The Importance of Financial Planning

Urgent Notification for Business Owners

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The Finance Bill 2024 was published yesterday & it contained provision which materially impacts your retirement funding from 01/01/2025.

Since Finance Act 2023, business owners were provided the opportunity to make significant contributions to their Personal Retirement Savings Accounts (PRSA) which for many, afforded them the opportunity to back fund for contributions which perhaps couldn’t be made in the early years of setting up the business.

PRACTICALLY, that meant that business owners with significant funds in the bank, and with one eye on retirement, could make significant contributions to fund their PRSA’s and if they were Company Directors, would receive Corporation Tax relief.

YESTERDAY, Minister Chambers published the Finance Bill 2024, which disappointingly, contained a provision to limit the employer contribution amount to 100% of total emoluments, which is usually defined as salary. This is a huge departure from the previous flexibility of being able to fund up to the Standard Fund Threshold of €2M.

WHAT HAS CHANGED is that contributions to a PRSA greater than their total remuneration will now NOT receive the Tax relief previously afforded and will be treated as a Benefit in Kind as it was prior to the original amendment in Finance Act 2023. In essence, this is a huge step back for the backbone of this economy; the Irish SME’s, family business owners & Company Directors.

ACTION is now required by business owners to swiftly re-assess their current retirement funding strategy and to re-align if necessary, with the current impending change in the legislation BEFORE 31/12/2024.

If you would like to discuss this further, please contact me on 085 866 9813 or michael@lifetimefinancial.ie  

The Importance of Financial Planning

New Pension Legislation Relevant to Small Self-Administered Schemes

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The Minister for Social Protection, Heather Humphreys announced in a press release issued on Tuesday the 27th of April that she has signed the European Union (Occupational Pension Schemes) Regulations 2021. (IORP stands for Institutions for Occupational Retirement Provision). This means that the EU IORP II directive will be transposed into Irish law through the amendment of the Pensions Act 1990.

How will this impact your Executive Pension Plans?

The legislation specifically targets the Administration and Investment Rules for Small Self- Administered Schemes including Executive Pension Plans. While one-member schemes, such as EPPs, have been granted a transitional period of 5 years to adopt the legislated changes, the increased governance and trustee responsibilities required by the rules are designed to bring immediate benefits to consumers.

What are the Administration Rule changes?

The New Regulations

• Cover trustee qualifications where trustees must pass a “fit and proper” test, risk management, auditing and reporting, cross-border activities, solvency and supervision.
• Provide better protection through enhanced governance and risk management.
• Provide clear, relevant and more consistent communication about pension schemes.
• Remove barriers to cross-border schemes.
• Ensure that trustees have the necessary powers and credentials to supervise schemes.
• Small schemes (schemes with less than 100 members) and trust RACs are no longer exempted from the IORP investment rules.

What are the Investment Rule changes?

The change in investment rules are effective immediately. They apply some restrictions to EPP investments as follows:
• Scheme assets must be predominantly invested in regulated markets. This means that direct property investments and unregulated investments will be restricted to no more than 50% of the aggregate portfolio. We await guidance on what this might look like in practice.
• Scheme assets must be properly diversified in such a way as to avoid excessive reliance on any particular asset, issuer or group of undertakings and accumulation of risk in the portfolio as a whole and
• Environmental, Social and Governance (ESG) issues must be considered when making investments.
These conditions apply only to new investments or borrowings entered into by EPPs and are not retrospective.

What is next?

The Pensions Authority will provide further information and guidance over the coming weeks and months, to ensure the new obligations are fully understood. We are working through the changes as quickly as we can with our providers and will update all our clients where appropriate.

If you have any queries regarding how this new legislation may affect your scheme, please contact our office on 046 92 40961.

The Importance of Financial Planning

How Can a Company Pension Benefit Me?

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Tax Relief on Contributions
Employer contributions – Corporation Tax Relief
Employee Contributions – income tax relief & not treated as a BIK

Investment Options
Access to thousands of Global Equities, Funds, Bonds, and Property, on regulated markets and managed though a single portfolio

Tax Free Investment Growth
Capital Growth & Income received from Investments made within Retirement Funds are tax free

Retirement Benefits
Tax Free Lump Sum up to €200,000 is available, (can be 1.5x salary or 25% of fund) the next €300,000 is taxed at standard rates

Income Drawdown Options
Flexible Income drawdown using an ARF allows tax management with other retirement income
Guaranteed income from an Annuity

Estate Planning
Protect the Family Balance Sheet
Lump Sums & pension options for your dependants in service & in retirement. ARF asset passes to your estate

 

How can a company pension benefit me?

