Trustee is closing my SAPS - what are my options?

Expect new single member schemes available under a master trust next month.

The open architecture options are likely to become less common with only insurance companies having deep enough pockets to pay for all the legal work.

This will ultimately increase costs, reduce choice and reduce transparency in the market.

Not a great outcome for the consumer it has to be said
Some of the Self Admin companies are piggy backing on the life co's Master Trusts. I have heard of two of them who are doing this. But I agree, I can see them being used a lot less than before.

Under the master trust structure, there will always be 100% allocation and no early exit penalties. From what I have heard so far, the charges won't be as competitive as before, so there will be an increase in cost for policy holders.


Steven
http://www.bluewaterfp.ie (www.bluewaterfp.ie)
 
But they’ll still he a good option for self employed won’t they? Due to the employer contribution option? At least that’s my plan anyway as i can throw in quite a lot from company and write it off as business expense rather than it being eaten up in corporation tax.
 
If, like me, you are a small business owner, here is a brief executive summary of the Finance Act as it relates to Pension Contributions in 2023:

An Employer contribution to a PRSA is no longer a Benefit in Kind (BIK) for an employee

Translation: That gets rid of an employer contribution to a PRSA being restricted by age related limits

It also means that employee contributions to PRSAs aren’t restricted by any employer contribution paid which was the case up to now – so also allows employees to contribute more and claim tax relief via a PRSA

However, the legislation does not restrict the level of BIK Free employer PRSA contributions in any way and these are not based on salary/service etc as we are used to in occupational pension schemes which are subject to Revenue maximum funding rules.

Translation: An employer can pay as much as they like into a PRSA without reference to either salary or service of the employee.

Tax relief on all employer PRSA contributions can be claimed in the accounting period in which it is paid unlike a special contribution to an occupational pension where the tax relief is spread forward over 5 years.

So now an employer can make any contribution to a PRSA they wish without limit.

Employees still need to consider the overall Standard Fund Threshold of €2 Million above which benefits are taxed at a punitive tax rate of 71%.

However, note that a PRSA can be "split" allowing a "good" fund of €2m and a "bad" fund above €2m. Note the bad fund can be deferred to age 75 and death before retirement is not a benefit crystalisation event for the purposes of applying the excess tax above the SFT.

Translation: just leave the excess to the family as a tax efficient inheritance

Therefore, not only can an employer now make an unlimited contribution to a PRSA they can also claim tax relief in the accounting period in which its paid

These rules are now hardwired in to current legislation

They apply to employees and 20% Directors. They also apply to 20% Directors of Investment Companies.

Self Employed Sole Traders or Partnerships can pay a BIK free employer PRSA contribution for an employee and this can include adult children (over 18) who can be put onto payroll.

The contribution to a Revenue approved pension, such as a PRSA, is not subject to CAT even where there is a family relationship between the parties. Therefore contributions can be made to a child's pension without impacting the CAT A exempt amounts.

Revenue's position on salary sacrifice still needs to be considered and should not be overlooked when making an employer contribution. Extra employer payments in addition to existing remuneration are allowable but an employee reducing their salary to make the payment will be caught by the salary sacrifice provisions.

An employer can contribute to an occupational scheme and a PRSA at the same time for the same employee

Marc Westlake CFP, TEP, APFS, QFA, EFP
Chartered Certified and European Financial Planner
Everlake
 
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