Presentation to Presented by Noel Hackett QFA MIB
Presentation to Presented by: Noel Hackett (QFA, MIB, Dip Invest) New Ireland Assurance Senior Pensions Consultant Tony Delaney- Area Manager 5 th, 8 th & 9 th April 2013. time 11. 00; 13. 15; 15. 00
Benefits at Retirement § At retirement your benefits will come from: – – – State Pension NUIG Scheme Purchase Notional yrs Additional Voluntary Contributions ( AVCs ) Accumulated wealth/savings/inheritances 2
NUIG Pension Scheme § Defined Benefit Scheme § Scheme provides – – – Pension Lump Sum ( Gratuity ) Spouses Pension Increases during course of payment Death in Service Benefit § Actual benefits depend on when you joined 3
Key Dates § 1995 § Future employees pay PRSI and receive – State Pension – Lower pension from NUIG § 2004 § Future employees have minimum RA of 65 § Immediate early retirement pension available – Existing employees from 50 – New employees from 55 4
NUIG Scheme – Pre 2004. § Normal Retirement Date is age 65. – but can retire from age 60 onwards § Pension – 1/80 th x Pensionable Service x Pensionable Salary – State Pension not payable (pre 95!) § Lump Sum – 3/80 th x Pensionable Service x Pensionable Salary 5
Example – Pre 1995 § Employee on a salary of € 50, 000 joined NUIG in 1990 at age 30 § Service to age 60 is 30 years § Pension from 60 is € 18, 750 p. a. – 30/80 ths x € 50, 000 – State Pension not payable § Tax Free Lump Sum is 90/80 ths of € 50, 000 - € 56, 250 6
NUIG Scheme – Post 1995 § Normal Retirement Date is 65, BUT can retire…. – Pre 2004 employees – From age 60 – Post 2004 employees – From age 65 § Pension – 1/200 th Pensionable Service x Pensionable Salary Plus – 1/80 th x Pensionable Service x Pensionable Salary – State Pension also payable § Lump Sum – 3/80 th x Pensionable Service x Pensionable Salary 7
Example – Post 1995 § Employee on a salary of € 50, 000 joined NUIG in 2000 at age 30 § Service to age 65 is 35 years § Pension from 65 is € 11, 396 p. a. – 35/200 ths x € 40, 040 = € 7, 007 pa – 35/80 ths x € 9960 = € 4, 357 pa – State Pension also payable – § Tax Free Lump Sum is 105/80 ths of € 50, 000 - € 65, 625 8
State Pension § From 2012 – Single Person € 230. 30 per week – Married Couple € 383. 80 § Applies to all employees who joined since 1995 9
Early Retirement § Was always allowed but only as a deferred pension § Changes from 2004 – – Existing employees from 50 New entrants from 55 Immediate pension payable Early payment reduction 10
Early Retirement Benefits – NRA 60 § Employee on salary of € 50, 000 joined before 1995 - early retiring at 55 § Service completed 25 years § Pension : 77. 8% x 25/ 80 ths x € 50, 000 = € 12, 156 § Tax Free Lump Sum : 90. 7%x 75/80 ths x € 50, 000 = € 42, 515 11
Employee Contributions § Contributory for new Entrants post April ’ 95 § Total Contribution Rate is 6. 5% Lump Sum 1. 5% Pensionable Remuneration Pension 3. 5% Net Pensionable Remuneration Spouse/Civil Partner & children’s pensions 1. 5% Pensionable Remuneration 12
Bridging the Gap - 2 Options § Purchase of Notional Years of Service Through NUI Galway Pensions Office § AVC Scheme Through New Ireland Assurance 13
Notional Years § Employee can buy “notional years” § Defined Benefit basis § Must buy year with all the “trimmings” – – Pension Gratuity Spouses Pension Increases 14
AVC Scheme § You can pay into the AVC Scheme § No promised benefits – will depend on – Investment Returns – Annuity Rates – if you buy a pension at retirement § Can be more flexible than added years, you can – Select a monthly contribution – Save for a specific benefit - lump sum only – ARF option 15
