A new client recently approached us to discuss his existing Executive Pension Plan (EPP). Taken out through another broker some 10 years previous, he was now been told of the legislative requirement to move it to a Master Trust EPP, or a PRSA by April 2026, as a result of the IORP II Directive.
At first, he was happy to be told that his annual management charge (AMC) was not going to increase, as he had already established a fund of circa 520K and he was continuing to invest sizeable monthly amounts.
His AMC charge was 1.25% PA (a typical charge) being levied against his accumulating pot, made up of monthly contributions, as well as occasional lump sum injections.
However, he still took this opportunity to shop around to make sure that he was doing well from both a charges and performance perspective. Now aged in his late forty’s, he was already planning to increase his regular monthly contributions, with a view to retiring at age 60.
On review, the results we offered meant a substantial 4-fold improvement:
- With a higher level of support, we reduced his AMC to just 0.50%, by moving his accumulated fund, whilst also blending active and passive management.
- His ongoing regular contributions were then redirected, to a separate and improved pensions vehicle, opening up his ability to make additional ad hoc lump sums.
- We also ensured that the entire value of his pension was passed tax-free, to his spouse on death before retirement, his existing Executive Pension placed a death benefit restriction of four times his salary (a restrictive feature of all EPPs). The regular contribution AMC was now only alps reduced by 20%, from its previous level.
- Finally, more flexibility at retirement was created. Come time to take his benefits, his new pension vehicles could be retired at age 60 or beyond, but without the need to transfer them out to an ARF, i.e. providing a tax-free lump sum and regular income from the same vehicle, or he could retire one and keep working, before then drawing down the second associated plan.
Important Note
Although new funding restrictions are likely to take effect from 1st Jan 2025, for PRSA lump sum injections, the ability to transfer from an Executive Pension to a company funded PRSA, will still remain. This option creates the opportunity to lower charges and enhance your future retirement benefits, in terms of both monetary value but also drawdown flexibility.
Better Executive Pension – Review
To arrange your free no-obligation discovery consultation by phone contact us today.
Contact: Ken O’Gorman – Director – CB, QFA, RPA, SIA – Retirement Planning Specialist – One Quote Financial Brokers on: 01 845 0049 or email: ken@onequote.ie
Or enquire online and give us a quick outline of how we can help.