 

The Importance of Financial Planning

Lifetime Financial Planning Remains Open During Lockdown

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We at Lifetime Financial Planning wish to reassure our Clients that we are included in the Government’s list of Essential Services. So we are continuing to work as normal through the lockdown. We have however switched to conducting many Client meetings online, and our Clients are finding this very convenient and safe also in these Covid times.

So stay safe everyone and we will all get through this.

Aidan Wall QFA FLIA SIA RPA

The Importance of Financial Planning

International Women’s Day Sunday 8th March

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There are plenty of national and international studies showing lower participation rates for women contributing to a pension and for those women who do participate, smaller pension pots.

The reasons and impact of the resulting pensions pay gap for women are manifold. Here are 7 simple step’s which women, and their employers, can take to help narrow the pension pay gap women experience.

  1. Join or set up a pension plan at your earliest opportunity. The funds built up can continue to grow even if you take time out during your career.
  2. Link salary increases to pension contribution increases. This is even more effective if committed to in advance. Simple percentage contribution rates do this automatically.
  3. Maximise contributions by availing of the maximum employer contribution rates and considering making Additional Voluntary Contributions (AVCs) where affordable.
  4. Continue making pension contributions, both employer and employee, while on maternity or other types of leave.
  5. If affordable make pension contributions while on a career break via a personal pension or PRSA. Take advantage of the tax reliefs available.
  6. Maximise contributions when returning to work after maternity leave or a career break.
  7. Take financial and/or investment advice which takes account of your specific circumstances and plans.

If you would like to take control of your finances and get your Lifetime Financial Plan in place then please contact Aidan Wall, QFA, or Michael Wall, QFA, at 046 924 0961.

The Importance of Financial Planning

Moved to Ireland from the UK? – Transfer Your UK Pension

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If you worked in the UK and have moved to Ireland, you may have left one or more UK Pensions behind. We strongly recommend that these assets be transferred back to Ireland, you thereby gain control of your asset.

BREXIT means this should be done sooner rather than later. The funds can be retained in Sterling if desired.

At Lifetime Financial Planning, we have the technical expertise and experience in transferring UK Pension Funds to Ireland.

If you need help in relation to transferring your UK pension or any other financial matter give us a call at Lifetime Financial Planning.

Tel +353 (0)46 924 0961. Email: michael@lifetimefinancial.ie or aidan@lifetimefinancial.ie

The Importance of Financial Planning

Moved Job – Lost Track of your Pension ?

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Lost track of your pension after moving jobs?

If you work in a job which includes a Pension, then you have a valuable asset. If you move to another job though, you might have lost track of your pension, especially if you change your address.

Indeed you might have moved job several times, and have several Pension pots. The safest solution may be to take control of these assets yourself so then there is no danger of losing track of them.

If you need help in relation to this or any other financial matter give us a call at Lifetime Financial Planning, Michael 085 866 9813 or Aidan 087 2621 006.

The Importance of Financial Planning

Will you have enough to retire?

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It’s a worry, isn’t it. You don’t want to run out of money after you stop working, or have to live in austerity. You may have a mix of things you are relying on, a business, property, pension fund, cash savings, your home. You may also have debts, loans. So it’s complicated, and the State Pension is good, but not nearly enough, and will it stay the pace ?

Our Recommendation. You need a PLAN. We call it a Lifetime Financial Plan, because it’s a long term plan, taking everything into account. And as your circumstances change, the plan is updated so you are always on track. You can get more info about this on our website www.lifetimefinancial.ie In making the plan, we also make sure you are making the best of any opportunities, such as saving tax. The sense of relief, and peace of mind that having a plan brings, means you can confidently get on with enjoying your life.

To find out more, and take the next step to your Lifetime Financial Plan, give Aidan a call at 087 262 1006 or Mick at 085 866 9813.

The Importance of Financial Planning

Set Your Financial Goals With a Lifetime Financial Plan

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A recently published survey revealed that a significant amount of our population is suffering from high levels of stress due to concerns about their financial well being.

Pension planning, for example, was a serious source of stress with over 51% of respondents saying they were not saving enough for their retirement. Not knowing how to plan for your financial future can lead to inaction and high levels of stress.

Identify Your Financial Goals

Despite being worried about their financial future the vast majority of people do not have a Lifetime Financial Plan to address this. In order to put together a good plan you need to ask yourself some straight questions…. 

  • When do you want to retire?

  • If I die or suffer serious ill-health how is my family fixed?

  • When do you want your mortgage paid off?

  • Have I made a will?

  • Should I review my savings and investments?

  • Can I save money on the cost of some utilities and services – Energy, Car or Home Insurance, Health Insurance etc.?

Let’s have a brief look at some key areas:

Take Control of your Pension

Starting a Pension Plan or increasing your contributions to an existing one is a very good move to make at the start of 2016.

  • The younger you start your plan the better as your pension pot will then be bigger.