Scope for AVCs § Did you join after 1995 ? – Pension lower than Revenue will allow § Do you – Wish to retire early ? – Have short service ? – Want to provide a higher Spouses Pension § Is your – Pension & Lump Sum based on your final (cut) salary – Scope to enhance this • “Revenue Final 10 year salary rule” 16
Additional Voluntary Contributions § Government incentive through: – Tax Relief, at source – Generous contribution limits – ARF option – greater flexibility at retirement § NB – Pension Fund levy of. 6% of fund will cease in 2014 17
Employee Tax Relief Limits (including AVCs) §Age % of Remuneration §Up to 30 § 30 – 39 § 40 – 49 § 50 - 54 § 55 -59 § 60 Plus 15% 20% 25% 30% 35% 40% §An earnings cap of € 115, 000 (2013) will apply to Employee Pension Contributions for the purpose of tax relief. §The above limits include contributions to NUIG Pension Scheme 18
Tax Relief § Monthly Contribution § Tax Relief § Net Cost € 400. 00 € 80. 00 € 320. 00 € 164. 00 € 236. 00 § Contributions and tax relief operated at source 19
USC for self assessed under age 70 the 2013 rates Part of aggregate income Rate of USC First € 10, 030 Next € 5, 980 Next € 83, 984+ 2% 4% 7% Income > € 100, 000 10%
TAX CREDITS 2013 Employee Tax credit Personal tax credit-single -married Widowed bereaved in yr of ass. One parent family tax credit Home carer tax credit Dependant relative Blind person credit-single both blind -married Additional credit widowed pers Age credit-single Age credit married 21 2010 € 1, 830 3, 660 1, 830 900 80 1, 830 3, 660 600 325 650 2013 € 1, 650 3, 300 1, 650 810 70 1, 650 3, 300 540 245 650
Standard Rate Bands 2010 2013 € € Single/Widowed 36, 400 32, 800 Married-one income 45, 400 41, 800 *Married-two incomes 72, 800 66, 500 One parent/Widowed 40, 400 36, 800 » With a max transferability between spouses of € 45, 400 in 2010 and € 41, 800 in 2011 » AGE EXEMPTION LIMIT 2010 € 20, 000 € 40, 000 Single Married Unchanged for 2013. 22 2013 € 18, 000 € 36, 000
Example § Employee aged 45 on a salary of € 60, 000 who joined post 1995 § Maximum AVC contribution is: 25% of € 60, 000 Less 1. 5% of € 60, 000 Less 3. 5% of € 60, 000 - € 23, 951 Scope for AVC 23 € 15, 000 € 900 € 1, 262 € 12, 838
Actual AVC Member – Example Mary Murphy Retired in April 2010. 29 yrs service. Age 65. Salary € 59, 000 NUIG Pension € 12, 705. 38 p. a. NUIG Tax free lump sum € 64, 162. 50 AVC Fund built up in 5 yrs @ € 300 pm = € 21, 075. 30 Net cost, after tax relief for Mary was€ 10, 620. 00 that she paid TAX free lump sum from AVC is € 21, 075. 30 Could have been € 24, 337. 50 from AVC if it was in her fund. Tax free LUMP SUM approved by Revenue is € 88, 500 24
Options at Retirement § Tax Free Lump Sum ( Up to € 200, 000 ) § Ongoing Pension – Personal – Spouses § Approved Retirement Fund ( ARF) – – Minimum income of € 12, 700 Invest € 63, 500 in AMRF Free to invest as you wish Withdrawals taxed as income 25
AVC Drawdown § For next 3 years – Draw down up to 30% of AVC Fund – Tax payable at your marginal rate – Only one “ opportunity” to make a drawdown § Care needed before drawdown considered 26
Making it easy to track your Fund Pensions Schemes Online § Password protected website § Information on – premium history – fund value – Estimated fund at retirement § It is free and easy to use § Review yearly – especially if circumstances change 27
