Paul McMahon

Requirements Overview The rules of an coccupational pension scheme must comply with Revenue requirements before they can qualify for tax exempt status for contributions and investments.  Revenue requires the establishment of a trust. The trust must be irrevocable. Its principal purpose must be the provision of certain categories of long service and other benefits, as provided for under tax legislation. The scheme may be based in part on employer and employee contributions, employer contributions only or largely on employee contributions […]

Defined Benefit Scheme Promises Defined benefit schemes promise a pension payment, which is usually based on the level of final salary. In order to fund the pension at the promised rate, a certain level of contributions must be made and maintained. Because of this requirement, Pensions legislation obliges defined benefit pension schemes to meet minimum funding and solvency requirements. The funding level must be certified. Historically, many defined benefit occupational pensions promised retirement benefits that were pitched at the maximum […]

Occupational Pension Scheme Contributions An occupational pension scheme may be designed in any way desired, subject to the conditions and limits in the Taxes legislation and in the Revenue Pensions manual.  The extent to which contributions to the scheme are made by the employer and the employee depends on its design and terms. Schemes range from those in which all contributions are made by employers, to those in which most or all contributions are made by employees. There is a […]

Insured Risk Benefits Occupational pension schemes may provide explicit risk benefits. Pensions or lump sums may be payable on the death of the pension scheme member in service or in retirement. In the case of death in service, the benefit is likely to have a significant risk element, equivalent to a life policy. In contrast, in the case of death in retirement, the benefit will usually derive from the individual’s fund. The benefits may accrue for the estate or for […]

Termination of Scheme Cover The Pensions Acts provides minimum rights to preserved of benefit for persons who leave service before their expected retirement date. The legislation has increased the minimum preserved benefit and has reduced the option to withdraw contributions.  The preserved benefit apply to service to the date of termination only. They do not apply to future service. Originally, the period of qualification for preserved benefits was five years under the Pensions Act, 1990.  This period was reduced to […]

Employment and  Pensions An occupational pension scheme is one established for the benefit of employees.  Subject to Revenue Commissioner’s approval and compliance with Revenue requirements, an occupational pension scheme may qualify for significant tax benefits.  See the relevant other articles in relation to the tax benefits at the contribution stage and the benefits within the pension scheme fund itself. The terms of an employee’s rights in respect of a pension will depend on his employment contract and the terms of […]

Pension Fund Income Exempt Occupational pensions schemes  which are registered with the Revenue (and Pensions Authority) are referred  to as exempt approved schemes. Contributions to those scheme may claim and receive tax relief. The general position is that all income of the scheme accumulates tax-free. Tax is paid on benefits received from the scheme, except to the extent that tax-free lump sums are allowed. Pension schemes, personal pensions and PRSAs are exempt from Irish income tax, capital gains on their […]

Small Controlled Pension Schemes Issues A small self-administered pension scheme (SSAs) is a type of occupational pension scheme which is primarily for the benefit of the controlling directors of the sponsoring employer. The members are usually one or more directors, who commonly control the sponsoring (and funding) employer, are trustees and are also the pension beneficiaries. As occupational schemes, SSAPs may be self-administered, rather than wholly invested with and administered by a life insurance company or another regulated provider. The […]