  • If you have a workplace pension scheme you should join it as your employer is likely to be making a contribution for you.

  • Those approaching retirement should make sure they are not taking too much investment risk.

  • Identify your retirement goals and the cost of getting there.

  • Put in place a plan to review your Lifetime Pension Plan at least once a year.

Protect your Family

Death is a taboo subject to most and yet having plans in place to deal with the financial impact of unexpected death is vital for anybody with dependent relatives. Equally you need to consider you and your families circumstances if you suffer a serious illness to the point where it has the effect of eliminating your income. 

  • Do you have Family Protection/Life Insurance cover?

  • If so will it be enough to maintain your family’s standard of living?

  • Should you have Serious Illness or Income Protection cover or both?

Estate Planning

Estate planning is a vital component of any robust financial plan. While, for example, the recent budget increased the tax free threshold for inheritances passing between parent and child to €280,000, with increasing house values etc., it doesn’t take a lot before there are very heavy tax exposures. Only a third of Irish people have made a will which is crazy if you want to dictate and sensibly arrange how your affairs are going to be managed when you die. You certainly don’t want to leave yourself dependent on the laws of intestacy which may not distribute your assets as you would like.

  • Have you made a will?

  • Does it need to be reviewed?

  • Are there any financial or tax planning matters that need consideration?

The Need for Regular Reviews

You should review your financial plan with your Broker on an annual basis. Numerous studies have shown that those who conduct regular reviews having higher savings and pension values than those who do not. 

  • A good plan will help eliminate the stress of not knowing where you are going.

  • Your circumstances do change regularly, for example, additions to the family.

  • Other situations change – tax laws, interest rates, economic climate etc, and your Financial Broker will be able to keep you up-to-date with these changes.

     

 

If you would like to take control of your finances in 2016 and get your Lifetime Financial Plan in place then please contact Aidan Wall, QFA, at 046 924 0961 or email aidan@lifetimefinancial.ie

 

The Importance of Financial Planning

Everyone Needs a Financial Plan

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How often have we heard the expression “I would not have achieved my goal without having a carefully thought out plan and sticking to it”. We hear it from high achieving people in the world of sport and business alike.

You will hear it from top class golfers like Rory McIlroy who will set his objectives, arrange his playing, coaching and work schedule for the year ahead and then go and execute that Plan. If he starts his year with no plan then he would say the focus simply isn’t there to be successful. This same principle is equally important in all other situations – the football/hurling team coach, the business manager or home-maker all need a plan. Doesn’t it make eminent sense, therefore, to seek assistance in achieving the objectives of your financial plan through each stage you face in your life?

Read more →

The Importance of Financial Planning

Pensions – No longer a luxury but an absolute necessity

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The recent budget announced that the Pensions levy is being substantially reduced and indeed will be abolished completely by the end of 2015. What was seen as a major obstacle to the encouragement to save through a Pension Plan for your retirement has now effectively been removed. Here therefore are some key considerations for you to bear in mind.

1. Start as soon as you can

  • Make no mistake, the starting point is the most important point when it comes to pensions.
  • Of course it is hard for someone in their 20s to think about saving for their retirement – let’s face it they are immortal and will never get old! – and it is made even harder in a fraught economic climate.
  • But the sooner a pension is started, the less a person will have to save. Someone who is 25 and takes out a pension is saving themselves a world of financial pain in the years ahead. If they wait until they are 40 they will need to put aside over 4 times to get themselves the same return.

2. Never panic though

  • More than 50 per cent of the population does not have a private pension.
  • While it is better to start a pension early, that doesn’t mean it is ever too late to start, it simply means that the later the start the more you may need to put in.
  • Counterbalancing the late start is probably a greater degree of affordability as you get older.

3. Managing risk

  • When you are younger you can afford to take a degree of investment risk that can include investment in high risk stocks.
  • As you get older the fewer risks you should take.
  • A gradual de-risking should be a feature of your strategy with each passing decade.
  • Good advice will help steer you through the process and to identify suitable opportunities without putting all your eggs in one basket.

4. Mix things up

  • Don’t just decide on a sum you’re comfortable putting into it and leave it at that. Change the payment amount as your life circumstances change.
  • If you get a pay rise you can increase it, if you have children you can reduce it (but only slightly). If you are due a bonus you can put in a once off lump sum.

5. A necessity, not a luxury

  • Putting pension money aside for your future retirement should be considered an unavoidable outgoing and not a luxury.
  • It is right up there with a mortgage, food, clothes and electricity as one of the things people need to realise that they cannot do without.

6. Keep tabs and get good advice

  • You should check your pension plan regularly.
  • Having access to a good financial planning adviser who will steer you through the process and carry out regular reviews with you is vitally important.

Source: Lifetime Financial Planning 2014