Presentation to
Presented by:Noel Hackett (QFA, MIB, Dip Invest)
New Ireland Assurance Senior
Pensions Consultant
Tony Delaney- Area Manager
5th,8th & 9th April 2013.
time11.00;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
– 1/80th x Pensionable Service x Pensionable Salary
– State Pension not payable (pre 95!)
 Lump Sum
– 3/80th 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.
– 30/80ths x €50,000
– State Pension not payable
 Tax Free Lump Sum is 90/80ths 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
– 1/200th Pensionable Service x Pensionable Salary
Plus
– 1/80th x Pensionable Service x Pensionable Salary
– State Pension also payable
 Lump Sum
– 3/80th 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.
– 35/200ths x €40,040 = €7,007 pa
– 35/80ths x €9960 = €4,357 pa
– State Pension also payable
–
 Tax Free Lump Sum is 105/80ths 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/ 80ths x €50,000 =
€12,156
 Tax Free Lump Sum : 90.7%x 75/80ths 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
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
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Tax Relief
€400.00
 Monthly Contribution
 Tax Relief
 Net Cost
€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
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2010
€
1,830
1,830
3,660
3,660
1,830
900
80
1,830
3,660
600
325
650
2013
€
1,650
1,650
3,300
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.
29yrs service. Age 65. Salary €59,000
€12,705.38p.a.
NUIG Pension
€64,162.50
NUIG Tax free lump sum
AVC Fund built up in 5 yrs @ €300pm = €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
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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 are13 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
32
IRIS Performance – to 1st 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 12months
Cash Fund(L)
0.2%
Gilt Fund
(M)
7.7%
BNY Mellon(M)
8.8%
Elements
(M)
4.4%
Protected (M)assets(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
3yrspa
0.7%
5.1%
3.6%
4.6%
n/a
9.1%
9.5%
9.3%
7.7%
10.5%
6.3%
35
5yrspa
1.6%
5.8%
n/a
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 45mins duration
(09.00 – 17.00)
Pensions and Investments Office
8 Lower Newcastle Road
10th, 11th 12th 15th and 16th April 2013
Contact Ann Cormican or Jacqueline Joyce in
Extn 5901/5028 to reserve time.
Email: ann.cormican@nuigalway.ie
Jacqueline.joyce@nuigalway.ie
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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