Investment Options – There are 13 funds available to Invest in including the Default Fund • The IRIS Retirement Fund – Strongly recommend all members to review their fund choice with Noel Hackett 28
Default Investment Strategy § Your AVCs will be invested in the default strategy if you don’t chose a fund § The Default Strategy is the Individual Retirement Investment Strategy ( IRIS ) – The longer the term is to retirement, the higher the proportion invested in equities and other growth assets – As retirement approaches, the purchasing power of the fund is protected by switching into Fixed Income Assets/Cash 29
Improvements to IRIS § Improvements implemented in December 2012 § Part of the equity content replaced by a Target Return Strategy § Two Key Benefits – Greater diversification – Greater flexibility 30
IRIS Glide Path – Default Fund 31
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IRIS Performance – to 1 st March 2013 33
Other Investment Options Low Risk Cash Fund IRIS- Default Fund- Lifestyle Fund. Medium Risk • Pension Gilt Fund BNY Mellon – Elements – Protected Assets § Medium to High – Pension Managed – Consensus Managed – Ethical Managed – Evergreen Fund High Risk – Pension Equity Fund – Innovator 34
Performance Figures § § § § FUND past 12 months Cash Fund(L) 0. 2% Gilt Fund (M) 7. 7% BNY Mellon(M) 8. 8% Elements (M) 4. 4% Protected (M) 4. 3% Managed(M-H) 12. 5% Consensus(M-H) 12. 8% Ethical (M-H) 11. 8% Evergreen (M-H) 9. 4% Equity Fund(VH) 14. 5% Innovator (VH) 7. 7% Funds are updated each day. § L-low risk M -Medium risk H- High risk VH -Very high risk 3 yrspa 0. 7% 5. 1% 3. 6% 4. 6% n/a 9. 1% 9. 5% 9. 3% 7. 7% 10. 5% 6. 3% assets(M) 35 5 yrspa 1. 6% 5. 8% n/a n/a 3. 1% 2. 9% 3. 4% 1. 0% 3. 4% -1. 9%
Investment Information - New Ireland Website § www. newireland. ie § Click on – – Pension I have a pension Public Centre Investment Choice and Performance § Up to date fact sheet for each available fund – performance of each fund over various time periods – asset splits, fund size etc 36
Other Information - New Ireland Website § www. newireland. ie § Click on – – Pension I have a pension Public Centre Popular forms and booklets 37
What Should I Do Next? Contact: Pensions Office NUI Galway Ph 091 -495028 ext: 5028 Email : pensions@nuigalway. ie Or: Noel Hackett, QFA, Pensions Consultant New Ireland Assurance Tel 061312166; Mobile 086 -8186163 Email: Noel. hackett@newireland. ie 38
Individual Consultations Available Noel Hackett will be in available for Individual Consultations of 45 mins duration (09. 00 – 17. 00) Pensions and Investments Office 8 Lower Newcastle Road 10 th, 11 th 12 th 15 th and 16 th April 2013 Contact Ann Cormican or Jacqueline Joyce in Extn 5901/5028 to reserve time. Email: ann. cormican@nuigalway. ie Jacqueline. joyce@nuigalway. ie 39
Any Questions? Thank You for attending 40
Cost Neutral Early Retirement Factors to calculate reduced Lump Sum and Pension (Age 60) Age Pension % Lump Sum % 50 62. 4 82. 2 51 65. 1 83. 9 52 67. 9 85. 5 53 71. 0 87. 2 54 74. 3 88. 9 55 77. 8 90. 7 56 81. 6 92. 4 57 85. 7 94. 3 58 90. 1 96. 1 59 94. 8 98. 0 41
Cost Neutral Early Retirement Factors to calculate reduced Lump Sum and Pension (Age 65) Age Pension % Lump Sum % 55 58. 2 82. 4 56 61. 1 84. 0 57 64. 1 85. 6 58 67. 4 87. 3 59 71. 0 89. 0 60 74. 8 90. 7 61 79. 0 92. 5 62 83. 6 94. 3 63 88. 5 96. 1 64 94. 0 98. 0 42
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