What do you mean it wasn't the rule? You couldn't transfer from OPSs to PRSAs period if you had more than 15 years. Now you can - so the option to get a TFLS via a PRSA is now available when it wasn't previously. No idea where the red herring is coming from?
Pension lump sum
- Thread starter Sunnygirl69
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That's not true. It's the same legislation.
As stated in paragraph 2, a lump sum to which this chapter applies is a retirement lump sum paid to an individual under the rules of a relevant pension arrangement including, for example, a lump sum paid under any of the following arrangements:
Revenue approved occupational pension schemes (including AVC arrangements),
Revenue approved retirement annuity contracts (RACs),
Personal Retirement Savings Accounts (PRSAs),
Pan-European Personal Pension Products (PEPPs),
Qualifying overseas pension plans (within the meaning of Chapter 2B, Part 30 TCA),
Public service pension schemes as defined in the Public Service Superannuation (Miscellaneous Provisions) Act 2004, and
Statutory schemes – that is schemes established by or under any enactment (which includes all statutory schemes that fall outside of the definition of public service pension schemes mentioned above).
The reason people say the waiver falls away has nothing to do with revenue. It is gap where the PRSA provider does not ask about the waiver on their application form. It's a classic 'Dont Ask, Don't tell' policy. Even do a quick google search and see how many pension/financial advisors will actually openly suggest this as an option when discussing pensions and redundancy. They don't.
It's not up to revenue to connect payments to previous redundancy but they can if they want. The onus is on the pension administrator. As I said, the administrator of our occupational scheme (one of the largest) made it clear that the waiver form would be provided to the PRSA provider if they asked for it or not. It was then up to the PRSA provider to do what they like.
Has anyone here actually done this (themselves or client) in the past two years and seen a waiver fall away?
Gordon Gekko
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This is completely inaccurate.
There is a gap, yes, where sometimes life companies don’t pick it up for transfers to other types of pension vehicles, such as Personal Retirement Bonds. That’s human error.
But where the money ends-up in a PRSA, the waiver in respect of an historic redundancy no longer applies. It’s not a grey area or anything to do with Revenue. That’s also a classic mistake people make. Revenue don’t make the rules per se; they enforce the rules, which derive from legislation, and a PRSA is not an occupational pension scheme.
You are completely wrong Gordon. Have been through two redundancies. Show me one pension website giving advice about redundancies that openly suggests this as an option?.
Or show me the legislation where is says the waiver only applies to occupational pension scheme?
Gordon Gekko
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You’ve received very poor advice so.
It’s in the legislation, because the legislation talks about lump sums from occupational schemes, and a PRSA isn’t an occupational scheme.
See the note here where there’s lobbying to make the position as you’re articulating:
(Section A2, Bullet Points 4 & 5).
thanks GG, the key sentence..
"At present there is no facility for the PRSA to apply such a waiver."
So even if a OPS admin informs the receiver PRSA admin of a waiver (as they "should" according to Revenue), the PRSA provider can't actually apply that to the new PRSA.
and a supplementary question based on AON's submission re BoBs.. which I believe do ask on their application forms whether a previous OPS waiver was agreed (SL do afaik), if this is actually applied to new BoB in practice?
"At present there is no facility for the PRSA to apply such a waiver."
So even if a OPS admin informs the receiver PRSA admin of a waiver (as they "should" according to Revenue), the PRSA provider can't actually apply that to the new PRSA.
and a supplementary question based on AON's submission re BoBs.. which I believe do ask on their application forms whether a previous OPS waiver was agreed (SL do afaik), if this is actually applied to new BoB in practice?
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Eh??? You link a lobbying doc from Aon? Show me the legislation or show me something where one single pension provider says you can sign a waiver and transfer to a PRSA and then the waiver is forgotten. One link????
Stop talking like what you are saying is gospel. I openly admit what you are saying is possible but I also admit that is a grey area. Unless you can provide a link of any sort that proves it is a fact of law, I would suggest that you stop. Is there one financial advisor on this site that is willing to support your position that the waiver only applies to occupational schemes?
