme would end on my 65 birthday whether I wanted it to or not.

Re: pension fund for the tax exempt

Pension benefits can usually be drawn down at 60 or later. However this just means that you can take up to 25% as a tax free lump sum and either buy an annuity (to pay regular pension incole) with the remainder or roll it over into another investment via an ARF/AMRF and draw the benefits down later.

In your situation there certainly doesn't seem to be any tax advantage in opening a pension. As to what's most appropriate I would have to defer to an independent, professional advisor who can better assess your overall circumstances and needs.

Re: pension fund for the tax exempt

Hi Mary

This is an interesting question which I have not thought about before.

A pension scheme would not be of any value to you.

Pension schemes are really only of value to top rate tax payers. They get tax relief on the contributions they make and the fund builds up free of tax. But when they draw down the pension, they pay tax on it.

As you pay no tax, you can't get tax relief.

I would suggest that the best approach for you would be to put your money in a low cost unit-linked fund such as a Quinn Life Tracker. You won't get any tax relief, and when you cash it, you will pay tax only on the gains. As your income is unpredictable, you need a flexible savings plan. If you have a good year, then you can contribute more. If you have a bad year, you can cash part of the fund at any time.

Something else for you to consider when you have built up some savings is to buy a portfolio of high yielding shares. This means shares which pay higher than average dividends. These dividends would be taxable, but as you are unlikely to exceed your tax credits, you won't pay any tax. The capital gains on these shares would be taxed at 20%, but I don't think you can do anything much about that.

As I say, it's a very interesting question. I would imagine that the Sculptors' Society or the Arts Council has brought out some guidance on it. If they haven't, they should do so.

Brendan

Re: pension fund for the tax exempt

I would not expect that the poster will run into such a large income from the pension that they will ever have tax liability (unless planning to build up large retirement fund in the relatively short term to age 60).

Would the poster be better in Exempt Funds (such as pension funds) rather than the non-exempt funds proposed in the reply above?

An exempt fund (such as pension fund) will not pay any tax - and there is a good chance that poster will not have tax liability at encashment either...due to relatively short term to retirement.

Re: pension fund for the tax exempt

Brendan said:

Pension schemes are really only of value to top rate tax payers.

Click to expand...

That seems like a bit of a sweeping statement. After all even standard rate taxpayers might benefit from the ability to draw down up to 25% of their pension tax free at retirement. You seem to be judging pensions on the tax breaks (or not) alone. I'm not sure that this is a balanced view.