Five month extension for defined benefit schemes to submit funding proposals to The Pensions Board.

The Pensions Board is further extending by five months the deadline for defined benefit schemes to submit funding proposals and or section 50 applications for approval by the Board.

This extension allows schemes to take into account the recently implemented Occupational Pension Schemes (Preservation of Benefits) (Amendment) Regulations 2010 (S.I No. 148 of 2010). This regulation permits schemes to increase the pension scheme’s normal retirement age under section 50 of the Pensions Act with immediate and retroactive effect. 

The extension will also allow scheme trustees and employers to consider the effect of the proposed changes in the National Pensions Framework.

Revised deadline:
Any scheme whose deadline for filing a funding proposal (and/or section 50 application) expires on 30 June 2010 will be allowed to adopt 30 November 2010 as a revised deadline.  There is no change or extension to the deadline for submitting actuarial funding certificates.

Any scheme whose deadline occurs after that date and up to 31 December 2010 can add five months to their deadline – see sample table below.

Current submission deadlineNew submission deadline
30 June 201030 November 2010
31 July 201031 December 2010
31 August 201031 January 2011
30 September 201028 February 2011
31 October 201031 March 2011
30 November 201030 April 2011
31 December 201031 May 2011
31 January 201131 January 2011 (no extension)

Trustees who fail to submit a funding proposal under section 49(3) with or without a section 50 application by the revised deadline may be liable to prosecution and the Board reserves the right to issue a unilateral section 50 direction in such circumstances.

Making an application:

A reduction of benefits under section 50/50A is a serious loss for scheme members. Therefore, the Board will consent to an application only where it is satisfied that the proposed future operation of the scheme is robust enough to make any further application unlikely.  Before making any application, trustees must engage in a comprehensive review of the scheme.
Where you have particular questions about a possible application, you should adopt the following approach:

  • Read the Section 50 and/or Section 49(3) guidelines and associated FAQs thoroughly.  In the first instance where you have any questions, ask your scheme actuarial or legal advisers.
  • Before putting any questions to the Board, get the scheme actuary to prepare a draft Section 50 and/or Section 49(3) application using the relevant form on the Board’s website.  The application form is designed to make sure that all necessary information is provided, and the process of completing it may answer your questions.
  • Remember that the Pensions Board will not advise on whether a Section 50 and/or Section 49(3) application should be made, or on the form, manner or level of any benefit reduction.
  • Where you still have questions, please send them by email to info@pensionsboard.ie, clearly marked as ‘Section 50 and/or Section 49(3)’. The Board will consider whether further FAQs should be published.  Where necessary, the Board may contact you to discuss the issues further
 
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About the Pension’s Calculator

  • This pension’s calculator is designed to give a broad indication of the level of contributions required to give your desired pension at your retirement age. This calculator only provides a sample indication of the funding contributions for your pension and no reliance should be placed on it.
  • This calculator does not take into account any contributions an employer might make to your pension.
  • Do you know that contributions paid to a pension scheme will benefit from income tax relief at your highest rate of income tax? This calculator takes into account current income tax relief benefits.
  • For a full and accurate assessment of your personal finances and any tax relief you may be entitled to on your pension contributions always consult with a professional financial adviser

The next step is to talk to your employer, trade union, bank, insurance company, building society or financial advisor about starting your pension today.

Pension Calculator Notes:
  1. Assumptions used: Investment return will be 5% per year before retirement and 4% per year after retirement. Salary will increase at 3% per year. Pension will increase at 2% per year in retirement. The State Pension will increase in line with salary increases. Spouse's annuity assumes a 3 year age gap between the Main Life and Spouse. Your personal illustration above makes an approximate allowance for the recently introduced Pensions Levy (i.e. 0.6% of your Fund Value) until 2014 or your intended retirement year if earlier.
  2. Contribution amounts shown will increase each year as salary increases.
  3. The actual pension at retirement will depend on actual investment return and salary inflation up to retirement and on the cost of purchasing annuities at retirement.
  4. Tax relief calculations take account of age related limits on tax relief in any given year as prescribed by the Revenue. Your financial advisor will be able to help you to stay within your limits. The maximum tax relief as a % of earnings are as follows:
         Under 30: 15%
         30 to 39: 20%
         40 to 49: 25%
         50 to 54: 30%
         55 to 59: 35%
         60 and over: 40%
  5. Contributions or benefits may exceed limits prescribed by the Revenue. Your financial advisor will be able to help you to stay within your limits. Budget 2011, introduced a Standard Fund Threshold (SFT) of €2.3 million. Individuals with pension funds in excess of this value as at 7 December 2010 may apply for a Personal Fund Threshold(PFT). When the capital value of pension benefits drawn down by an individual exceed his or her SFT or PFT as appropriate, a tax charge of 41% is applied to the excess fund.
  6. In these net contribution calculations, PAYE & single persons tax reliefs and single persons tax bands are assumed. It is also assumed that no other tax reliefs apply.
  7. The annuity rate used to convert your pension fund at retirement age is a long term average annuity rate, which makes no allowance for the recent gender equalisation ruling. The annuity rate used in your personal illustration above will be shown when you run the calculator.
  8. This calculator takes account of the fact that the State Pension (Transition) will no longer be paid from 1 January 2014. This means that there will then be a standard State Pension age of 66 years for everyone. If you have qualified for the State Pension Transition before 1 January 2014 you remain entitled to it for the duration of your claim (1 year). State pension age will increase to 67 in 2021 and to 68 in 2028

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