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Gordon Gekko
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I couldn’t be bothered to be honest. I’m away at the moment. You clearly haven’t a clue and have softened to “admitting what I am saying is possible”. I could spend 30 mins copying and pasting the legislation and explaining it to you but what’s the point?
Hi Sunny,
This document should help. The numbering has gone a bit off but see, in particular, para 2 of section 3.6. This doc gives the relevant TCA references also.
[I've given up asking Gekko to explain himself
]
This document should help. The numbering has gone a bit off but see, in particular, para 2 of section 3.6. This doc gives the relevant TCA references also.
[I've given up asking Gekko to explain himself
]The legislation is outlined in the above and is very clear. The lump sum doesn’t apply to the prsa. Different tax advisers have different views on this. Some insist on transferring to the prsa before exit so that c is 0. Some are ok waiving and going afterwards.Hi Sunny,
This document should help. The numbering has gone a bit off but see, in particular, para 2 of section 3.6. This doc gives the relevant TCA references also.
[I've given up asking Gekko to explain himself
Great answer. I always said it was possible. I am just not arrogant enough to be telling people the legislation says you can and then 'can't be bothered' to provide legislation where it explicitly states the waiver only applies to occupational scheme and doesn't follow to a PRSA.
You still can't provide one link to the legislation or one pension provider that openly suggests this as a solution. All the different pension providers out there that have pension advice around redundancies and I bet you can't find one that will openly suggest this solution that you say is as clear as day in the legislation...
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Where is it very clear that the tax free waiver doesn't follow to the PRSA?
As I said, there are numerous financial advisors on this site. I would be curious to know how many of them have advised their clients about this in the knowledge that the legislation is clear.
Has anyone got something from a pension administrator in writing offering them this solution or confirming the waiver doesn't follow them when they transferred to a PRSA??
The legislation has been provided you just have to follow it.
Why would a pension administrator provide you with this solution? All this tread highlights is the need for getting specialist tax advice. That’s who you should be talking to and not a pension administrator.
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Gordon Gekko
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Not “can’t. Just won’t.
Gordon Gekko
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There’s an adviser suggesting it:
Should I make use of the SCSB relief for my redundancy payment
A friend of mine (47 years) is being made redundant at end of year. 16.3 yrs of service, 5 weeks (2 statutory + 3 weeks voluntary) redundancy payment. There is also a company pension (DC), with a current value of around 240K. Projected (I know!) max lump sum payment at retirement (normal...
www.askaboutmoney.com
Is this the relevant bit ....?Hi Sunny,
This document should help. The numbering has gone a bit off but see, in particular, para 2 of section 3.6. This doc gives the relevant TCA references also.
[I've given up asking Gekko to explain himself
Section 3.6
"3. the net present value of any tax-free lump sum arising from an option to commute a pension, in whole or in part, in favour of a lump sum. An employer’s pension scheme may give the individual an option to commute in whole or part, a pension annuity in exchange for a tax-free lump sum under the scheme. In this case the relevant capital sum includes the present value (at the date of termination) of the lump sum to which the individual may become entitled in the future if this option is exercised. This figure is included in the RCS calculation whether or not the option is exercised.
Where an individual wishes to surrender their entitlement to receive the above mentioned tax-free lump sum from the occupational pension scheme, he / she must sign an irrevocable waiver to this effect and forward same to the administrator of the pension scheme on or before the date of termination of the employment. A copy of this waiver letter should be retained with the employer’s payroll records."
No mention of PRSA at all - only Occupational Pensions Schemes and 'pension annuity'....
sridhar1803
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Is the waiver only for tax free lumpsum or taxable lumpsums as well? I believe lumpsums > 200K & < 500K can be taken by paying lower rate of tax. Does anyone know signing a waiver removes right to all lumpsum payments?
The right to a pension lump sum is waived. This is regardless of wether or not it is taxed.