Pension plan for non-resident

C

Conall2

Registered User
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Hi,
I'm looking to start a pension for myself but don't want all my eggs in one basket. I have a couple of rentals at present and my plan is to use these as some of my pension.

I'm 42 this year and I work abroad and I'm registered as non-resident (for tax) but Ireland is my primary residence. I meet all the requirements for this legally.
On paying tax on my rentals recently i was told I wasn't entitled to pay the voluntary contributions (I have paid them for the previous 5 years).
Most pensions calculate in the tax allowance into the price per month but as I'm not entitled to this I'm wondering what the best course of action is?

Cheers
 
Firstly, rental income is deemed “unearned income” and so is not “pensionable”. You cannot use such income as pension contributions and claim tax relief against such income.
If your main income is overseas and you are not tax resident in Ireland, then any pension contributions in Ireland cannot be offset against that income. In other words, if you are not paying any tax in Ireland then you cannot claim tax relief.
Perhaps you could establish a Pension in whatever country you are a tax resident.
 
If it's the tax relief you are looking for, as Conan said.

If you are looking for another saving vehicle for retirement, set up a non resident investment account and invest through that. You will be taxed in the country you are resident in. Works well for people in the Middle East where their tax is zero. You have to cash it in before you become Irish resident again though...


Steven
http://www.bluewaterfp.ie (www.bluewaterfp.ie)
 
Cheers for the responses,
I'm not looking for tax relief just looking for the best type of pension plan. I am planning on keeping the houses and using the monthly rent as part of my pension just looking for the best type of pension as I don't really know much about them and I don't really trust them.
I'm in the merchant navy so I'm not tax resident in any country so would I be tax free on this until I go resident again? or does it get too complicated?
 
Why don’t you trust pensions? They are only a bucket to hold assets similar to a bank account etc!

It might be easier if you tried to clarify what you want to achieve here. Are you trying to put excess funds from the rentals away for retirement or are you trying to create specific pension income for retirement.

people generally retire on a mixture of sources of income such as pension, rental, dividend etc. it doesn’t all have to be in a pension.
 
Basically I'm looking for another source of retirement income (trying to create specific pension income for retirement) thats not going to go belly up when I go to retire. (i know nothing is guaranteed) but I was looking for advice for what the best option is.
The reason I don't trust pensions is I've quite a few colleagues have to work longer than expected to supplement their pensions after paying in for 40 years in one case. I still assume you can lose your entire investment in a pension unlike a bank account which is covered (or was) by the state?

cheers
 
Conall, the main issue for you investing in a pension in Ireland is that you would get no tax relief when the funds go in but you will be taxed when you draw down the funds in retirement (assuming you are then back living and tax-resident in Ireland). So you're basically storing away your tax-free cash so that you can pay tax on it at a later date. This makes no financial sense.
As suggested above, you are probably best off opening an investment account and putting your money into something like accumulating ETFs so you don't have to deal with dividends etc - your funds will just accrue within the ETF.
I would suggest reading something like Andrew Hallam's Global Expatriate's Guide to Investing (he also has a useful website) to get guidance on what mix of ETFs/which broker.
 
Conall2 said:
Cheers for the responses,
I'm not looking for tax relief just looking for the best type of pension plan. I am planning on keeping the houses and using the monthly rent as part of my pension just looking for the best type of pension as I don't really know much about them and I don't really trust them.
I'm in the merchant navy so I'm not tax resident in any country so would I be tax free on this until I go resident again? or does it get too complicated?
Click to expand...

It's not complicated at all. You set up an non resident investment account. Profits are taxed where you are tax resident i.e. nowhere. Before you become Irish tax resident again, you cash it in under your tax free status and invest the higher amount as a new contribution.


Conall2 said:
Basically I'm looking for another source of retirement income (trying to create specific pension income for retirement) thats not going to go belly up when I go to retire. (i know nothing is guaranteed) but I was looking for advice for what the best option is.
The reason I don't trust pensions is I've quite a few colleagues have to work longer than expected to supplement their pensions after paying in for 40 years in one case. I still assume you can lose your entire investment in a pension unlike a bank account which is covered (or was) by the state?
Click to expand...

How much did this colleague pay into his pension? What fund was he in? I have lost count of the amount of people who dismiss pensions as a whole but when I look at what they have, they contribute very little and leave it in cash. If you don't save decent sums of money and get a decent investment return, your pension will be rubbish when you retire. There were lots of very expensive pensions in the past but they are all gone in Ireland.



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